Year: 2020

The Effective Settlement Spot Price (ESSP) in WESM for November went down by 10.1%  from October 2020 with price of 1.86 P/kWh from 2.07 P/kWh of the preceding month. WESM prices continue to drop in the month of December 2020 as ample generation supply and colder weather conditions persist on top of the implementation of community quarantine in several parts of the country.

During its media briefing, the market operator noted that the price drop trend began in October despite the increase in prices last 27-28 October 2020 due to forced and planned outages brought by Typhoon Quinta.

The consecutive typhoons which entered the Philippines in November also had significant impact in the market results including the decline in System Demand and Supply last 01 to 03 November caused by the passage of Typhoon Rolly. This was then succeeded by the declaration of Market Intervention by the System Operator followed by the imposition of Market Suspension by the Energy Regulatory Commission (ERC) on 12 to 13 November due to the Typhoon Ulysses. Administered Prices were applied in Luzon for the affected intervals. Aside from this, system demand also dipped on a weekday caused by the nationwide celebration of Bonifacio day last 30 November 2020.

As for the System Peak Demand, compared to the figure last year, the results for November 2020 decreased by 4.7% which is equivalent to 580 MW. Up until 10 December 2020, peak demand for December decreased by 4.5% (539 MW) for the same period last year.

On a regional level, Luzon Peak Demand decreased for both November and December 2020 (as of 10 December) as opposed to the same periods last year, equivalent to 4.9% (509MW) and 4.4% (440MW), respectively. Meanwhile, Visayas Peak Demand was reduced by 5.3% (113 MW) for November 2020 and 6.4% (137MW) for December in comparison to the same periods of 2019.

For market transactions, colder weather conditions and frequent occurrence of typhoon in November resulted to a drop in energy consumption by 9.2% which is equivalent to 636 GWh from November 2019. This resulted to an Effective Settlement Spot Price (ESSP) of 1.86 P/kWh for the said month, which is lower by 10.1% from the month of October.

Lastly, as colder weather conditions persist for November, hydro plants’ contribution in the generation mix continued to increase for the month from 6.2% to 8.9% and Wind plants from 1.3% to 2.1%; On the other hand, the contribution of the coal plants reduced from 57.6% to 54.7%.

Throughout the celebration of Christmas and the upcoming new year, IEMOP will continue to provide reliable market services to ensure a bright holiday for every Filipino household.

Paving the way for a progressive market, the Independent Electricity Market Operator of the Philippines (IEMOP) conducted its second Market Participants’ Update (MPU) for the year in fulfilment of its mission of providing sustainable and innovative market solutions and services to its stakeholders and participants.

Similar to its previous MPU and other engagements, the event was conducted online in compliance with the health protocols being implemented to minimize the spread of the COVID-19 virus.

With the theme “Future of the Market”, the participants were apprised of the Market Performance under the general community quarantine and IEMOPs initiatives in shaping the future of the market.

“To date, IEMOP remains involved in the implementation of new policies and regulations as well as in the development of new market mechanisms to foster a more dynamic power market for our participants,” IEMOP President and Chief Executive Officer Richard Nethercott emphasized.

Likewise, the event was attended by Assistant Secretary Redentor E. Delola of the Department of Energy who addressed the participants regarding the milestones and anticipated activities within the energy industry.

Market Operations Highlights

The presentations started with the updates on the market operations highlights which reported generation capacity of around 17,208MW in Luzon and approximately 3,665MW in Visayas. Coal power plants continue to dominate the generation mix with 43% of the total registered capacity versus the remaining sources namely natural gas, hydro, oil-based, geothermal, solar, biomass, wind, and energy storage. The effective settlement spot price (ESSP) for October 2020 is 2,066.74 Php/MWh with 12% of the total energy traded sourced from the market.

IEMOP also noted the on-going development for the interfacing of IEMOP’s Central Registration and Settlement System (CRSS) with the Energy Virtual One-Stop Shop (EVOSS) system. The EVOSS system (https://www.evoss.ph/) under the Department of Energy, which went operational last 24 July 2020, refers to an online system that allows the coordinated submission and synchronous processing of all required data and information, and provides a single decision-making portal for actions on applications for permits and/or certifications necessary for, or related to, an application of a proponent for new power generation, transmission, or distribution projects.

