The Independent Electricity Market Operator of the Philippines, committed to its role in providing sustainable and innovative market solutions and services to its stakeholders, constantly strives to formulate new services that will enhance the operation of the WESM and provide value to the electricity market. IEMOP continuously delivers long-term market development plans that aim to address new challenges, seek new solutions, and set new goals, products, and services in the country’s power market sector. Given this, IEMOP’s pursuit of potential market innovations for a more sustainable, competitive, efficient, fair, transparent, and reliable electricity market for the Filipino people resulted in the following on-going and succeeding market advancements:
This refers to the addition of new features to enhance competition in the spot market.
Enhanced WESM Design – This refers to the implementation of the enhancements to WESM design and operations with commercial operations last June 26, 2021 as per DOE DC2021-06-0015. The enhancements include removal of Pmin constrain in the MDOM, shorter trading and dispatch interval of five (5)-minute, ex-ante pricing only for every five (5)-minute trading and dispatch interval, and automated pricing corrections, among others.
Demand-side bidding – This refers to possible mechanisms to encourage the participation of demand resources in WESM trading. Demand-side bidding allows electricity consumers to offer a specific change to their normal pattern of consumption, at a given time, in return for a specified incentive. The implementation of demand-side bidding is planned after the establishment of the ancillary services market to improve the viability of investing in wholesale demand-side management. This enhancement is targeted on 2024.
Financial transmission rights – This refers to the implementation of financial transmission rights in the WESM as provided under Clause 3.12 of the WESM Rules. Financial transmission rights are a financial instrument that allows market participants to hedge price risk of delivering energy to the grid. It is a method to avoid congestion charges associated with the WESM’s Locational Marginal Pricing or LMP. They are proposed to be implemented after the transition to full retail competition due to the complexity of FTR trading and minimize regulatory requirements around 2026.
Clause 126.96.36.199(a) of the WESM Rules provides for the competitive tendering process for the procurement of ancillary services to be administered by the Market Operator. This set of activities refer to the implementation of the ancillary services market.
Reserve market – This refers to the start of implementation of the reserve market in the WESM. Enhanced WESM design is indicated as a precursor since the reserve market is part of the current ERC filing for the revisions to the price determination methodology. In December 2019, the Department of Energy (DOE) promulgated DC 2019-12-0018 entitled “Adopting a General Framework Governing the Provision and Utilization of Ancillary Services in the Grid”. Under Section 1 of the circular, DOE established that energy and reserves shall be co-optimized in the WESM through the commercial operation of the Reserve Market. Section 11 of the circular required the Market Operator to undertake activities for the preparation and implementation of the Reserve Market. In March 2021, the DOE promulgated DC2021-03-0009 entitled “Adopting A General Framework Governing the Operationalization of the Reserve Market in the Wholesale Electricity Spot Market and Providing Further Policies to Supplement DC2019-12-0018.” The Market Operator is coordinating with the System Operator for the submission of revised WESM Rules and relevant Manuals for the implementation of the Reserve Market at the end of 2021.
Demand response – This refers to the review and possible rules enhancements to allow the effective and efficient participation of demand-side resources in the reserve market. Demand response provides an opportunity for consumers to reduce or shift their electricity consumption to better match the electricity demand to supply with response to time-based rates and other forms of financial incentives. This is planned for development after retail aggregation to increase the number of potential participants in this program around 2023.
Besides introducing and enhancing markets, IEMOP also aims to expand the geographical reach of its markets – the major of which is Mindanao.
WESM Mindanao – DOE DC2017-05-0009 provided for the launch of the WESM in Mindanao. IEMOP is in full participation with several efforts in preparation of the implementation of WESM in Mindanao. These efforts include the active registration drives to encourage trading participants to commence registrations in the WESM for Mindanao. Several WESM overviews, hands-on trainings and consultations to different entities in Mindanao were conducted. The DOE DC2021-06-0015 which declares the commercial operations of enhanced WESM design also provided the implementation of WESM Central Scheduling in Mindanao starting June 26, 2021. The implementation of WESM in Mindanao is being targeted for commercial operations within 2021.
