Power distributors oppose price determination system-A A +A
Wednesday, October 2, 2013
POWER distributors in Mindanao on Tuesday expressed opposition to what they called as "unfair" system in deciding prices of electricity by the Philippine Electricity Market Cooperation (PEMC).
The Association of Mindanao Rural Electric Cooperative (Amreco) submitted its opposition to Department of Energy Secretary Carlos Jericho Petilla last September 20, questioning the PEMC's price determination methodology (PDM) that will be utilized by the Interim Mindanao Electricity Market (Imem).
"Amreco is not against the implementation of Imem but we are questioning some of its provisions including the PDM that PEMC has filed with the Energy Regulatory Commission (ERC)," said Amreco president Sergio C. Dagooc, who was guest in yesterday's edition of I-Talk at Seda Hotel.
In an order issued last September 4, the ERC approved PEMC's Pricing and Cost Recovery Methodology (PCRM) for Imem, paving the way for PEMC to use the PDM in establishing power rates.
Dagooc said that they are opposing the rule, which states that Imem Day-Ahead Price (Idap) "shall correspond to the highest offer price fully or partially scheduled for the particular Imem trading interval."
For instance, he said that if there are three power generators who will sell extra capacity to the grid, they will determine the Idap for the day it will be sold, they will then nominate this to the National Grip Corporation of the Philippines (NGCP).
"Generator A will say they have 2MW available for tomorrow it will be nominated to NGCP at P5/kwh, then let's say that Generator B and C will also have the same capacity available on the same day but to be sold at P10/kwh and P15/kwh, respectively," Dagooc said, explaining that power distributors have no choice but to pay for the highest rate regardless of which generator they intend to purchase their energy supply.
"If that generator offers P5/kwh, it should remain as it is and not P15/kwh, it is unfair for us," Dagooc said.
In a press release by ERC, other features of the PDM are: an Imem's Idap for energy supply which is being determined day-ahead to provide certainty in pricing for the participants; a cap on offers in the market, with the cap to be agreed upon by the DOE and the ERC; a small premium for Imem Resources on changes in dispatch from the Day-Ahead Imem Schedule; penalties for trading participants deviating from the schedule beyond ±3 percent variation tolerance or dispatch instructions of the Mindanao System Operator; and compensation for trading participants for their actual delivery, subject to premiums and penalties, if any.
Dagooc said Petilla has assured him that if they see that the rates in Mindanao have increased due to Imem, they will changed the rules.
In a report by the Mindanao Development Authority on the launch of Imem on September 26, Petilla was quoted saying: "Imem is not here as a final institution with final rules. It will react according to the needs of the electricity market rather than put out final procedures that cannot be changed,"
Under the Imem rules, all distributory entities are mandated to become members and to participate in the determination and nomination of price for Imem trading intervals. However, they are not mandated to but electricity but are mandated to participation in "nominating" the amount of megawatts to be sold.
Amreco has a total of 33 power distributors in Mindanao, 27 who are in the grid and six who are Small Power Utilities Group.
Published in the Sun.Star Davao newspaper on October 02, 2013.