The Independent Electricity Market Operator of the Philippines (IEMOP) admitted that it is “clueless” whether investigations had been done by the market surveillance committee (MSC) of the Wholesale Electricity Spot Market (WESM) or the regulators on the recurrent price spikes that happened during the summer months.
When asked during a press briefing if the WESM had observed any “extraordinary” or “beyond the usual” trading behavior of the generation companies (GenCos) that have been trading in the spot market, IEMOP Spokesperson Rhea Caguete repulsively replied to a media query that “we don’t look at market collusion” and that the market operator just sticks to its routine of observing trends and submitting data on a daily and weekly basis – primarily to the Department of Energy (DOE) and Energy Regulatory Commission.
Caguete is also unaware or largely uninformed how an investigation process shall be carried out by the MSC or if coordination is being done with the WESM operator, particularly on specific triggers as to when data or reports are brought to MSC’s attention for possible investigation – especially if there are series of price spikes when supply gets extremely strained.
“We cannot provide that data whether they are doing investigation or not because on the market operator side, we are just submitting data,” the irate IEMOP spokesperson stressed.
In other power spot markets globally, the MSC or their market surveillance entities act as the first line of “market policing” for any suspected anti-competitive behavior or allegations of market collusion and pricing play of the trading participants, so that electricity consumers can be duly protected.
But this is a market weakness that is not getting reinforced even if the WESM has already been operating for 15 years; hence, it remains a nagging puzzle as to which entities have been messing up on their jobs when it comes to probing the recurring allegations of gaming in the market.
In a Congressional hearing, ERC Chairperson Agnes T. Devanadera divulged that even if there had just been two instances of red alerts or rotational brownouts this year, the secondary price cap kicked off 418 times; and 118 instances just happened within April 26 to May 31 period.
A secondary price cap is a cost-cushioning mechanism to consumers and that is being enforced in the WESM if series of price spikes going beyond the primary price cap of P32 per kilowatt hour (kWh) is observed – typically, in line with the prescribed thresholds by the regulator.
On investigation of ‘extraordinary trading incidents’ in the WESM, IEMOP Manager for Corporate Strategy and Program Management Julius Bunyi gave a more straightforward answer to media queries when he qualified that “in relation to the process of MSC in providing investigation, to our knowledge, we have not received any query from MSC.”
He similarly acknowledged that if an investigation had been initiated, it should have been automatic that IEMOP was tapped as a resource person because it has been them submitting data to the MSC, as well as with the DOE and ERC.
Bunyi further explained that in a probe process, “they invite us (IEMOP) as resource person, but definitely we have not received from MSC to act as a resource person on that,” emphasizing then that they are not aware if investigations had really been done or not.
In a related development, Engineer John Paul Grayda, manager for pricing validation and analysis of IEMOP, indicated that the effective settlement price in the WESM for the current supply month as of June 20 had been tamed to P6.53 per kWh versus last month’s heftier level of P7.66 per kWh.
He emphasized that supply availability had likewise been boosted because there have been power plants that were synchronized back to the grid following episodes of forced outages in previous weeks and months.
Grayda specified that average supply had been buoyed to 13,458 megawatts this June vis-à-vis average demand of 11,052 megawatts, entailing then that there is also sufficient reserve in the system.