The operator of the Wholesale Electricity Spot Market (WESM) has tossed to the Energy Regulatory Commission (ERC) the power to investigate the electricity price spikes registered during February 2010 supply month which became the subject of complaint jointly lodged by Manila Electric Company and Dagupan Electric Corporation.

In a letter sent by Philippine Electricity Market Corporation (PEMC) president Melinda L. Ocampo to ERC chairperson Zenaida G. Cruz-Ducut, she noted that PEMC “refrains from taking cognizance of this issue and seeks the guidance of the Honorable Commission in the resolution of the concerns raised by the DECORP and Meralco on the level of competition in the market.”

In the letter-complaint of the two power utilities, they raised concerns about the drastic price spikes in the spot market during the questioned billing month – covering the period from January 26-February 25, 2010.

Their request for investigation on market transactions then were focused on two grounds: One, on the level of competition in the market; and two, the possible occurrence of anti-competitive behavior and/or market power abuse.

The market operator, however, has thrown into the regulator’s jurisdiction to “step and redress” anti-competitive behavior in the market if it establishes anything of that sort being committed by trading participants.

PEMC particularly cited Section 45 of the Electric Power Industry Reform Act (EPIRA) as legal basis for ERC “to monitor and penalize any market power abuse during the same and succeeding periods, for which there are indications that the situation in February 2010 continues to persist.”

Given the circumstances during such tight supply month, Meralco and DECORP also asked PEMC “to look into the possibility of declaring a market failure and the application of administered prices for the February 2010 billing period.”

But Ocampo noted in her correspondence to the regulator that declaration of market failure “is not legally tenable”, stressing that “the capacity of the sellers is less than the demand of the buyers.”
On that basis, PEMC is likewise seeking the ERC’s confirmation “of the lack of legal basis to declare market failure” for the said billing month.

The two distribution utilities, on their part, rapped that “the WESM market indices (referring to pivotal supplier index and price setting frequency index) point towards a skewed structure of the market during the February 2010 billing period.”

They then added that “it is imperative that the performance of the market investigated to verify the significant drop in the level of competition as signaled by the indices.”

As DUs, they further noted that “we strive to work with the rest of the industry to ensure that the WESM becomes truly a competitive, efficient, transparent and reliable market for electricity.”