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'Specific parameters' on DOE WESM intervention sought.

An "intervention" at the Wholesale Electricity Spot Market (WESM) based on "supply margin" was proposed by Energy Secretary Carlos Jericho L. Petilla and ended up in the issuance of a Circular, but the specific parameters especially on pricing for such market rules change are seen lacking by industry participants.

Concerns have been raised though that if the proposed 4.0-percent supply margin would be the sole trigger, this may result in prolonged intervention or market suspension during tight supply conditions, especially during summer months.

The basic definition of supply margin, as could be applied in the electricity spot markets, would be the difference between supply and demand.

Industry players tend to agree to market intervention in 'extraordinary cases' or force majeure events, but they stressed such cannot just be done without price parameters being laid down by the Department of Energy, Philippine Electricity Market Corporation (PEMC) or the Energy Regulatory Commission.

For instance, how many trading intervals at 'cap level of clearing prices' shall be set as a condition before market intervention could be called for as recourse by the WESM operator. Such, it was noted, must also consider the start-off period of power generation facilities.

DOE director Mylene Capongcol noted these were considered in the discussions leading to the crafting of the Circular. The interim enforcement, she said, may go along with the revised cap for the WESM.

The DOE Circular vests upon market operator PEMC the power to enforce market intervention if the supply margin trigger is reached. Correspondingly, an administered price cap has to be used as a basis for settlements.

Additionally, it was proposed that the DOE must consider if all must-run units (MRUs) had already been exhausted.

Setting supply margin triggers, it was emphasized, must also be harmonized with the Grid Operating Maintenance (GOMP) which sets the planning and maintenance schedules for power plants.

The DOE Circular serves as a revision to the existing WESM Rules provision on Market Suspension, which just originally covered "natural calamities" or "following a declaration of a national and international security emergency of the President of the Republic."

During market suspension or intervention, the Market Operator shall impose an administered price to be used as basis for settlements.


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Title Annotation:Business News
Publication:Manila Bulletin
Date:Jan 9, 2014
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