THE Department of Energy (DoE) is open to a proposal for the Philippine Stock Exchange (PSE) to operate a venue for trading electricity, the agency’s head said.
“[We] have to open our mind to all the possible options and what is good for the industry,” DoE Secretary Alfonso G. Cusi told reporters when asked about reports that the PSE leadership had initiated talks with the department about an electricity exchange.
“We are exploring all the possible set ups that will be good for the industry and the consumer,” he said.
Last week, PSE President and Chief Executive Officer Ramon S. Monzon was quoted as saying that he had started talks with the DoE about a plan for the bourse to also operate an electricity exchange.
Mr. Monzon said the PSE’s selling point is for that exchange to be operated by a “professional organization” that is at the same time insulated from “political influences.”
Mr. Cusi said the proposal is worth studying.
“Yes, we’re studying it,” he said.
The talks between the DoE and the PSE come about three months after Mr. Cusi ordered the creation of a “transition committee” for the management of the Philippine Electricity Market Corp. (PEMC), the governance arm of the wholesale electricity spot market (WESM).
The DoE said the transition panel is also mandated to assess PEMC’s existing structures, systems and resources, and propose a way forward for the WESM. The order gives the committee seven months from Aug. 1 to complete its tasks.
Early this year, Mr. Cusi asked the previous members of the board to submit their courtesy resignation. No official reason was given for the move.
The WESM is the country’s centralized venue for buyers and sellers to trade electricity as a commodity where its prices are based on actual use, or demand, and availability, or supply.
The DoE has said that the creation of an independent market operator (IMO) for the WESM is among the provisions of Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA) that have yet to be fully implemented.
Under EPIRA, the electricity market should be implemented by an operator as called for by the WESM rules. The market operator is meant to be an autonomous group, to be constituted by the DoE, with equitable representation from industry participants, initially under the administrative supervision of the National Transmission Corp.
The market operator is to undertake the preparatory work and initial operation of the WESM. EPIRA called for the creation of the independent entity one year after the implementation of the WESM. The spot market started commercial operations in the Luzon grid on June 26, 2006.
WESM is governed by PEMC, a 16-man board chaired by the DoE secretary, plus 15 directors coming from the industry.
Mr. Cusi said by the end of the transition team’s life in February, an IMO should have been created.
“We’re thinking of a corporation separate from PEMC,” he said.
He described the IMO as “independent from the government. That’s the requirement of the law.”
“But the DoE will still be the supervising body. There must be a supervising body,” he said. “It’s just like the PSE is supervised by the Securities and Exchange Commission.” — Victor V. Saulon