PEMC complies with order on surplus settlements

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THE Philippine Electricity Market Corp. (PEMC) said it “immediately” acted on the Energy Regulatory Commission’s (ERC) order on the adjustment of the net settlement surplus (NSS), resulting in either a refund to some market participants or collections from the others.

“We are rectifying the mis-allocation of the NSS through a refund to the market participants who received less than what was due them while collecting from the others who have received more,” PEMC President Oscar E. Ala said in a statement.

“This is similar to a situation wherein you are supposed to give your son and daughter P5 and P10, respectively. However, you inadvertently gave your son P10 and your daughter P5. And as a parent, one has to correct the amounts given to each,” he added.

PEMC, the operator of the country’s wholesale electricity spot market, said the NSS adjustments started with the July 2019 billing period.

NSS is the surplus or deficit remaining after all market transactions have been accounted for. This accounts for price differences occurring between generator and customer locations or nodes because of losses and congestion given the electricity market’s “locational marginal pricing scheme.”




NSS is distributed to trading participants that are entitled to receive a share of the surplus or deficit in accordance with an ERC-approved methodology.

“As the governing body of the electricity market, our interest is in securing the integrity of market transactions, which include settlements, while upholding consumer protection. With this, we promptly complied with the directives detailed in the ERC Order on the NSS issued on Aug. 1, 2019,” Mr. Ala said.

PEMC noted that the collection for non-distribution utilities will be hastened to one month. This is to ensure that utilities expecting a refund will be able to immediately pass on the benefit of the refund to their end consumers, it added.

On Friday, the ERC said it directed the market operator to make the necessary adjustments NSS allocations and the corresponding settlement calculations for the June 2018 to May 2019 billing months.

The regulator said the directive to PEMC is a result of its findings on the inconsistencies in the share of power generators and customers in the NSS allocations issued by the market operator.

“An audit of relevant PEMC/MO (market operator) systems and operations may be in order. We need to ensure that market processes and transactions are accurately and efficiently carried out so as not to compromise the public benefit of reasonable electricity pricing, as well as to ensure that our consumers are spared from unnecessary burden,” said ERC Chairperson and Chief Executive Officer Agnes VST Devanadera. — Victor V. Saulon

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