By Richard J. Nethercott
President, Independent Electricity Market Operator of the Philippines (IEMOP)
Economic progress and development are closely associated with a stable electric power industry. Stability in supply, coupled with competitive electricity rates, attracts industrial and commercial investments that generate jobs and opportunities for the people. This, in turn, is best achieved through sound policies developed in consultation with industry participants and stakeholders.
In recent years, we have seen the Department of Energy (DoE), under the leadership of Secretary Alfonso G. Cusi, issue both new and updated policies towards the full implementation of the Electric Power Industry Reform Act (EPIRA) or RA 9136 and in support of the Duterte Administration’s “Build, Build, Build Program” and “Ambisyon Natin 2040”.
Pursuant to the President’s 10-Point Socio Economic Agenda, the DoE advocated the issuance of executive orders (EO) and legislative enactments that would increase competitiveness, ease of doing business, and secure stable electricity supply in the country.
In 2017, President Rodrigo Duterte issued EO No. 30, s. 2017, designating major energy projects as “Energy Projects of National Significance”. Projects designated as such are entitled to an expedited processing of permits and licenses. Meanwhile, in 2019, the Congress enacted the Energy Virtual One-Stop Shop (EVOSS) Act. This law streamlined the permitting process of power generation, transmission, and distribution projects.
To further strengthen this mandate, President Duterte issued Administrative Order (AO) No. 23, s. 2020, eliminating overregulation to promote efficiency in government processes. The AO specifically provides that, for energy-related projects, the timelines provided by the EVOSS Act shall be complied with.
The foregoing will not only provide investors a healthy investment environment but, more importantly, it will ensure supply security as it aims to eliminate unnecessary delays in the completion of energy projects.
The DoE, likewise, has introduced changes and improvements in the Philippine Wholesale Electricity Spot Market (WESM). Delayed for many years, Secretary Cusi spearheaded the transition of the Autonomous Group Market Operator into the Independent Market Operator envisioned by the EPIRA. With the joint endorsement of the DoE and the electric power industry participants, the Independent Electricity Market Operator of the Philippines (IEMOP) was formed. This paved the way for even more developments in the WESM.
For one, the Market Operator is now a truly independent entity and has been certified by TÜV SÜD to be ISO 9001:2015 (Quality Management System) and ISO 27001:2013 (Information Security and Management System) compliant. Moreover, IEMOP has employed new technologies and social media infrastructure in publishing market information to make the WESM more transparent. Further, the conduct of regular stakeholder engagements ensures inclusivity and feedback on its performance while pertinent WESM Rules enhancements ensure a robust and stable market.
The IEMOP, as the independent market operator, was also able to establish close ties with institutions that are relevant to the operations of the WESM such as the National Grid Corporation of the Philippines (NGCP), which serves as the System Operator, and the Philippine Electricity Market Corporation (PEMC), which serves as the WESM Governing Body.
To date, IEMOP is closely coordinating with the DoE, the ERC, and electric power industry participants to launch the enhanced WESM design which will transition the spot market from a one-hour trading interval to a five-minute trading interval spot market. This five-minute trading interval was designed by the DoE together with the electric power industry participants and aims to further enhance market efficiency and transparency by allowing market participants to know their market schedules and prices near real-time.
While the DoE strives to ensure the quality, security, reliability, and affordability of the supply of electric power, it also promotes consumer protection. Espousing consumers’ power of choice, the DoE and the Energy Regulatory Commission (ERC) respectively issued circulars and resolutions on Retail Competition and Open Access.
Another policy issuance aimed to benefit consumers is the circular on competitive selection process for bilateral contracts, which ensures that the distribution utilities’ procurement of supply is done in the least-cost manner. The DoE is also actively implementing the provisions of the Renewable Energy Act (RA 9513) such as the renewable portfolio standards and green energy option program, which will promote the use of indigenous and renewable energy sources in the country.
Not to be outdone, the electric power industry participants have proven themselves to be a reliable and steady partner in the government’s efforts to promote development. In the wake of the COVID-19 pandemic, we have witnessed how the electric power industry participants, led by the DoE and the ERC, worked hand-in-hand to face the unprecedented challenges encountered by the energy sector.
Through coordinated efforts, the country was assured of uninterrupted supply of electricity. Distribution utilities heeded the call to provide a grace period for the payment of bills falling due during the enhanced community quarantine, thereby, providing a sigh of relief to the consumers. In whatever means possible, industry players willingly and generously contributed to the government’s efforts to combat COVID-19. All these show that the spirit of Bayanihan is in fact present in this industry.
As we recover as one from this pandemic, the electric power industry remains to be one of the key sectors that will surely help mitigate economic downturn and propel the economy towards full recovery. This will be achieved through constant consultation and cooperation between the policy makers and the stakeholders to formulate new and innovative solutions and policies that will ensure a secure and stable supply of electricity at competitive prices in our country. As shown by the electric power industry’s response to the current pandemic, complementing efforts by public and private entities produce positive results for the common good.