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Stricter WESM penalties to start in January 2014

Starting January 2014, more stringent penalty measures await offending trading participants in the Wholesale Electricity Spot Market (WESM) – that has been based on Energy Secretary Carlos Jericho Petilla’s marching order to the board of the Philippine Electricity Market Corporation.

“The Secretary said he wants the rules changed, including those on penalties, starting January next year so we have to deliver on that,” PEMC president Melinda L. Ocampo said. PEMC supervises the operations of the electricity spot market.

In last week’s International Conference on Competition in the Power Industry, Petilla announced that “the WESM rules are being fine-tuned”, emphasizing the need for imposition of stronger sanctions against market breaches.

“There are rules in the competition that have been subject to abuse, so there are a few things that we have to fine-tune,” the energy chief stressed.

Given last week’s skyrocketing prices at the WESM, Petilla was obviously vexed that he ordered an immediate investigation of the alleged “collusive acts” of some power plant owners and operators. “If there are parties colluding or violating market rules, I want them penalized,” he stressed.

The energy chief reminded power industry players that a competitive market “is not only about profits, but also about public service.”

Petilla further averred that after seven years of WESM’s “birth pains”, it is already high time “to look at the rules that we have and if these are actually being violated.”

The participant-power generators are not the only ones targeted for penalty impositions, but also the other market players, such as the retail electricity suppliers (RES); as well as system operator National Grid Corporation of the Philippines (NGCP) primarily on concerns relating to dispatch calls on capacities.

NGCP executives have not denied “acts of omission” on its ancillary services procurement mandate, admitting that the company scrambled at times on the scheduling and dispatch of power facilities and may have been oblivious of the technical constraints of the generating units.  It reasoned out though that such had been part of its “struggle to keep pace with the complexities” of the restructured power market.

So for all parties to start on “equal footing,” NGCP has been proposing “moratorium on penalties” until the enforcement of the revised WESM rules.

The company propounded that even the penalties imposed against the power generators by the WESM’s market surveillance committee (MSC) be written off for now, just so the rules “would treat everybody fairly.”

Moving forward, NGCP said it will improve on its system operation (SO) function and will adhere to mandates on reporting all of its dispatch instructions, including last-minute schedules for ancillary services or must-run units, so the industry can be properly apprised as to which party has been committing market breaches.