PEMC seeks higher spot market fees

MANILA, Philippines — Philippine Electricity Market Corp. (PEMC), the operator of the country’s wholesale electricity spot market (WESM), is asking regulatory clearance to jack up its market fees to raise additional funds to cover its operations.

PEMC filed an application with the Energy Regulatory Commission (ERC) to approve its P882.21-million funding requirement to cover its expenditure program.

Initial figures peg the market fee rate of 1.04 centavos per kilowatt-hour (kwh).

The proposed amount covers personal services, which pertain to the salaries and benefits of its 160 employees in Luzon and Visayas.

It will also fund PEMC’s maintenance and other operating expenses, as weill as capital expenditures, which consist of enhancements and upgrades to the Market Management System (MMS) and corporate infrastructure, and the cost of lease improvements.

The amount also takes into consideration PEMC’s cost of the preparations and initial operations of the WESM in Mindanao next year.

The fees will be collected from the WESM participants in Luzon and Visayas only, pending the commencement of commercial operations of WESM in Mindanao.

WESM Mindanao commenced trial operations last June 26, serving as a transition period for energy stakeholders.

The trial operations program contains a set of preparatory activities that aim to familiarize all Mindanao participants in the implementation of the WESM via the market systems and procedures to be deployed.

PEMC said Mindanao participants are expected to be involved in the conduct of end-to-end testing of all interfaces and systems that will involve simulations of all processes such as registration, bid submission, pricing and scheduling, and settlement.

WESM Mindanao is expected to start commercial operations next year.

The establishment of WESM in Mindanao is a high priority agenda of Energy Secretary Alfonso Cusi, as underlined in Republic Act 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA).

In Luzon, WESM commenced commercial operations on June 26, 2006 while the Visayas grid was integrated into the WESM on Dec. 26, 2010.

EPIRA paved way for the creation of WESM, which serves as a trading facility for power generators and buyers of electricity such as distribution utilities. Under the law, prices at WESM should be governed by market forces.

The law also provides that WESM rates could be passed on to consumers under the generation charge component of their electricity bills.