By Myrna M. Velasco
The Energy Regulatory Commission (ERC) has approved the application of Independent Electricity Market Operator of the Philippines, Inc. (IEMOP) for a new loan that it could utilize to refinance funding for the establishment of market management system (MMS), or the information technology-enabled trading platform of the Wholesale Electricity Spot Market (WESM).
ERC logo(Photo courtesy of www.erc.gov.ph)
The original filing with the ERC was done through precursor-firm Philippine Electricity Market Corporation (PEMC), but regulatory imprimatur was granted on having that application substituted by IEMOP following the spot market operations’ restructuring process last year.
In the ERC approval, it was stipulated that the WESM operator had been given authority “to enter into a facility agreement with a commercial bank for a reasonable interest rate to refinance the MMS loan repayment.”
The first loan availed of for the WESM trading platform had been from state-run Power Sector Assets and Liabilities Management Corporation (PSALM) amounting to P816.858 million.
On IEMOP’s loan refinancing bid, the ERC decreed that the market operator can impose additional market fees – to be recouped from trading participants in Luzon and Visayas markets.
The industry regulator added that the costs can be allocated to the specified trading participants “based on their respective utilization of the MMS and collect the corresponding monthly AMF (additional market fees) rate,” within the prescribed billing period.
While in the process of negotiating for a new loan, the market operator has also been allowed to utilize its unused budget and other income for the repayment of its PSALM loan.
The WESM operator’s unused budget amounted to P510.138 million, therefore, that leaves a balance of P306.719 million vis-à-vis the total MMS credit facility of P816.858 million.
The ERC, in particular, has approved an interest rate payment of 5.63 percent on the MMS loan, contrary to the 12 percent interest rate that PSALM had imposed.
“PEMC (as substituted by IEMOP) shall pay PSALM the principal amount plus an interest rate of 5.6323 percent based on the Bangko Sentral ng Pilipinas average lending rates for the past five years,” the power industry regulator has ordered.
Inclusive of the ERC-authorized interest rate, the total balance that IEMOP can collect from market participants would be P323.994 million, which it proposed to be passed on over one year.
“The MMS loan to PSALM was already due and must be settled. Hence, a shorter recovery period of one year is reasonable as it would indeed lessen the amount of interest to be paid redounding to the interest of electricity end-users,” the ERC stressed.