Trial run for power reserve market begins

MANILA  -Trial operations for the power reserve market commenced on Monday after the Department of Energy (DOE) directed the Independent Electricity Market Operator of the Philippines (Iemop) to lead the program that would help boost the country’s ancillary services.

In an advisory released on Monday, the DOE said Iemop had completed preparatory activities, such as ensuring the readiness of its market systems, on June 13.

The only missing components to fully begin reserve market operations is the Energy Regulatory Commission’s (ERC) approval of the price determination methodology (PDM) and the conduct of the trial operations program (TOP).

“In anticipation of the eventual approval by the ERC of the PDM, the [market operator] is directed to commence the TOP by 26 June 2023,” the DOE said in its advisory.

The PDM will dictate the pricing mechanism and settlement for the trading of power reserves in the Wholesale Electricity Spot Market (WESM).

The reserve market will allow the trade of power reserves or ancillary services in the WESM and help increase electricity supply that is crucial during power interruptions.

According to the DOE, the TOP is a “nonbinding exercise” for reserve market participants to test all market systems for registration, scheduling, dispatch and pricing, metering, cost recovery and settlement.

For its part, Iemop confirmed that it had issued an advisory on Monday to all generation companies accredited as ancillary service providers that they were mandated to register in the WESM and participate in the three-month trial run.

The reserve market is set to be launched on Sept. 26, according to Iemop.Earlier this year, ERC chair Monalisa Dimalanta said the reserve market would be able to determine the “actual amount of power reserves we have, as well as how much reserves we will need to prevent blackouts.”

She added that it would help entice investors to build additional power plants if there is minimal trade observed in the market.“High power demand when there is low supply triggers higher prices. Through the reserve market, we can increase the power reserves we currently have and therefore lower the price of electricity,” Dimalanta said in March.

In a text message to the Inquirer on Tuesday, Dimalanta said the PDM would likely be approved within July, as the regulator had just concluded public hearings.

Iemop and the Philippine Electricity Market Corp. (PEMC) in January filed a joint application seeking the ERC’s approval of amendments on PMD rules in the WESM.

Among the proposed changes is the removal of spot reserve recovery charges from trading participants’ settlement amounts, as the National Grid Corp. of the Philippines (NGCP) is designated as the sole buyer of reserves.The NGCP is required by law to provide sufficient ancillary services either through competitive spot market trading or entering into contracts.

Both Iemop and the NGCP, as the grid operator, are tasked with formulating the guidelines and procedures for the implementation of the TOP.

The DOE also required Iemop to submit weekly results of the trial run, while PEMC was directed to conduct an audit of the software enhancements to the market systems as part of preparations for the commercial operation of the reserve market. INQ