ERC sets hearing on PEMC's proposed Recovery Mechanism

The Energy Regulatory Commission (ERC) has set for public hearing the PEMC's (Philippine Electricity Market Corporation) proposed Pricing and Cost Recovery Mechanism for Reserves (Reserve PCRM) in the Philippine WESM (Wholesale Electricity Spot Market). The ERC scheduled the expository presentation and pre-trial conference on February 26, 2007 and the evidentiary hearings on March 6, 12, 13, 19, and 20, 2007 at nine o’clock in the morning (9:00 A.M.) at the ERC Hearing Room, 15th Floor, Pacific Center Building, San Miguel Ave., Pasig City.

“The PCRM is a welcome development because this is another step towards sustaining competition, not only in the spot market, but also in the entire electric power industry. With the PCRM in place, generators can now also compete in providing ancillary services”, ERC Chairman and CEO Rodolfo B. Albano, Jr. asserted.

PEMC's proposal supplements the Ancillary Services Cost Recovery Mechanism (AS-CRM) of the National Transmission Corporation (TRANSCO). The Reserve PCRM will be applicable to all reserves that are to be traded in the WESM and will supersede, to this extent, the AS-CRM of the TRANSCO. Nonetheless, the TRANSCO AS-CRM will still apply to other ancillary services that are not traded in the WESM as well as to reserve regions or cost recovery zones where the WESM reserve market is not yet operational. Once approved, the PCRM shall become an integral part of the PDM (Price Determination Methodology).

The Reserve PCRM application aims to establish: (1) the principles by which identified operating reserves will be priced in the WESM and the formula for determining the reserve trading amounts of reserve providers, including the allocation of reserve costs among market players; and (2) the methodology for determining the administered prices and cost recovery charges during market suspension and intervention.

“All electricitiy stakeholders, including the consuming public, are urged to actively participate in the scheduled hearings to aid the ERC in coming up with a sound decision on this particular filing by the PEMC,” Chairman Albano concluded.

February 26, 2007