Philippines: Mindanao electric cooperatives say their views on WESM disregarded

Philippines: Mindanao electric cooperatives say their views on WESM
disregarded

Electric cooperatives in Mindanao are opposing the terms under the planned
wholesale electricity spot market (WESM), claiming that their
recommendations during the Department of Energy's (DoE) consultations were
not considered.

In a news conference here Friday, the Association of Mindanao Rural Electric
Cooperatives, Inc. (AMRECO) said one of their main proposals is establishing
an "independent" market that will be managed by local industry stakeholders
and not the Philippine Electricity Market Corp. (PEMC).

The 33-member AMRECO, which accounts for a majority of the electricity
distributors in Mindanao, is also pushing for a lower price cap than the
proposed P32 per kilowatt hour.

Following the posting and call for comments on the draft guidelines for the
Mindanao WESM on its Web site in January, the DoE held consultations in five
major cities in February and early March. The power supply market is
scheduled for launch on June 26.

AMRECO President Sergio C. Dagooc said PEMC officials do not understand and
are not "considerate" of the problems in the energy sector of Mindanao.

"We have experienced that in the Interim Mindanao Electricity Market or
IMEM," Mr. Dagooc said.

He added that the system operator of the Mindanao WESM should have board
members who come from the southern islands' consumer and religious groups,
among others.

AMRECO established the Amreco Power Supply Aggregation Group Corp. in 2014
to consolidate the needed capacity of its members and be able to buy a
bigger volume from the short-lived IMEM that was set up in late 2013.

However, the Energy Regulatory Commission (ERC) ruled that the aggregator
company cannot sign supply contracts as it does not have the legal standing
to cover the financial obligations of cooperatives that fail to pay the
power suppliers.

In late February, PEMC President Melinda L. Ocampo said in a news conference
here that the financial capacity of electric cooperatives remains the
biggest concern in the planned opening of the WESM.

On the price cap, which is the same as the one set under the IMEM, Mr.
Dagooc said the ERC should set a rate per power plant based on the energy
source and allow demand and supply to determine prices.

"Example: this plant has a price depending on technology used, diesel,
hydro... The principle of supply and demand will fix the price," he said.

AMRECO held a workshop here last Friday for industry players, following a
similar activity in Cagayan de Oro City a couple of weeks ago, with the aim
of formulating alternative WESM guidelines that will be submitted to the
DoE.

Mr. Dagooc said they want a "responsive mechanism" that will address the
particular circumstances in Mindanao's power sector.

"Hopefully, the DoE will remove the rules that are not applicable to us and
hopefully insert our rules that will come up during the workshop," Mr.
Dagooc said.

The WESM, which is being implemented in Luzon and the Visayas, is planned
for launching in Mindanao given the expected supply surplus of at least
1,000 megawatts by the end of the year as new power plants come online.

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Link to Original Article:
http://www.bworldonline.com/content.php?section=Economy&title=Mindanao-elect
ric-cooperatives-say-their-views-on-WESM-disregarded&id=142794

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com