Enhanced WESM starts commercial operations

MANILA, Philippines — The wholesale electricity spot market (WESM) in Luzon and Visayas has transitioned from the one-hour interval to the five-minute trading yesterday, while the Mindanao grid is given another month to complete registration with  the spot market.

This marks the commercial operations of the enhanced WESM design and operations (EWDO) as ordered by the Department of Energy in a department circular, the Independent Electricity Market Operator of the Philippines (IEMOP) said.

“All five-minute dispatch schedules and prices, including for settlement shall already be implemented from June 26,” IEMOP market information modelling manager Edward Olmedo said.

For Luzon and Visayas, the IEMOP will observe the compliance of market participants in the first phase of the EWDO commercial operations.

This means participants will be exempted from sanctions and penalties in case of breach of standards to get used to the new setup.

“The first phase will involve observation of compliances to the dispatch protocol…That will last for only one month to three months,” Olmedo said.

Meanwhile, WESM Mindanao has commenced but only central scheduling of capacities will be implemented and there will be no WESM transactions until July 25, Olmedo said.

“For Mindanao, participants still have to complete full registration in the WESM. We’re giving them another extension,” he said.

The EWDO, which was initially conceived way back in 2013, aims to further enhance competition, transparency, and robustness of the WESM which can then lead to more investments in the Philippine power industry.

The transition to a five-minute dispatch and settlement interval from the current one-hour interval would significantly improve the demand forecast and eliminate generation imbalances that could happen in a one-hour trading interval, the IEMOP said.

This would make the grid more secure through the reduced system imbalance while, at the same time, generator trading participants would be able to easily comply with their target schedule, the market operator said.

On the other hand, customer trading participants including distribution utilities, bulk users, and retail electricity suppliers would now have a more refined period for their bilateral contracts, thus enabling them to have a more robust option on having their electricity supplied either through their bilateral contracts or through the electricity spot market.

Overall, the efficiencies gained from this transition are expected to eventually benefit the ordinary Filipino through more competitive electricity prices for the distribution utilities and also those who are already participating as contestable customers under the Retail Competition and Open Access (RCOA).