Electricity bourse ready to operate in the Visayas

The Philippine Electricity Market Corporation (PEMC) board recently certified the readiness of the electricity bourse to begin commercial operations in the Visayas in a meeting held February 22 in Cebu City.

PEMC, the governing body of the Wholesale Electricity Spot Market (WESM) Visayas, is expected to forward the endorsement to the Department of Energy, after which, a definite date of the Visayas market launch will be set.

“Now, that we’ve achieved technical readiness, we await advice from the DOE [Department of Energy] on the final launch date in the Visayas,” said PEMC executive vice president Mario R. Pangilinan.

In a statement released by PEMC, it said that the DOE will also take into account the level of competitive arrangements in the Visayas as well as other considerations to ensure that the market functions as intended and that the consumers are protected.

"The generators in the Visayas have all signed up for participation in the market.  However, on the buyer side, there is a lack of direct participation due to recurring issues on the existing power contracts,” said PEMC president Lasse A. Holopainen.

Holopainen added that although in some ways this may be beneficial in the short-term as this ensures the protection of consumers from price spikes during the early days of the market.

Once the WESM begins in the Visayas, all energy will be traded through the market management system which should lead to more efficient use of capacity as well as giving the appropriate investment signals for more power generation capacity at the right time.

PEMC announced last month that it has to postpone its original date launch of the WESM Visayas, which was originally slated January 26, 2008, to allow further time for participants to complete registration and test their market trading interface systems.

The WESM began Commercial Operations in Luzon in June 2006 and has since contributed changes to the industry. One such significant change was the increase in the privatization program of generation capacities with over P119 billion worth of generation assets privatized since the market started.

"The presence of WESM is encouraging investors to invest in the Philippine Power Sector.  Operation of the Market in the Visayas will ensure the efficient pricing of electricity as well as the security of long-term power supply," Holopainen added.

The establishment of WESM is expected to create a more robust energy industry by encouraging competition and efficiency among industry players. 

The Electric Power Industry Reform Act (EPIRA) of 2001 mandated the establishment of the electricity spot market to set the price of electricity thru market forces, free from the restrictions of regulation. 

Transparency in market operations transactions ensure the reflection of the true cost of electricity and improve the delivery of power supply to the end-users.

If WESM will start its commercial operation, it allows buyers and suppliers to trade electricity as a commodity and will invite interested power facility investors to open plants, where it is needed, as the electricity spot market will show the real demand and supply of power.