WESM pricing scheme ready by June - ERC
The Energy Regulatory Commission (ERC) will conclude the evaluation on the Philippine Electricity Market Corporation’s (PEMC) application for the approval of the structure and level of market fees for the Philippine Wholesale Electricity Spot Market (WESM) by June 2006 in time for WESM operation by July 2006.
“The
ERC is aware of its timelines and mandates under the Electric Power Industry
Reform Act (EPIRA),” Chairman Rodlofo B. Albano, Jr. stressed. “But
there are certain procedures which need to be followed and other relevant matters
which should be considered prior to any resolution by the ERC,” Chairman
Albano added. Said pronouncement was made in the light of statements that appeared
in the major dailies on 30 May 2006 that the snail pace process of the ERC in
approving the market fees and the administered price and price determination
methodology keeps the revolutionary mechanism on hold.
“The ERC wants to be sure that its decision would be robust and would
withstand any challenge by the stakeholders”, Chairman Albano clarified.
As a prelude to the commercial operations of the WESM, the ERC needs to approve the following: (1) Price Determination Methodology (PDM); (2) Market Fees to be charged to all WESM members; and (3) the Administered Price Cap. The PDM shall reflect the accepted economic principles of how energy will be priced in the WESM and will provide a level playing field to all electric power industry participants. Market Fees, on one hand, are the costs of administering and operating the WESM which shall be recovered by the market operator through the charge to be imposed upon all market members. The Administered Price will be imposed during market suspension and intervention to be used as basis for settlements. All three concerns need to be synchronized to ensure the effective and efficient operation of the WESM.
“Expect the three (3) aforementioned items ready by June 2006,” the Chairman said. “Let me emphasize, however, that the success or failure of the power industry restructuring does not solely rely on the ERC, but with the full cooperation of all the industry participants as well. Therefore, let us stop pointing accusing fingers and instead work together to achieve our goal of a successful wholesale electricity spot market,” Chairman Albano urged.
June 6, 2006