Retail competition in Mindanao – One of the criteria for the implementation of retail competition is the operations of the WESM. With the start of WESM operations in Mindanao by 2021, preparations for the implementation of retail competition in the region should commence soon. The DOE has mentioned that implementation of retail competition in Mindanao will be assessed one (1) year after the start of WESM operations. It is planned that retail competition in Mindanao be implemented after the proposed changes in the rules to reduce barriers to entry are completed to avoid re-learning of Mindanao participants of the retail competition design, targeted on June 2022.
In addition to being the Market Operator, IEMOP also performs the function of the Central Registration Body (CRB) of the retail electricity market. Developments to enhance the services of the retail market include the following activities:
Improvements in the Retail Market Processes –In view of the continuous reduction in contestability threshold, proposed amendments to the WESM and Retail Rules and Manuals were submitted in 2018 to the Rules Change Committee (RCC) to reduce barriers for retail market entry. The proposal aims to encourage participation in retail participation and enhance competition through process improvements. The proposal was also designed with an eye towards the implementation of household-level retail competition. The DOE has promulgated the proposed amendments with the DOE DC2021-06-0012 which provides the provisions to promote the participation in the retail competition. The Market Operator has initially implemented some of the provisions of the DC on 25 July 2021. The other provisions of the DC will be implemented after the software enhancements which is targeted to be deployed on 2022.
100kW threshold – This refers to the review and enhancement of retail market procedures for the efficient participation of end-users with 100 kW average peak demand for the past twelve (12) months in retail competition. IEMOP submitted and presented to DOE and ERC its proposed study on integration and possible changes in the retail rules and processes for the 100kW threshold. Lowering of threshold to 100kW is targeted on 2023.
Retail Aggregation Program – This refers to the development that allows aggregation of end-users to meet the threshold and facilitate their energy procurement from retail aggregators. The Retail Aggregation Program is expected to be implemented by 26 December 2022.
Full retail competition – This refers to the review and enhancement of CRB procedures for the efficient participation of households in retail competition, hopefully to be implemented on 2024.
The Renewable Energy Act No.9513 or the “Renewable Energy Act of 2008” affirms the government’s commitment to ensure ensure a continuous, adequate and economic supply of energy through the integrated and intensive exploration, production, management and development of the country’s renewable energy (RE) resources. Part of this commitment is the formulation of several RE policies that will encourage the development of RE resources in the country. This section includes developments for market mechanisms specifically targeting renewable energy resources.
RE Market – This refers to the establishment of a Renewable Energy Market that will monitor the compliance of the energy sector in the Renewable Portfolio Standard (RPS). Electric power industry participants are required to source or produce a specified percentage of of its annual generation from eligible RE resources. DOE DC2019-12-0016, entitled “Promulgating the Renewable Energy Market (REM) Rules” stated that no later than one (1) year from the start of commercial operations of the REM, the functions, assets and liabilities of PEMC in performing the RER functions shall be transferred to the entity performing market operations. IEMOP, as the market operator, is gearing towards its role to serve as the Renewable Energy Registrar (RER) of the Renewable Energy Market (REM).
Green Energy Option Program – This is a program under the Renewable Energy Act of 2008 to empower electricity end-users to choose purely from Renewable Energy Resources for their electricity requirements. Eligible end-users for this program are entities with an average peak demand of 100 kW for the past 12 months. IEMOP, as the Central Registration Body, is set to commence the Green Energy Option Program (GEOP) starting on 3 December 2021.
The forward market is being developed to allow the trading of short- to medium-term contracts and will be an alternative mode for procuring electricity in addition to the WESM and bilateral contracts.
Electricity Forward Alternative Trading System– This refers to an ongoing development by IEMOP together with several generation companies for an auction-based trading of standardized forward contracts on a monthly basis. IEMOP is in coordination with DOE and SEC for the legal clearance to implement this program.
Exchange-traded with bilateral settlement – This refers to the enhancement of the trading of forward contracts to exchange-type rules but with bilateral settlement targeted on 2024
Exchange-traded with centralized settlement – This refers to the enhancement of the trading of forward contracts to exchange-type rules and with a central counterparty which may commence on 2026.
STUDIES ON NEW MARKETS
Part of IEMOP’s progressive exploration for market development initiatives is keeping a hawk-eye perspective on different factors transforming the electric power system. Continuous evaluation of the feasibility of other markets commonly implemented in other countries is included.
