IEMOP plans to stop collecting WESM market fees

Published August 17, 2022, 3:57 PM

by Myrna M. Velasco

The Independent Electricity Market Operator of the Philippines (IEMOP), the operating entity of the Wholesale Electricity Spot Market (WESM), is planning to stop collecting market fees from trading participants if no coordination could still be established with the board of the Philippine Electricity Market Corporation (PEM Board), the governance body of the spot market.

“We will be constrained to stop collecting market fees for the July 2022 billing period should we fail to receive clear instructions and authority from the PEM Board on the matter,” said IEMOP Chairman Ralph A. Villanueva in a letter to the PEM Board on Aug. 16 this year. He emphasized that “to date, we have yet to receive any response from the PEM Board as regards our request.”

Villanueva further reminded PEM Board Chairman Noel V. Aboboto that the matter was already raised to them in four separate letters that were sent on June 21, July 19, July 22 and August 9 this year.

But while waiting for a reply and direction from the PEM Board, Villanueva indicated that IEMOP “shall continue to collect the market fees for the WESM as a matter of right and obligation under EPIRA (Electric Power Industry Reform Act) and its IRR (implementing rules and regulations).”

The EPIRA or Republic Act 9136 is the law that had cast the overall enforcement of restructuring in the country’s power industry – and that included the establishment of the WESM.

The IEMOP chairman noted that they are primarily leaning on a decision rendered by the Supreme Court last March declaring that “IEMOP is now the independent market operator (IMO) or the market operator of the WESM.”

Taking cue from that, Villanueva further cited the SC ruling’s stipulation that IEMOP is now the entity “which has the right to recover the cost of administering and operating the WESM through a charge, or the market fees, imposed on all market members, subject to the approval of the ERC (Energy Regulatory Commission).”

With this development, Villanueva said “We are likewise hopeful that the issues hounding the IMO transition will be laid to rest in view of the clear pronouncement of the Supreme Court in its decision,” adding that “we remain open to discussion with the PEM Board to achieve stability and certainty of WESM operations and governance.”

In the decision of the high court promulgated in March and issued to the parties-in-interest this week, the court issued writ of mandamus “to compel the ERC to perform its duties of acting upon and proceeding with the process of approval or disapproval of the market fees application filed by IEMOP, and to accord IEMOP all the rights and authority of the market operator of WESM, in accordance with the EPIRA and the relevant rules and regulations.”

The market fees being collected from the WESM trading participants are being utilized to cover the cost of operations of the electricity spot market and to upgrade and expand its market management system utilizing information technology software and hardware to support its trading operations.

There is already an integrated power spot market for the Luzon and Visayas grids while the proposed WESM for Mindanao has been targeted for commercial operations for a long time already.