IEMOP is guided by the advisories issued by the DOE and ERC on the implementation of Republic Act No. 11494 or the Bayanihan to Recover as One Act regarding payment extension timelines. By way of compliance with DOE Advisory dated 23 September 2020 and ERC Advisory dated 29 October 2020, IEMOP issued its own advisory on 3 November 2020 providing the guidelines in relation to WESM settlements.

RCOA LOWER CONTESTABILITY THRESHOLD IMPLEMENTATION AND OTHER MARKET DEVELOPMENTS

IEMOP also appraised the participants on the latest development on Retail Competition and Open Access (RCOA).

In October 2020, ERC released a draft resolution prescribing the timeline for the implementation of retail competition and open access. Under the draft resolution, the contestability threshold will be reduced to 500 kW on 26 February 2021. This will be followed by reduction to 100 kW on 26 January 2022, which will also mark the start of retail aggregation. Finally, the draft ERC resolution provides for the implementation of RCOA at the household level on 26 January 2023. A 10 kW threshold, however, is provided in the draft ERC resolution for household-level implementation.

In anticipation of the lowering of contestability threshold, IEMOP has submitted a proposal in 2018 which introduces changes to retail market processes that would enable the Central Registration Body to better handle the significant volume of retail transactions.

Under IEMOP’s 2018 proposal, WESM registration of contestable customers will be optional for those that would opt to purchase part of their requirements directly from the spot market as Direct WESM Members. This set-up is also proposed in cases when the contestability threshold is reduced further given the significant volume of retail transaction. Currently, all contestable customers are required to register in the WESM, most of which are Indirect WESM Members.

In terms of metering, the Retail Rules require interval metering at 5-minute resolution. This requirement is proposed to be relaxed to any metering interval (i.e. 1-hour, 30-minutes, 15-minutes). To minimize the cost of participating in the retail market, use of existing non-interval meters is also proposed when the threshold is reduced further. In these cases, profiling is proposed to be performed by the Central Registration Body to convert the submitted metering data to 5-minute data for WESM settlement.

With the increasing number of contestable customers and to reduce requirements for RCOA participation, IEMOP further proposed in 2018 to streamline the documentary requirements for switching.

IEMOP is currently performing studies to develop detailed proposals for lower threshold implementation. For the 4^th quarter of 2020, IEMOP targets to complete studies on the overall CRB implementation framework, profiling of non-interval meters, and retail aggregation.

Finally, the roster of presentations also includes discussion on the impending commercial launch of the Enhanced WESM Design and Operations (EWDO) which was set to change the landscape of the Philippine Electricity Trading. IEMOP noted that its Market Systems are ready for the implementation of the EWDO. Anent other criteria for EWDO’s commercial launch, IEMOP is continuously working with stakeholders and participants in achieving necessary regulatory and policy approvals as well as the overall market readiness.

“We endeavor to retain our very satisfactory rating based on the PEMC Market Operator Performance Status Report and continuously improve our processes to give participants the service they deserve,” IEMOP’s Chief Operating Officer and Acting Trading Head Robinson Descanzo said.

Together with the participants and stakeholders, IEMOP looks forward to powering a brighter future for the energy market which shall in turn, contribute to the overall growth and progress of the nation.

In the aftermath of the torrential rainfall and strong winds caused by Typhoons Rolly and Ulysses, the Independent Electricity Market Operator of the Philippines (IEMOP) launched the Oplan Bayanihan to provide assistance to those who were severely affected by these consecutive storms.

As a response to the moving plight of their fellow Filipinos, IEMOP took initiative and centralized its response efforts through the Oplan Bayanihan wherein its Board of Directors, Management, and employees sent their donations, both in cash and in kind, to help rebuild the lives of the families affected by the typhoons.

Through the generosity and cooperation of the IEMOP management and staff, the initiative raised a significant amount which was donated to the local government units of Cagayan and Catanduanes. Cash donations were also given to private entities such as the Project Sunshine, which aids those living in the evacuation centers in Cauayan, Isabela, and the Alfonso Maria Fusco Orphanage in Catanduanes.  Likewise, a portion of the donations were used to purchase relief goods including facemasks and face shields which were distributed last 19 November among the affected families in San Mateo, Rizal.

