WESM-Visayas only viable with two new power plants

CEBU, Philippines - The Cebu business sector hopes that once the Toledo Power and Korean Electric Company (Kepco) officially operate in the next few years, the Wholesale Electricity Spot Market (WESM) in the Visayas will finally be approved to go on commercial operation.

Cebu Chamber of Commerce and Industry (CCCI) president Sam Chioson said the non-operation of WESM Visayas at present is understandable because of the lack of power supply in Cebu, but if these two power plants will start their businesses, WESM should be activated immediately.

Despite the call of some sectors to have the WESM operated as soon as possible, the chamber on the other hand, said that the facility could wait until these two new power plants will announce their formal operations in the next few years.

“If WESM were operational right now, it can have negative effect to the consumers,” Chioson said explaining that while there is only enough or even a bit power shortage, electricity spot market is not yet advisable, because it could make power rates more expensive.

The Department of Enegy (DOE) deferred WESM operations in the Visayas last year, due to inadequate capacity in both power generation and transmission facilities, as revealed in a study conducted by consultancy firm Intelligent Energy Systems (IES).

PEMC had said that the facility here is ready to operate the market. WESM Visayas has been on trial operations since 2005.

PEMC targeted to go live in the Visayas in January last year. Commercial operations were postponed to February, then to March and further to April 26 (2008), until the DoE deferred market operations due to findings of the IES study.

Instead, DOE together with the Philippine Electricity Market Corporation (PEMC) introduced the Visayas Supply Augmentation Auction (VSAA), which approval for implementation is still dependent on the Energy Regulatory Commission (ERC).

The VSAA hopes to address the growing concern for the tight power supply in the Visayas, specifically in Cebu, Negros and Panay.

“Visayas power conditions have been limited for the past two years. Until additional expected capacities come in by 2010, the DOE has to find immediate ways to address the situation or residents of the region will endure one to three hour rotating brownouts on a daily basis,” said DOE secretary Angelo Reyes in a statement.

VSAA is a voluntary program, which allows distribution utilities and large consumers of electricity to boost their supply deficit through a transparent and competitive means much like the electricity spot market in Luzon.

The program offers a number of options for distribution utilities for the procurement of power. This includes purchase of supply deficit from another supplier thru the VSAA apart from their existing bilateral contracts as well as voluntary load curtailment.

The successful launch of the VSAA will allow for a smooth transition to the operation of the Visayas Commercial Operations Program of the Wholesale Electricity Spot Market (WESM) which is expected to encourage possible investors to venture in the Visayas power industry, thus bringing in the competition necessary for the region.

According to Chioson the Chamber supporting the VSAA program, and believes that it will temporary address the power shortage in the province while waiting for the two power plants to provide additional capacity.