ESTABLISHING the Interim Mindanao Electricity Market (IMEM) is not yet “ripe” due to the power shortage situation in Mindanao, said the Association of Mindanao Rural Electric Cooperative (Amreco), the island’s biggest consortium of electric coops.
With this, Amreco, whose 33 member-electric cooperatives account for 1,941,554 residential consumers in Mindanao, called on the government to defer the implementation of IMEM.
IMEM is patterned after the Wholesale Electricity Spot Market (WESM) in Luzon and the Visayas as a means to trade and dispatch power to power distribution companies and cooperatives.
Like WESM, IMEM is deemed to lower the prices of power from its generation plant to promote a climate of competition from power generation operators as it trades power to those who need it.
IMEM is set to take effect on September 26 and will be operated by the Philippine Electricity Market Corporation (PEMC).
Premature
“It is premature and primarily not conducive at this time,” Amreco president Segio Dagooc said.
Amreco said it is quite evident that Mindanao is not prepared for the implementation of IMEM and the possibility to partake in a year’s time, “by then, the requirements might be already contracted, rendering IMEM useless.”
Representative Edgardo Masongsong (1st Consumers Alliance for Rural Energy [1-Care] party-list) said in an email that IMEM is going to be an added burden for the common “tao” (ordinary folk) who will bear the brunt of the high cost of electricity vis-a-vis increases in prices of basic commodities and services.
Masongsong added that based on the initial simulation made by electric cooperatives belonging to Amreco, the power rates under IMEM will increase as much as P5.610 per kilowatt, or an equivalent of 261 percent increase.
Based on the simulations conducted, Mindanao spot market is “an added problem rather than a solution for the consumers.”
Dagooc said the IMEM issue must be elevated to the Mindanao Power Monitoring Committee (MPMC) principal’s meeting, which is threading deep into a sustainable growth and development in Mindanao.
Reliable energy
Amreco said that one essential element to ensure sustainable growth is having a reliable supply of energy.
Mindanao Development Authority (MinDA) chairs the MPMC since it’s not organic to the power sector.
Amreco said it is quicker to achieve policy decision when the decision-makers (agency heads) are present.
Ahead of the IMEM implementation, the Pricing Methodology needs to be reviewed and deliberated appropriately to ensure that such will not be monopolized by the generators, the group added.
The Agus-Pulangi hydropower dams contribute almost 60 percent of the island’s power, while Steag State Power Inc. provides 210 megawatts. Power barges operated by ThermaMarine Inc. also provide peak demand power supply.
Resolve power shortage
Masongsong said the Department of Energy and the PEMC have to address the many issues concerning the IMEM.
“They must be able to guarantee to all electricity end-users that its implementation will resolve the shortage of power in Mindanao and eventually reduce to a great extent, if not totally eliminate, the rotating brownouts which the Mindanaoans continue to experience,” he said.
“It is imperative that they answer all these issues before pushing through with the implementation of IMEM, a copycat of WESM, which has not stopped power hikes in Luzon and Visayas,” Masongsong added.
Masongsong and Amreco opined that implementing the IMEM as scheduled will only undermine efforts to address the so-called Mindanao power crisis.
Masongsong filed in August House Resolution 156, which is calling for the deferment of the IMEM.
But the PEMC earlier asked industry participants to register in IMEM, to alleviate the supply problem in Mindanao.
The electric cooperatives understand that supposedly, the IMEM is designed as a binding day-ahead market where only the uncontracted or unutilized contracted capacities are traded.
The day-ahead price is market-driven and subject to an offer cap to be agreed by the regulator and ERC. However, it appears that the effect of the current IMEM rules could be worse.
Mandatory
The registration in the IMEM is mandatory on all generation facilities within the grid.
PEMC, which also operates WESM, has sought approval of the Energy Regulatory Commission (ERC) on the price determination methodology for IMEM.
The methodology sets the formula and processes for the determination of prices and settlements in the electricity market that Amreco is currently objecting to.
The Amreco requested the DOE through the ERC to defer implementation of the IMEM in order to give the ECs enough time to obtain more Interruptible Load Program agreements that would further reduce their power deficits.
Amreco assailed that if the price determination methodology proposed by the PEMC is implemented, it will tend to result in “excessive” profits (67 percent to 100 percent of the marginal cost) by the grid-connected generators, such as the Southern Philippines Power Corporation, operated by Alsons Corporation, the Western Mindanao Power Corporation, and the ThermaMarine Incorporated power barges operated by Aboitiz Equity Ventures.
PEMC proposed that the implementation of the IMEM should be deferred beyond September 26 to enable the electric cooperatives to lease or purchase modular generating sets or hybrid solar power plants and to enter into agreements for Interruptible Load Programs with customers who own generating plants, Amreco added.