The Philippine Electricity Market Corporation (PEMC), which regulates the Wholesale Electricity Spot Market (WESM), is seeking approval for an additional spot market transaction fees to be slapped to participants of the Renewable Energy Market (REM) to support operational expenses.
In its filing before the Energy Regulatory Commission (ERC), PEMC has applied for a transaction fee rate of P1.76 per megawatt-hour (MWh) or equivalent P0.00176 per kilowatt hour (kWh) for the paper-based trading activities targeted in the RE market.
PEMC said it will require aggregate P52.390 million for the preliminary year of operation of the REM, which is one of the policy measures set forth by the government to stimulate investment appetite in the RE sector.
The ERC has scheduled virtual public hearings on the REM transaction fee petition of PEMC within June 1 to July 20 this year to ensure parties-in-interest are given the floor to present evidence.
In seeking the additional fee, PEMC said it factored in capital expenses (capex) and operating expenses (OPEX) at the phase of the development of the RE Market; as well as the first year of its operations.
“The development cost of the REM pertains to the expenses for the preparatory works, acts and activities that needs to be undertaken by the applicant prior to and for commencement operation of the REM and also includes the assets and equipment,” the company explained.
On the year-one operation of the RE market, PEMC indicated that the costs integrated in the transaction fee application includes “all the governance and RE registrar functions as well as the software modifications required.”
The capex, in particular, covers the “procurement, enhancement, improvement, modification or replacement of assets, including back-up systems, disaster recovery sites, corporate infrastructure, equipment, hardware and software requirements.”
For OPEX, the corresponding costs would include personnel services such as salaries and benefits of personnel to be hired as organic employees of PEMC, being the entity in-charge of registration as well as oversight of the RE market.
The establishment of the RE Market is underpinned by the prescriptions of the Renewable Energy Act and the August 18, 2020 advisory of the Department of Energy (DOE) that casts the transition period for the commercial operation of the REM.
It was emphasized in the ERC application that PEMC’s performance of its responsibilities for the concretization of the renewable energy market, “makes the imposition of the transaction fee crucial in achieving and implementing the mandate of the RE Act and the REM rules.”
As further pointed out, “any further delay on the commencement of the commercial operation of the REM would defeat the objectives of the RE Act of encouraging the stakeholders in the electric power industry and the increase in the utilization of RE through the development of national and local capabilities in the use of RE systems and promoting its efficient and cost-effective commercial application by providing fiscal and non-fiscal incentives.”