A “special settlement arrangement” is being firmed up for the trading of capacity in the Wholesale Electricity Spot Market (WESM) for the scheduled energization of the P52-billion Mindanao-Visayas Interconnection Project (MVIP), or the link-up of power grids in the two islands as concretized by the National Grid Corporation of the Philippines (NGCP).

In a briefing with reporters, Engineer Robinson P. Descanzo, chief operating officer of the Independent Electricity Market Operator of the Philippines (IEMOP), noted that a differentiated pricing settlement will have to be formulated by the Energy Regulatory Commission (ERC) as system operator NGCP already kicks off the energization and testing of the interconnected Visayas and Mindanao grids.

He affirmed that based on discussions of the relevant industry stakeholders – including that of the Department of Energy (DOE) and the ERC – at least 45 megawatts of capacity may be shared between the two grids at the duration of the MVIP testing phase; and such capacity may be traded in the spot market.

The IEMOP, being the operator the WESM, follows an ERC-approved price determination methodology (PDM) for transactions done through the spot market, both in the Luzon and Visayas markets.

But Descanzo qualified the PDM is only applicable to the commercially operating spot markets in Luzon and Visayas; while the proposed WESM-Mindanao is still at its trial operations period, hence, the PDM cannot be enforced yet for capacities traded in that market.

The alternative rule being thought out then, according to Descanzo, will be for ERC to temporarily mandate a special pricing settlement for traded capacity in the sharing of power supply between Visayas and Mindanao.

“There will be special arrangement how to process the settlements which are equivalent to the megawatts that are exported to Visayas from Mindanao or vice versa during the testing period,” the IEMOP executive stated.

He stressed “that’s what we floated even in two meetings ago with the DOE and the stakeholders. We told them that we should have a special settlement arrangement, so we will not encounter problems eventually on that trading of capacity.”

Descanzo emphasized that based on project status update given by NGCP, the transmission firm had apprised industry players that the initial import of 45MW of power from Mindanao starting this March could already be ramped up to 300MW by June this year.

He admitted though that the level of pricing for the propounded settlement is still up for determination by the ERC, being the industry regulator that has been setting the rates to be charged to consumers across the industry’s supply chain.