Friday, March 14, 2008 Electricity market to hold mock trade to prepare participants
FIVE days prior to its commercial operations in the Visayas, the Wholesale Electricity Spot Market (WESM) will conduct this month a “free-for-all bidding” for all local power trading participants.
“This will enable trading participants to experience actual market trading environment through implementation of a market-based scheduling but with minimal impact to the commercial operation of the WESM Luzon,” said Philippine Electricity Market Corp. (PEMC) executive vice president for market operations Mario Pangilinan.
PEMC president Lassie Holopainen said the “mock trade” —among WESM customers power generators, power distribution utilities and rural electric cooperatives— will help market participants “develop strategies in the competitive power environment.”
PEMC, which runs WESM, announced last Tuesday that it is awaiting the approval of the Department of Energy (DOE) for the commercial operations of WESM Visayas.
Last January, the PEMC board announced that it has deferred the Visayas commercial operations originally set last Jan. 26 and extended the run of WESM’s live dispatch operation “to give participants more time to complete registration and test their market trading interface systems.”
“We believe we are now ready to go live. The trial operations in the Visayas (that began in 2005) is the longest in the market worldwide,” Holopainen told a press conference during the WESM Visayas launch update at the Cebu City Marriott Hotel last Tuesday.
To effectively run the Visayas operations, he said, the DOE has commissioned a third party consultant to assess the WESM system.
Holopainen said the PEMC understands local WESM trading participants will come as “indirect members” once the commercial operations begins this month.
This is due to existing bilateral contracts between power distributors and power generators, which cover 96 percent of the 1,065-megawatt (MW) average peak demand in the Negros-Panay-Cebu grid.
Under Republic Act 9136 or the Electric Power Industry Reform Act, distribution utilities are required to get at least 10 percent of their supply from WESM.
However, Holopainen said for the short run, WESM Visayas will have to contend with the four percent uncontracted power supply- estimated to reach 50 megawatts during peak hours- once commercial operations begin.
“Later, they will realize it will not be beneficial for them to stay as indirect participants. It will be better for them to be flexible, to be able to trade,” Holopainen said, adding that “at a certain point” the 10 percent requirement for WESM will be strictly enforced on the power industry players by policymakers.
Still, Holopainen is encouraging WESM Visayas traders to become indirect participants in two to three years so as not to expose their respective customers to price volatility. (MMM)