Study on Distributed Energy Resources. The cognizance of the growing trend of distributed energy resources (DERs) in the Philippines and their corresponding benefits to the electricity market and the grid has inspired IEMOP to spearhead a study on the integration of the distributed energy resources in the WESM. The study provides a review of the current trend in DER, existing regulations and policies, and the DER participation models in other electricity markets. After the review, the study presents a possible participation model in the Philippine WESM for DERs and additional policy, regulatory, and technical that may be required for the successful integration of DERs in the electricity market. A brief overview of the content of IEMOP’s study on the integration of DERs in the WESM was published in the 2019 IEMOP Q1 Report.
Study on Capacity Market. As a complement to pricing signals in the energy market, capacity markets have been utilized to ensure the entry of additional capacities to meet the projected medium-term demand of the system. Capacity markets auction off the medium-term capacity requirements of the system (i.e., peak demand plus pre-determined margin) to ensure the availability of supply for their respective markets. Power plants that were cleared in the capacity market are required to be available at the agreed timeline and ensure high availability in its operations. These power plants recover their production costs through the energy market and receive payments from the capacity market for their availability. In the Philippines, capacity investments are dependent on the private sector’s initiatives based on their individual views of the power market. A capacity market would provide for a centralized approach in ensuring short- to medium-term supply sufficiency.
IEMOP remains firm in its pursuit for excellence in market operations services by being remarkably dynamic by catering to the needs of the electric industry, innovating through the myriad of changes and technological advancements in the electric power system, and constantly developing to better serve and benefit the stakeholders. IEMOP ceaselessly spearheads and proposes reforms to ensure fulfilment of the Wholesale Electricity Spot Market (WESM) objectives. In line with this, IEMOP has submitted several rules change proposals to the WESM Rules Change Committee (RCC). The list below are IEMOP’s proposed changes and their status are as follows:
|1||Proposed Amendments to the (1) Retail Manuals and (2) WESM Manuals to Reduce Barriers to Entry and Participation in Retail Competition||DC2021-06-0012|
|2||Proposed Amendments to the WESM Manual on Registration, Suspension and De-Registration Criteria and Procedures to Include Additional Modelling Requirements and Procedures||DC2020-06-0013|
|3||Proposed Amendments to the WESM Manual on Registration, Suspension and De-Registration Criteria and Procedures to Harmonize with WESM Rules Changes||DC2020-06-0013|
|4||Proposed Amendments to the WESM Manual on Registration, Suspension and De-Registration Criteria and Procedures to Clarify Basis for Registered Capacities of Generating Units in the WESM||DC2020-06-0013|
|5||Proposed Amendments to the WESM Rules and Manual on Metering Standards and Procedures to Clarify Entity Monitoring Wholesale Metering Services Provider Performance||DC2021-07-0021|
|6||Proposed Amendments to the WESM Rules and Manuals for the Implementation of DOE DC2019-02-0003 Providing for the Framework Governing the Operations of Embedded Generators|
|7||Proposed Amendments to the WESM Rules and WESM Manual on Registration, Suspension and De-Registration Criteria and Procedures to Harmonize with RA 11234 and Additional Requirements for De-Registration and Cessation||DC2020-06-0013|
|8||Proposed Amendments to the WESM Manual on the Constraint Violation Coefficients (CVC) and Pricing Re-Runs to Include Additional CVCs to Reflect the Dispatch Hierarchy of Self-Scheduled Generation||DC2021-07-0022|
|9||[General] Proposed Amendments to the (1) WESM Rules and (2) WESM Manual on Billing and Settlement for Enhancements to the Determination of Initial Prudential Requirement||DC2020-06-0014|
|10||Proposed Amendments to the Retail Rules and Various Retail Manuals to Harmonize with ERC Rules Supplementing the Switching and Billing Process and Adopting a Disconnection Policy for Contestable Customers||DC2021-06-0012|
