New DOE Policy to Establish WESM's Independent Market Operator

Wazzup Pilipinas!

The Department of Energy (DOE) issued a policy that would guide the establishment of an Independent Market Operator (IMO) of the Wholesale Electricity Spot Market (WESM). The WESM serves as a venue to trade electricity as a commodity.

Under Department Circular No. DC2018-01-0002 otherwise known as Adopting Policies for the Effective and Efficient Transition to the IMO for the WESM, the DOE and the Energy Regulatory Commission (ERC) will ensure fair competition and the promotion of public interest as envisioned in the Electric Power Industry Reform Act (EPIRA).

“WESM is an added option for the electricity sources of our consumers, especially addressing the stability and efficiency of power supply,” Energy Secretary Alfonso Cusi said.

Cusi added that the WESM and IMO would be consistent with the wisdom of EPIRA to ensure quality, reliable, secure, affordable and reasonable prices and electricity supply through a transparent, free and competitive power market.

The policy on IMO outlines the mandates of the DOE and the ERC over the operator; its guiding principles; its composition, including the Board of at least five (5) members; its functions; and WESM’s new governing and governance structure and the conditions for transition.

In particular, the issuance will provide guidelines on the procedures for:

·        Establishing the merit order dispatch instructions for each time period;

·        Determining the market-clearing price for each time period;

·        Administering the market, including criteria for admission to and termination from the market which includes security or performance bond requirements, voting rights of the participants, surveillance and assurance of compliance of the participants with the rules and the formation of the wholesale electricity spot market governing body;

·        Prescribing guidelines for the market operation in system emergencies; and

·        Amending the rules.

The Circular on IMO was published on 4 February (Sunday) in two (2) newspapers of general circulation, which will take effect immediately after its publication.

“This policy on IMO will ensure full public accountability to safeguard, foremost, our energy consumers,” Cusi emphasized.