As the Philippines moves forward from the disastrous effects of the pandemic and these typhoons, IEMOP remains vigilant in extending assistance to its fellow Filipinos who are most in need of help during these circumstances.

As lower temperatures and rainy days occur over the Philippines, demand for electricity dampened. For the first half of October, the system peak demand decreased by 5.4% or 696 MW compared with the 2019 level.  This resulted in market prices in the Wholesale Electricity Spot Market (WESM) for the 1^st half of October to decline to 2.19 P/kWh

On a regional level, Luzon Peak Demand is at 10,303 MW while Visayas Peak Demand was recorded at 2,008 MW.

Supply generally remained sufficient, although some price spikes were encountered on the first week of October as a result of the planned outage of the Leyte-Luzon HVDC interconnection, which limited the flow of power between the Luzon and Visayas grids.

September 2020

For September, the effective spot settlement price increased to 3.88 P/kWh and is largely attributable to the occurrence of price spikes as generator outages affected the supply levels.

Supply levels started to decrease last 04 September, thereby depleting the margin in Luzon and Visayas with several generating plants that are de-rated, on scheduled maintenance and on forced outage. Largest capacity on outage of 2,945 MW was recorded on 07 September, of which 1,752 MW were planned outages while 1,194 MW were forced outages. The thin supply margin resulted in an increase in market price with the Load Weighted Average Price (LWAP) reaching as high as 36.20 PhP/KWh for a single interval.

The System Peak Demand exceeded its 2019 peak demand for the same month with September 2020 having a level 1.3% or 163 MW higher than the previous year. Delving further, Luzon Peak Demand reached 10,563 MW in September, higher than the 10,260 MW value recorded during the similar period in the previous year.

Overall, the generation mix was dominated by coal plants which provided 58.4% of the energy requirement followed by natural gas plants at 21.1%, while geothermal plants contributed 11.3% and hydro plants provided 5.2% of the total generation. The remaining balance were contributed by the other renewable energy plants (Wind – 0.5%, Biomass – 0.9% and Solar – 1.5%). Wind energy generation increased to 35 GWh for September from 33 GWH in August and 13 GWh in July 2020.

Market Readiness

IEMOP has successfully completed its preparations for the Enhanced WESM Design and Operations (EWDO) on 30 September 2020. With the completion of the critical performance testing and fine-tuning activities, the New Market Management System (NMMS) and the Central Registration and Settlement System (CRSS) are now ready for commercial use. This completes the preparations of IEMOP for the Go-Live, which also included the achievement of the reliability standard for the market systems, software audit certification for the new market systems, deployment of enhancements, continuous availability of the market interfaces, conduct of trainings, and the implementation of the parallel operations program (POP).

Other prerequisites for full commercial operations are the ongoing policy and regulatory approvals, Market Participants Readiness, and the ongoing SO Security Assessment. While we endeavor to have the Go-Live on 26 December 2020, this is still subject to the approval of the Department of Energy (DOE).

Cognizant of the importance of nurturing the youth of today towards building a brighter future for the nation, IEMOP launched its OPLAN e-SKWELA campaign – an initiative which aims to empower the next generation of industry leaders by enabling access to quality education amid the COVID-19 pandemic. As such, IEMOP segregated company laptops which are no longer used for its market operations and donated them to the students from the Philippine Science High School (PSHS) System in Quezon City who have limited access to technology for their online learning activities.

To further amplify the result of this initiative, IEMOP also sought the support of its employees through their contribution of new or used gadgets such as laptops, tablets, and other online learning-related accessories. Meanwhile, IEMOP employees responded by raising funds to purchase Android tablets and other gadgets for deserving students.

On 14 October, IEMOP successfully turned over 21 laptops and 24 tablets donated by the IEMOP Board, Management and employees to PSHS – represented by Mr. Rod Allan A. De Lara, Deputy Executive Director, and Ms. Lilia T. Habacon, Executive Director. Alongside this, essential gadget accessories were also given to PSHS on that day.

In the coming days, IEMOP will continue with its thrust to empower young Filipinos in order to further contribute to the creation of a better, brighter, and more inclusive future for the Philippines.

