Power spot trading starts in M’danao

MANILA, Philippines - The Energy Regulatory Commission (ERC) has granted Philippine Electricity Market Corp. (PEMC), the provisional authority to implement its pricing and cost recovery methodology for an electricity market in Mindanao.

With this development, PEMC, the operator of the Wholesale Electricity Spot Market can now start operating a trading floor for electricity in Mindanao.

“With the grant of the provisional authority, PEMC may now start the Interim Mindanao Electricity Market (IMEM) operations using the price determination methodology (PDM) that it proposed,” the ERC said.

The IMEM is designed to act as a day-ahead market where contracted capacities are traded. The day-ahead price is market driven and will be subject to an offer cap to be agreed by the regulators.

Registration in the IMEM is mandatory for all generation facilities, distribution utilities and all end-users in Mindanao.

The ERC-approved pricing methodology sets forth the specific principles and formula in determining the prices and settlement amounts for the IMEM.

Energy Secretary Carlos Jericho Petilla said the launch of the IMEM would help address the power crunch in Mindanao.

“We’re doing a lot of different things. On Friday, we will launch the IMEM hoping that we can extract electricity from small generators on the grid,” Petilla said during the Philippine Economic Forum yesterday.

The salient features of PEMC’s pricing methodology include an IMEM day-ahead price (IDAP) for energy supply, which is being determined day-ahead to provide certainty in pricing for the participants; the IDAP that shall correspond to the highest offer price fully or partially scheduled for the particular IMEM trading interval and a cap on offers in the market, with the cap to be agreed upon by the Department of Energy and the ERC.

“To achieve economic gains for Mindanao, the pricing methodology allows the minimization of the total cost of purchasing energy from the IMEM offers in order to meet the IMEM demand,” ERC added.