|11||Proposed Amendments to the WESM Manual on Registration, Suspension, and De-Registration Criteria and Procedures and WESM Manual on Market Network Model Criteria and Procedures to Clarify Procedures for the Registration of a New Load Facility||DOE DC2020-10-0019|
|12||Proposed Amendments to the WESM Manual on Dispatch Protocol for the Optimal Timing of Market Runs||DOE DC2020-10-0020|
|13||Proposed Amendments to the WESM Manual on Metering Standards and Procedures to Harmonize with the Site-Specific Loss Adjustment Procedures of Wholesale Metering Service Provider||DC2021-07-0021|
|14||Proposed Amendments to the WESM Manual on Dispatch Protocol to Enhance Procedures in Must-Run Unit (MRU) Accounting||DC2021-03-0006|
|15||Proposed Amendments to the WESM Rules and WESM Manual on Market Operator Information Disclosure and Confidentiality to Provide Exceptions for Confidentiality Undertaking for Oversight Bodies||DC2022-03-0011|
|16||Proposed Amendments to the WESM Manual on Registration, Suspension, ad De-registration Criteria and Procedures for General Enhancements to the Application Process of New WESM Members||DC2022-06-0022|
|17||Proposed Amendments to the WESM Manual on Registration, Suspension, and De-Registration Criteria and Procedures to Clarify Bilateral Contracts Accounted for in Settlements||DC2022-03-0010|
|18||Proposed Amendments to the WESM Rules and WESM Manual for the Implementation of ERC Resolution No. 07 Series of 2019 entitled A Resolution Adopting Amendments to the Rules for the Distribution of NSS||DC2021-03-0007|
|19||Proposed Abolition of Relevant WESM Manuals in View of the Implementation of Enhanced WESM Design and Operations||For DOE approval|
|20||Proposed Amendments to the WESM Manual on Load Forecasting Methodology for the Inclusion of the Procedures for Preparation and Updating of Nodal Load Distribution Factors||DC2021-03-0005|
|21||Proposed Urgent Amendments to the WESM Manual on Protocol for Central Scheduling and Dispatch of Energy and Contracted Reserves||DC2021-05-0010|
|22||Proposed Amendments to the WESM Rules and WESM Manual on Billing and Settlement regarding Enhancements to Prudential Requirements Procedures||DC2022-03-0003|
|23||Proposed Amendments to WESM Rules and WESM Manuals for Rationalization of Billing Adjustment Timelines||DC2021-11-0037|
|24||Proposed Amendments to the WESM Rules and WESM Manuals on Clarifications on Indirect WESM Membership||Part A – For DOE Approval
Part B – For DOE Approval
|25||Proposed Amendments to the WESM Rules and WESM Manuals on Validation Timeline Adjustment in Metering and Billing||For RCC Approval|
|26||Proposed Amendments to the Dispatch Protocol for Enhancements to Market Operator-System Operator Procedures||DC2022-06-0023|
|27||Proposed Amendments to the WESM Manuals on Market Resource Modelling||For PEM Board Approval|
|28||Proposed Amendments to the WESM Rules and WESM Manual on De-registration and Cessation||DC2022-03-0009|
|29||Proposed Urgent Amendments to the WESM Manual on Billing and Settlement to Harmonize with ERC Directives on Additional Compensation Process||DC2022-06-0025|
|30||Proposed Amendments to WESM Rules and Various WESM Manuals on Implementation of Reserve Market||DC2022-11-0032|
|31||Proposed Urgent Amendments to the WESM Rules, Retail Rules and Various Market Manuals on the Implementation of the Green Energy Option Program||PEM Board Approved|
|32||Proposed Amendments to the WESM Manual on Billing and Settlement on Additional Compensation (Reflect CRSS Supplemental Audit Findings and Additional Condition for AP Eligible Amount)||For RCC Approval|
|33||Proposed Amendments to the Retail Rules and Manuals on Switching Requirements related to No Outstanding Balance||For RCC Approval|
|34||Proposed Urgent Amendments to the WESM Rules, Retail Rules and Market Manuals on the Implementation of Electric Retail Aggregation Program||For RCC Approval|
|35||Proposed Urgent Amendments to the WESM Rules and WESM Registration Manual on the Implementation of Preferential Dispatch||PEM Board Approved|
|36||Proposed Amendments to the WESM Rules and Various Manuals on Interruptible Load Program||For RCC Approval|
|37||Proposed Amendments on No Outstanding Balance (Harmonization with ERC Resolution No. 01 Series of 2023)||For RCC Approval|