The Independent Electricity Market Operator of the Philippines (IEMOP) achieves another milestone as it marks its second year of service as the Independent Market Operator (IMO) of the Wholesale Electricity Spot Market (WESM).

Incorporated last 2018, IEMOP commenced with the WESM operations on Sept. 26 of the same year pursuant to the Electric Power Industry Reform Act of 2001 (EPIRA). Since then, IEMOP has been providing expert market solutions and services in line with its vision to be a world-class service organization committed to provide excellent and reliable market management.

Alongside this, IEMOP continues to be in constant coordination with its participants and stakeholders by conducting engagement meetings to apprise them on the latest developments within the industry.

During its monthly media briefing, IEMOP gave a detailed situationer on the market supply, demand, and transactions in the WESM as well as updates on the Enhanced WESM Design and Operations that is set to Go-Live this December 2020.

Market Operations

Supply margin continued to be sufficient for the month of August 2020 resulting to an average price of 2.08 P/kWh. As requested by medical groups, the Modified Enhanced Community Quarantine (MECQ) was again implemented in the National Capital Region (NCR), Bulacan, Cavite, Laguna and Rizal from the period of 4-18 August 2020. This resulted in a 696 MW decrease in Luzon’s peak demand during its first week. The demand level for the following weeks continued to be relatively low given the two consecutive long weekends due to the commemoration of the Ninoy Aquino Day and National Heroes Day.

Beginning Sept. 4, 2020, a decrease in supply level was observed with several generating plants going on scheduled maintenance, a number of notable plants on forced outages, and capacity deration of some power producers. Highest outage of 2,945 MW was recorded on Sept. 7, 2020 on which 1,752 MW are planned outage while 1,193 MW are forced outage.

With the outages that transpired, the average market price of about 3 PhP/KWh saw a spike in prices beginning Sept. 4 2020 reaching as high as 36.11 PhP/KWh average during a single interval. In total, there were 31 trading intervals with market clearing prices higher than 10.00 PhP/KWh for the period of Sept. 4 to 13, 2020. Despite the occurrence of price spikes on the said period, the average price still amounted to only 3.64 PhP/KWh as of Sept. 13, 2020.

The aggregated Luzon and Visayas (system) peak demand of 12,586 MW on 08 September 2020 was the highest demand recorded since July 2020. At the onset of September, the Luzon peak demand was noticeably increasing with peak demand of 10,563 MW on 1400H of Sept. 8, 2020. Meanwhile, the peak demand in Visayas of 2,099 MW occurred on 1400H of Aug. 26, 2020 with similar levels observable in the other weekdays. On a regional level, the Luzon Peak Demand of 10,563 MW exceeded its 2019 peak by 3%.

In comparison to the figures last year, the System Peak Demand generally decreased in the prior months, but it has exceeded its 2019 demand levels during the month of September 2020 by 1.3% or 163 MW higher.

Enhanced WESM Design and Operations

IEMOP’s ongoing “Fast-Forward to Five: Enhanced WESM Design Full Parallel and Trial Operations Program” campaign continues on as it caps off another round of focus group discussions held last Aug. 27 to discuss the issues, updates and next activities in time for the target date.

In the remaining months before the Go-Live, IEMOP continues to work hand-in-hand with the Trading Participants by addressing the various issues and concerns they have encountered during their participation in the POP and TOP.

Following the official launch of the Enhanced WESM Design Parallel Operations Program: Fast-Forward to Five Campaign and the conduct of Market Participants’ Update: Sustaining Momentum, the Independent Electricity Market Operator of the Philippines (IEMOP) continues to deliver efficient market management and services despite the ongoing implementation of the community quarantine in various areas in Luzon and Visayas. Through its utilization of online platforms, the Market Operator remains in constant coordination with its participants and stakeholders as it apprises them on the market results of the Wholesale Electricity Spot Market (WESM) as well as the latest developments within the power industry.

MARKET OUTCOMES

Given the implementation of the Enhanced Community Quarantine (ECQ) in some areas, the system demand dipped during the period 16 March to 15 May 2020 due to the limited operations of establishments. During this ECQ period, the lowest system peak demand recorded 10,033 MW, which occurred in April 2020. This was a 24% reduction from the peak demand level of the previous month. The average price during the ECQ period was only 1.55 P/kWh because of the ample supply margin.

