The Independent Electricity Market Operator of the Philippines (IEMOP) has deferred to middle of next year the commercial operations of the new market management system (NMMS) or the modified trading platform of the Wholesale Electricity Spot Market.
The spot market’s transformation to a 5-minute trading interval was originally scheduled to go ‘live’ by December 26 this year, but IEMOP said it will need to address several equation adjustments in price calculations that had been raised by the Energy Regulatory Commission.
Engineer Robinson P. Descanzo, chief operating officer of IEMOP, indicated that the market readiness steering committee (MRSC) of the Philippine Electricity Market Board had recommended the six-month extension to provide a time leeway in addressing the concerns raised by the industry regulator.
At the same time, any adjustments in the equation or formula for the WESM’s effective spot settlement price (ESSP) must also need to go through new round of audit or certification by third party auditor Australian firm IES.
The pricing equation, in which the ERC wanted some adjustments on, would include those on: price substitution methodology (PSM), administered price (AP); and the secondary price cap.
“Since the equation had been revised on how to derive prices for special scenarios (in the spot market), that shall be quoted in the software again then it will also need to go through another round of audit,” Descanzo explained.
He qualified that the commitment of IEMOP to complete the enhancements will be until November this year; and the testing for the auditor shall start early December.
“Their estimate to complete the audit testing will be roughly 2-3 months, so that will be until February-March, so those are the preparations that we needed to work on that’s why the December target was moved to next year,” the IEMOP executive stressed.
Once the new trading platform in the WESM will go live commercially, traded capacities will also shift to one pricing system, instead of the two-tiered pricing that integrates both ex-ante price (based on forecast demand) and ex-post price (based on actual demand) which reigned as a feature of the WESM trading system since its establishment in 2006.
IEMOP also explained that even the traditional nomination of PMin or the minimum stable load of a power plant shall be ditched – and will instead require market participants to compete on the first megawatt that they will trade in the spot market.
The timing of the NMMS commercial debut next year is likewise seen coinciding with the long targeted operations of the proposed electricity spot market in Mindanao.
With the new information technology (IT) trading platform of the WESM, IEMOP executives have opined that this will stimulate more intense competition among industry players that in turn could result in lower electricity rates for the consumers.