A GROUP of businessmen and professionals in Cebu is calling on the government to immediately implement the Wholesale Electricity Spot Market (WESM) to address the power shortage in the Visayas.

In a one-page resolution sent to Sun.Star Cebu yesterday, the Cebu Business Club (CBC) pointed out that the Philippine Electricity Market Corp. (PEMC) has already established the infrastructure for the operation of WESM in the Cebu-Negros-Panay (CNP) grid.

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“The implementation of WESM allows unutilized and hidden power capacities to be freely traded, thereby mitigating the current power shortages,” said the business group.

WESM, which was supposed to start in the Visayas in February 2008, ensures that the price of electricity bought through its facilities is market-based. At present, the WESM covers only Luzon.

“We are advocating the immediate implementation of WESM. There are no obstacles remaining, but it seems the Department of Energy is stonewalling,” said CBC president Dondi Joseph in an email.

The business sector in Cebu has been expressing its belief that the WESM’s operation in the region will help ease the power crisis in the Visayas.

The power situation in Cebu and in the entire CNP grid has been described as “critical,” with supply levels falling short of demand. In Cebu alone, the demand for power grows at an average rate of five percent a year. At the end of 2008, power reserves had reached zero.

CBC said in its resolution that all WESM participants—“distribution utilities (DUs), aggregators, major loads, and independent power producers”—were ready to commence trading as early as February 2008.

The group added that the existing bilateral power agreements between DUs and IPPs will not be immediately affected by WESM, ensuring that electricity prices to the average user will remain stable.

“Failure to address power shortage will hamper the growth of Cebu’s economy and directly affect employment and the growth of neighboring provinces. Reliable power is an absolute requirement for attracting and retaining foreign direct investors and developing local businesses,” CBC said.

Temporary solution

The current power shortage will be addressed temporarily by the operation of the 246-mw coal-fired Toledo power plant by the Cebu Energy Development Corp. this year and the 200-mw plant of Kepco-SPC Power Corp. in Naga town scheduled to be completed by 2011.

CBC’s recent resolution was the product of its summit on economic development, environment protection and poverty alleviation held last Dec. 4 at Marco Polo Plaza

Cebu.

The resolution also called on the National Economic and Development Authority and the Department of Energy to immediately conduct a formal study on Cebu’s power requirements for the next 15 years relative to the economic growth of Cebu and its neighbors.

CBC also proposed the creation of a council under the Regional Development Council to be composed of stakeholders from business, civil society, academe, the environment sector and local government units. This council would focus on energy options, including “realistically available renewable or environmental-friendly energy sources.”

The resolution was signed by the board of trustees of the CBC composed of Dondi Joseph, Bruce Chiongbian, Sabino Dapat, Perry Fajardo, Vivencio Lacustales, Roy Lotzof, Jose Soberano, Philip Tan and Roger Lim.

Earlier, Cebu Energy Development Corp. president Jess Alcordo had said in a press conference that he disagreed with the Department of Energy’s reason that WESM is not yet applicable in the Visayas because there is no excess power here.

He said government officials were hesitant to put WESM in the Visayas because they believed the rates would increase.

But Alcordo said this was not true.

The PEMC, however, in a newspaper report earlier last month, said WESM will be installed within the next two years yet because it is still waiting for the power supply situation in the Visayas to normalize.

It expects prices to increase when the WESM is put in place. To avoid this, it will implement the Visayas Supply Augmentation Auction scheme to address the deficit before going full blast with the WESM.