Spot market operator Philippine Electricity Market Corporation (PEMC) has secured additional budgetary leeway of P108.736 million following the Energy Regulatory Commission’s approval of its outlay for the enhancement projects set at the market management system (MMS) of the Wholesale Electricity Spot Market.

This will slightly drive up market transaction fees to be paid by WESM participants to P0.0169 per kilowatt hour (kWh) from P0.0144 per kWh. The budgetary adjustment has been based on PEMC’s original application lodged with the Commission for transaction fees covering regulatory years 2009 to 2011.

The ERC emphasized though that recovery for this additional budget shall only be confined to 2009 transaction fees.

The MMS enhancement project will enable the WESM to keep pace with technological advancements in electricity spot market operations, primarily “to address obsolescence, upgrading of the MMS efficiency, and/or addressing the growing need of market participants for timely information.”

The ERC originally approved P622.868 million budget for PEMC this 2009, but the market operator indicated this is “insufficient to cover its MMS enhancement projects and loan repayment.” The loan repayment bid though had been ruled to be the subject of a separate application.

In granting its motion for this additional budget, the regulatory body noted that it primarily considered PEMC’s need for immediate cash to initiate MMS enhancement projects, given realities that accessing commercial loans as an option may involve longer and more tedious processes.

However, the Commission rebuffed the spot market operator’s arguments that the drop in its sales would prevent it from realizing its approved budget for 2009.

In the same ruling though, the ERC denied PEMC’s supplemental petition for another additional budget of P162.931 million, supposedly for cost adjustments in the MMS enhancement project based on quotations submitted by turnkey contractor Asea Brown Boveri.

The regulator noted that, since that particular amount was not part of the original calculation in PEMC’s original filing for 2009-2011 transaction fees, this cannot be automatically acted upon by the ERC as this may eventually raise legal questions.

“It must be emphasized that the inclusion of the said additional budgetary amount for the MMS enhancement project at this juncture suffers from legal and procedural infirmity,” the ERC stressed.

Nevertheless, the regulator indicated that PEMC is not prevented from filing a separate and independent application to cover such additional budgetary claim.

It was culled that ABB’s adjusted cost estimates for WESM’s MMS enhancement came later in December 2008. The final numbers rolled amounted to P315.211 million as compared to PEMC’s original estimate of P152.280 million.