Decision ERC Case No. 2009-015RCERC approves VSAA implementation in the Visayas Region
The Energy Regulatory Commission (ERC) recently approved the Visayas Supply Augmentation Auction plan filed by the Department of Energy, through the Philippine Electricity Market Corporation (PEMC).
The authority granted to implement the voluntary scheme is subject to several modifications imposed by the ERC, particularly on the pricing, the manner of administration and the effect of the same on the rate to be passed on to the end-users.
PEMC has proposed that the participants in the scheme would be the generation companies with excess un-contracted capacity and the customers capable offering the interruptible portion of their load. This is an intended interplay of both the supply and demand settings to avert the expected shortfall in the area.
The VSAA mechanism is a commendably innovative approach created to find an immediate solution to the Visayas power supply situation. The ERC has found as acceptable the concept of a day-ahead auction market with hourly bids and offers as proposed by the PEMC. Owing to the absence of open access at the distribution level in the Visayas region, the ERC has allowed the auctioning process to be opened meantime to participants connected to the Visayas transmission network namely: the generation companies with un-contracted capacity and customers which are directly connected to the grid.
On the other hand, the potential interruptible load customers shall still be allowed to lend support in the alleviation of the deficit in the region but through another scheme. The ERC has patterned the arrangement to a de-loading program recently approved for the Cebu grid and has allowed similar technical and compensation framework to be adopted in the Negros and Panay sub-grids. If so interested, the distribution utility must so express it by filing its application with the ERC. The methodology and compensation provided under the Cebu de-loading arrangement shall be adopted unless a particular distribution utility would manifest otherwise.
The PEMC is expected to adjust its administration costs given the provisos introduced by the ERC. The approved VSAA shall run for a period of one (1) year. PEMC has been directed to subsequently submit a review on the necessity of continuing the VSAA depending on the level of supply in the region.
In all these, the Commission has tasked the System Operator of the National Grid Corporation of the Philippines (NGCP) to put in coordination efforts with the PEMC and distribution utilities to provide central scheduling and dispatch to all the subgrids in the Visayas region.
It is expected that the approval of the VSAA would provide an interim solution to the Visayas supply condition marked by shortfalls in the electric power supply especially in the Negros and Panay areas.
Decision ERC Case No. 2009-015RC
September 18, 2009