Independent operator eyed for WESM

MANILA, Philippines - The Department of Energy (DOE) is eyeing an independent market operator (IMO) this year for the electricity spot market as it wants to ensure that consumers would be protected under such system.

According to the Electric Power Industry Reform Act of 2001, the Wholesale Electricity Spot Market (WESM), the country’s trading floor for electricity, must be transferred to an independent entity or IMO after its establishment.

“We have to be careful. I want the IMO this year. My target is to make it an IMO on the premise that we are all protected,” Energy Secretary Carlos Jericho Petilla said.

He said adequate measures must be in place before WESM’s operations can be transferred to an IMO.

“It’s easy to shift to an IMO but we cannot go back anymore if we do, so we have to be careful,” he pointed out.

The IMO shall be composed of an independent board of directors but Petilla expressed concern on the criteria for the selection of the IMO board.

“Who chooses the independent directors? What is the composition of independent directors? Is there such thing as independent directors in this country? Government will no longer be there,” he said.

The Philippine Electricity Market Corp. currently operates the WESM. PEMC, which has been operating the market since 2006, is a 15-man body made up of representatives from each sector of the electric power industry as well as independent members.

Petilla, as DOF chief, currently chairs the PEMC until its transition to an IMO.

Once that happens, it would be the IMO board that will operate the market as well as set WESM rules.

Power generators, for their part, said the IMO must have a proven track record of not less than two years as a leading market operator of a similar- or larger-sized electricity market.

In another development, the Federation of Philippine Industries (FPI) is calling for a dialogue among stakeholders where they can come up with win-win solutions on the power-rate impasse caused by the Malampaya shutdown and the subsequent cases filed in court to stop the implementation of rate hikes.

FPI chairman Jesus Lim Arranza said it has been observed that the power generators and suppliers earned a windfall profit as a result of the Malampaya shutdown.

“These power generators practically earned the said windfall profit at the expense of other’s misfortunes and without spending additional investment and effort and at no additional cost at all,” he said.

However, Arranza said the power generators and suppliers are claiming that they are just merely following what is supposedly provided under the law.

This prompted the affected consumers to file a case in court questioning the legal and factual basis for the power rate hike.

The Supreme Court had since ruled to temporarily suspend the implementation of the rate hike. Arranza said there could be ways to thresh out the differences if only all stakeholders would meet in a dialogue while a court case is pending.