DoE to restructure WESM operator

The Department of Energy is looking to restructure the Philippine Electricity Market Corp. (PEMC) before yearend in order to finally privatize the operations of the wholesale electricity spot market (WESM).

Energy Secretary Jose Rene D. Almendras explained that the DoE wanted to reformat the existing board of the PEMC so that it will serve as the so-called independent market operator (IMO), instead of bidding out to third parties the management of the WESM operations.

According to Almendras, the PEMC board agreed not to bid out the IMO as it may only hike existing rates, which may eventually translate to higher prices at the WESM.

Instead, the board will be reconstructed through a process of selection criteria, to have equal representation from power generators, private distribution utilities and electric cooperatives—but minus government presence.

PEMC is then eventually envisioned to run as a nonprofit corporation, with representatives from concerned sectors equally represented in the newly formed board that will handle the operations of WESM at cost, he added.

At present, the PEMC serves as the interim market operator for WESM, a trading platform where a portion of Luzon’s electricity requirement is sourced. However, the PEMC board still has representation from the DoE, something that Almendras wants to be removed to make it truly independent.

The privatization of the IMO was seen crucial as it is expected not only to lead to improvements and efficiency in the system, but will also be able to entice more investors and companies to participate in the WESM. By having more players, it is expected that electricity prices will be more competitive.

Under the Electric Power Industry Reform Act of 2001, an independent private sector entity or the IMO should have been appointed one year after WESM’s implementation, effectively privatizing the operations of the WESM.

The WESM became operational in June 2006.