Wholesale Electricity Spot Market trial to start next month

DAVAO CITY (MindaNews / 21 Feb) – The Philippine Electricity Market Corporation (PEMC) will start the trial operations of the Wholesale Electricity Spot Market (WESM) next month before it will start its commercial operation on June 26, 2017, according to Energy Undersecretary Felix William B. Fuentebella.

In a press conference on Tuesday, the energy official said that the Mindanao grid must have the WESM Mindanao in place soon where the distribution utilities and electric cooperatives and power generators can participate in the market, based on the power demand.

Fuentebella said that this is a much faster way to trade power because there is a bidding every five minutes that allows for the buying and selling of electricity, which prioritizes the cheapest energy mix of renewable and non-renewable.

He said the WESM is more efficient than forging of bilateral contracts between the power generators and distribution utilities because those who cannot be served with power based on the contracted capacity will have easy access to the market to immediately fill the power gap.

Fuentebella said that they are not stopping the practice of power contracting with the introduction of WESM to Mindanao grid but rather providing the demand side of the industry with more options how they can access the capacity, most especially the 500 to 600 MW of power surplus.

Romeo Montenegro, director for investment promotion and public affairs of Mindanao Development Authority (MinDA), said that the power contracts have a lock-in period of 25 years but the distribution utilities and electric coops can decide to buy from the market whenever necessary or in situation where there is shortfall.

He said that it took a while for Mindanao to transition into a market because the island was previously wrought with power shortages before power investors put up new capacities such as hydro power plants and coal plants but now it sees a tremendous excess which might not be utilized well without an electricity market.

“We need it, given that Mindanao needs to embrace the phenomenal growth. In the next five to 10 years, we will see more malls mushrooming in Mindanao. There will be new ports, airports, and seaports which will trigger the much needed demand for electricity. We need to prepare for such eventualities to make sure that mechanism is available to adjust to that kind of reality,” Montenegro said.

Even with excess capacities, he added that there are still franchise areas covered by some cooperatives which continue to experience power outages in the absence of bilateral contracts to cover their needs.

“With WESM, even with no contracts, they will be able to access the market. That’s just one of the advantages or importance of the market,” he said. “The WESM opens up the playing field for all types of generating plants. Right now, if you are a small hydro, it’s very hard to compete with the market. As consumers, this opens up an avenue for us to see what’s happening in the industry,” Montenegro said.

PEMC handled the Interim Mindanao Electricity Market (IMEM) before it was suspended in February 2014 due to “system collapse in Mindanao” and the need to “resolve operational and commercial issues and concerns.”

National Grid Corporation of the Philippines (NGCP) spokesperson Cynthia Alabanza said that they will ensure that infrastructure is read and that all improvements on the grid will be in place before the implementation of WESM in June this year.

“There are certain technical issues in connection points but we’re aiming for most expedient and reliable remedies. This takes time to plan but, as it is, the grid is ready to accommodate the market situation,” she said. (Antonio L. Colina IV / MindaNews)