June start of power reserves spot market planned

The Independent Electricity Market Operator of the Philippines (Iemop) plans to begin commercial operations of the spot market for power reserves by June this year, its official said.

“The target of the DOE (Department of Energy) is to pursue the commercial operations [of the reserves market] by June. The price determination methodology (PDM) has to be approved,” Iemop CEO Robinson Descanzo said in a press chat on Thursday.

Iemop, which operates the Wholesale Electricity Spot Market (WESM) or the market for trading electricity, is awaiting the Energy Regulatory Commission’s (ERC) approval on the PDM before integrating the reserve market in the WESM.

Iemop head of corporate strategy and communications department Isidro Cacho Jr. said they already filed their application for the PDM with the ERC.

The regulator will conduct a series of hearings on the proposed PDM between March and April.

According to Descanzo, the pricing formula was tweaked as the policy promulgated by the DOE makes National Grid Corp. of the Philippines (NGCP) as the sole buyer of ancillary services from generation companies.

In essence, the PDM spells out the pricing mechanism and settlement for the trading of power reserves or ancillary services in the WESM.

The new PDM application lodged by Iemop calls for the implementation of the co-optimized energy and reserve market in the WESM.

If approved, this would amend the previously approved pricing mechanism to incorporate provisions relevant to trading reserves, specifically reserve pricing and settlement.

It would remove spot reserve recovery charges from trading participants’ settlement amounts since NGCP is designated as the sole buyer.

A single buyer system shall be implemented for procuring ancillary services through the reserve market or procurement agreements, according to the DOE circular.

NGCP is mandated by law to ensure sufficient ancillary services either via competitive bidding or entering into contracts.
Ancillary services are designed to ensure the uninterrupted transmission of electricity from power plants to electricity end-users.