The system demand rose at the onset of June due to the transition to General Community Quarantine (GCQ) of the other areas from ECQ. However, supply margin levels tightened at the earlier part of the month due to natural gas supply restrictions and some major plant outages which triggered several high prices that resulted in a monthly average price of 3.19 P/kWh for June 2020.

Moving forward, an adequate supply margin was observed during the month of July which resulted in an average price of 2.08 P/kWh. There was a slight increase in the supply levels at the start of the billing month as more generators came online. Since a number of areas remain to be under GCQ, a relatively lower system demand was reported. In fact, last 13 July, demand dipped due to colder weather conditions brought about by tropical depression “Carina”. There were price spikes encountered on 23 July due to planned and forced outages of major plants which then resulted in a thin supply margin. A decreasing demand was also observed on the latter part of July considering the rainy season and observance of Eid’l Adha on 31 July.

In line with the clamor raised by the medical frontliners, the Modified Enhanced Community Quarantine (MECQ) was implemented once again along major parts of Luzon. With the reduction in commercial activities, peak demand was observed to decrease by 696 MW for the first week of MECQ in comparison to the two weeks prior to its resumption.

Furthermore, compared to the beginning of Q2 last year, system peak demand decreased by 22.3% which is equivalent to 2,885 MW. The peak demand is gradually approaching its 2019 demand levels with only a 3.4% or 424 MW difference from the previous year particularly for the month of August 2020.

Overall, given the limited operations of establishments and industries, market prices remained low despite some intervals with price spikes which were attributed to supply restrictions and plant outages as noted previously.

MARKET DEMOGRAPHICS

To date, there are 278 registered WESM members: 135 Generation Companies, 19 private Distribution Utilities (DUs), 71 Electric Cooperatives (ECs), 52 Directly-Connected Customers (DCCs), and 1 Wholesale Aggregator.

As for the retail level, there are 33 Retail Electricity Suppliers (RES), 14 Local RES, 25 Supplier of Last Resort (SOLR), 54 Retail Metering Service Providers (RMSPs) and 1,469 contestable customers (33-DCC and 1436-connected to DU).

As of 26 July, there have been a total of 463 supplier switches since the start of RCOA. During the period of June to July 2020, IEMOP processed an additional 7 initial customer switches and 17 regular customer switches. Moreover, in terms of energy consumption, CCs also recovered in June and July increasing to 21 and 22% of the total consumption from a low of 17% of the total consumption last April 2020.

Despite the implementation of the community quarantine, Retail Electricity Suppliers remained highly active in engaging contestable customers with 104 switches for the past five months.

MARKET DEVELOPMENTS: WESM MINDANAO

The Go Live target for the Enhanced WESM Design (5-minute Market) by end of December this year remains on-track with the completion of Performance Tuning of the NMMS. Significant progress has already been made by IEMOP to ensure that the new market systems are ready for the commercial launch of WESM in Mindanao. This includes the completion of its systems performance tuning, improvement of the market systems, and the conduct of the audit for its recent enhancements and fixes on the new market systems. Likewise, the Market Operator has re-launched the Trial Operations Program and has brought the campaign online through the EWDO POP Hub located within IEMOP’s website to ensure that the WESM Mindanao Stakeholders are up-to-date and ready to perform their responsibilities in the WESM.

In terms of WESM registration for Mindanao, most of the Grid Generators have been registered and almost all Electric Cooperatives and Private DUs are also completing their registration. However, registration of embedded generators and several directly connected customers remains to be the challenge. IEMOP is currently engaging them in coordination with the DOE. As the registration drive continues, the Market Operator also calls for proactive participation in the submission of trial offers and MW nominations in the Market Participant Interface.

Although the recent re-launch brought about some improvements with regard to the engagement of the Mindanao stakeholders, IEMOP intends to sustain the pace by preparing a series of activities and engagements to further prepare the participants in time for the launching of the WESM in Mindanao.

