Mindanao power players urged to comply with WESM rules

MINDANAO, Philippines — The Energy Regulatory Commission (ERC) has ordered all power distributors and industry participants in Mindanao to comply with all the requirements to join the wholesale electricity spot market (WESM) in the region.

ERC said the directive was issued to ensure the overall readiness of the systems and procedures towards the shift to a new system and environment.

Despite the mandatory membership, ERC chairperson and chief executive officer Agnes Devanadera said the completion of WESM registration is already delayed based on results of the recent 19th WESM Mindanao Readiness Assessment (WMRA) Meetings conducted by the Department of Energy (DOE).

“Therefore, the commission hereby enjoins the distribution utilities (DUs) in Mindanao to comply with all the WESM prerequisites, and to strictly follow the Interim Mindanao Dispatch Protocol (IMDP),” she said.

The WMRA further noted the low turnout of participation in the trial operations program and the incidence of manual load dropping (MLD) despite oversupply of generating capacity in the region resulting from the DUs’ non-compliance to the IMDP.

ERC said the completion of the WESM registry for Mindanao Trading Participants and their active participation — particularly of DUs — are essential to the commercial operations of WESM in Mindanao, which has already been pushed back a couple of times.

Originally, WESM Mindanao was targeted to start in October 2018, but was deferred to middle of this year due to the ongoing software audit being done on the New Market Management System (NMMS) to be used for the regional WESM.

Mindanao’s WESM is slated to be operational on Jan. 26, 2020.

“The ERC enjoins full compliance with the WESM rules to avoid recurrence of MLD. Otherwise, the commission shall be constrained to impose the necessary fines and penalties on the DUs for failure to comply with the WESM directives,” Devanadera said.

The WESM in the Mindanao Grid was launched on June 26, 2017 pursuant to the DOE’s circular which aims to provide sufficient time for the market operator, system operator and WESM participants to prepare and familiarize themselves with WESM operations. 

The DOE circular likewise mandates the National Grid Corp. of the Philippines (NGCP) and the WESM participants to implement the Interim Mindanao Dispatch Protocol.

Established under the Electric Power Industry Reform Act of 2001, WESM serves as the country’s electricity trading market. Currently, PEMC operates the country’s electricity spot market in Luzon and Visayas.

Mindanao was not part of the WESM and its power grid is not connected to the national grid.

Instead, an Interim Mindanao Electricity Market (IMEM) was set up on Sept. 26, 2013 and started full commercial operations on Nov. 26, 2013 as a trading floor for electricity in the region.

However, this was suspended in February 2014 following a grid-wide power interruption in the region, which prevented power companies with excess generating capacity to offer their output to distribution utilities (DUs).

Apart from instances of power interruptions during its operations, PEMC also faced the difficulty of getting payments from DUs for the capacity bought in IMEM.