Group pushes privately run WESM

A GROUP of private power-plant operators wants the government to let go of its control over the domestic spot market for electricity.

Ernesto Pantangco, Philippine Independent Power Producers Association (PIPPA) president, said the Wholesale Electricity Spot Market’s (WESM) operations should be turned over to an independent market operator (IMO) run by the private sector.

“The operations of the WESM should really be with the IMO, which is supposed to be bid out and ran by private groups. I think this is important and is why we strongly urge the formation of the IMO as soon as possible in order to provide total independence of the market operator [from] any industry participant,” he said.

Created under the Electric Power Industry Reform Act of 2001 (EPIRA), the WESM is a market where power suppliers and customers may trade their requirements, giving them an alternative to bilateral supply contracts.

Electricity prices at the spot market, however, are more volatile, as WESM prices are dictated by market forces as well as weather and power facilities’ conditions.

The WESM, which started commercial operations in Luzon in 2006, is currently run by state-supervised Philippine Electricity Market Corp. (PEMC), whose board of directors is composed of representatives from all the sectors of the industry.

Pantangco said the EPIRA states that an IMO should be in place running the WESM one year after its commercial operations. PEMC’s function should be relegated to monitoring once the IMO takes charge of WESM.

He said international practice showed that private sector-led spot markets tend to improve operations and promote transparency.

An IMO may help keep irregularities at the WESM in check.

To recall, a number of irregularities at the WESM were uncovered since its inception, such as power generators withholding capacities and trading teams manipulating prices, most of which were blamed on state agencies.

“That’s why it’s important to have a private-sector led PEMC—because what happens is that [if it] were purely all government then it [irregularities] would not all come out,” Pantangco said.

PIPPA groups together the country’s independent power producers with a total installed capacity of 9,572 megawatts. Bulk of the private sector’s capacity at 5,837 megawatts, however, is controlled by state-owned National Power Corp. (Napocor) under build-operate-transfer schemes. The remainder of the installed capacity is directly contracted by distribution utilities.

State-run Power Sector Assets and Liabilities Management Corp. trades in behalf of Napocor’s contracted capacities at the WESM.
— Euan Paulo C. Añonuevo, Manila Times