The Independent Electricity Market Operator of the Philippines (IEMOP) held its first online Market Participants’ Update (MPU) in line with its commitment to provide efficient, reliable, and transparent market management services.
With the theme “Sustaining Momentum”, the Market Operator apprised the WESM participants on the latest trading results, developments, and other enhancements to ensure a robust and competitive power bourse.

Market Operations Highlights

IEMOP reported a robust market trading participation with a total registered capacity of 20,177MW with about 16,500MW of generation capacity in Luzon and around 3700MW in Visayas. The registered participants for the Wholesale Market remains strong with 279 members; while for the retail market, there are 1,581 participants to date.

For 2020, the total generation in the Luzon and Visayas grids for the first 5 months went down by as much as 5.3% compared to the same period last year. Total energy production for January to May 2020 was 31.850 TWh versus the recorded 33.633 TWh last 2019. Coal and natural gas plants accounted for more than three-fourths of the generation mix.

On a more detailed note, the total generation for January to February 2020, which was before the onset of the pandemic, was higher by 6.5% at 13.306 TWh compared to same period last year. However, during the ECQ, the demand consumption dropped significantly. The total generation from March to May 2020 was only 18.543 TWh which recorded a drop of 12.3% during the same period last year.

In January 2020, price spikes were observed as capacities from South Luzon were unable to transmit their generation due to the multiple tripping of major transmission lines in the Luzon grid because of the Taal Volcano Eruption last 12 January 2020. High prices were still observed resulting from the maintenance outage of large generators and relatively higher demand in the month of February. The average system demand for this period was around 9,552 MW with an average market price of 3.24 P/kWh.

System demand dipped from 16 March 2020 to 15 May 2020 due to the limited operations of establishments amidst the implementation of the ECQ. The average system demand was around 8,617 MW which lowered by 17.03% from the pre-ECQ level. Moreover, the average price during the ECQ period was around 1.55 P/kWh due to the ample supply margin.
For May 2020, multiple price spikes were observed as a result of generator forced outages. Upon the shift from ECQ to GCQ on 16 May 2020, the demand gradually increased. The average demand was around 10,006MW from 16 May 2020 to 25 June 2020. Price spikes were also observed during the first week of June 2020 due to some generator forced outages which resulted to an average market price of 3.08 P/kWh.

Customer Transactions
The period of January to May 2020 recorded a total consumption of 30.477 TWh. Accordingly, customer transactions for 2020 generally dropped by 5.2% as compared to the same period of 2019. About 11.6% of this consumption was sourced from the WESM at an average Effective Spot Settlement Price (ESSP) of 2.53 P/kWh.

During the ECQ period from March to May, customer transactions only reached 17.739 TWh or 12.0% lower than that of 2019. Moreover, around 9.5% of the customer’s consumption from March – May 2020 was settled at a spot rate of 2.05P/kWh, which is about 70% lower compared to the 2019 rate for the same period.

Enhanced WESM Design and Operations
IEMOP officially launched its ‘Fast-Forward to Five’ campaign which aims to highlight the Parallel Operations Program (POP) Activities for the New Market Management System (NMMS) that will facilitate the 5-minute market trading by December of this year.

In relation to the said campaign, IEMOP conducted back-to-back focus group discussions with the WESM stakeholders last 24 June as a precursor to the succeeding phases of the POP.

Meanwhile, the involvement of the Mindanao power players also remain to be a determining factor in setting the timeline and target date for the operation of WESM in Mindanao.

Market Developments
To further substantiate its commitment to continuously innovate market solutions, IEMOP also presented its set of ongoing market developments and rules change activities in support of the policies and issuances set by the Department of Energy (DOE) and Energy Regulatory Commission (ERC).

Among the top priorities of the market Operator is the transition to the five-minute market. It is also focused on participating with the Ancillary Services Technical Working Group in preparation for the reserve market. IEMOP has also proposed Rules Changes that aims to enhance the Retail market trading in anticipation of the transition towards full retail competition. IEMOP is also collaborating with the Philippine Electricity Market Corporation (PEMC) for the conduct of a detailed study on developing the electricity derivatives market to enhance the risk management mechanism of trading participants in the WESM and the implementation of the Green Energy Option Program and the Renewable Energy Market.

In the coming days, IEMOP looks forward to bringing forth a more robust and progressive electricity market that is up to par with the global standards.