WESM operator ordered to refund ‘over-collections’

Published July 13, 2020, 10:00 PM

by Myrna M. Velasco

The Energy Regulatory Commission (ERC) has ordered the operator of the Wholesale Electricity Spot Market (WESM) to refund over-collections in market transaction fees (MTFs) that accrued during the 2016-2017 period.

The refund directive was specifically channeled to Philippine Electricity Market Corporation (PEMC) as it was still the WESM operator that time – that was before the market operation function was transferred to spin-off firm Independent Electricity Market Operator of the Philippines.

The market transaction fee is being paid for by trading participants, primarily the generation companies (GenCos) which have been offering their capacities in the spot market.

The refund will in turn be passed on as cost reduction in the bill of consumers – and the implementation shall start in the next billing cycle and must be completed over 12-month span.

“PEMC shall reflect the said refund as a separate line item in the WESM monthly billing statement, and to correspondingly implement the adjusted MTF which should be the net amount to be refunded,” the ERC has stipulated.

As explained by ERC Chairperson Agnes T. Devanadera, “the Commission determined the over-collection by getting the variance between the market transaction fee collected in 2016 and 2017, and the ERC-approved budget of PEMC for the same period.”

She expounded “the resulting variance is the amount to be refunded which shall be apportioned among all Luzon and Visayas participants.”

The regulatory body noted that in evaluating PEMC’s application, it considered several factors, including the stature of the company as a government-owned and controlled corporation.

The ERC said it similarly roped in “the relevance and reasonableness of the actual utilization of each cost component as reflected in the 2016 and 2017 variance report.”

The regulatory body said it used “actual proof of expenditures submitted by PEMC to verify its utilization;” and it commensurably did “comparison of the expenditures of each cost item with industry standards, as well as existing rules and regulations provided for GOCCs.”

PEMC was further directed to submit to the regulatory body its plan of action for the implementation of the refund scheme within 10 days from the receipt of the decision.

Additionally, the ERC had provided PEMC the general guidelines on its future market transaction fee applications.

“We urge the PEMC to strictly observe the general guidelines that we have indicated in our decision for its future market transaction fee applications so that the consuming public, who will eventually bear the costs of the market transaction fee, will not be unnecessarily burdened,” Devanadera stressed.