Mindanao spot market launch faces delays

THE low rates of registration by the Mindanao energy industry may further delay the launch of the electricity spot market in the region, according to the Independent Electricity Market Operator of the Philippines (IEMOP).

The independent operator of the Wholesale Electricity Spot Market (WESM) said it is on track to proceed with the operation of the Mindanao market on Dec. 26 despite low levels of participation so far.

“‘Pag ‘di pa nakumpleto ang registration by December, that’s an indication na baka ma-move pa further ‘yung commercial date ng Mindanao. But so far, nag-i-stick pa tayo sa December because ‘yun talaga ang government target (If registrations aren’t complete by December, the commercial launch in Mindanao could be moved back. But so far we are sticking to the government target)“ IEMOP Chief Operation Officer Robinson P. Descanzo said at a virtual briefing.

So far, participation in the trial run of the Mindanao market consisted of 12 grid-connected generation firms, three private distribution utilities, and four of the 28 embedded generators.

Three of 28 electric cooperatives and two of 13 directly-connected customers have also registered, while the rest have yet to complete their initial prudential requirements.

IEMOP noted some issues discouraging the power industry from joining the spot market.

Power utilities managing embedded generators are wary of the central dispatching set-up, which is needed to coordinate generation schedules.

“Ang bawat DU (distribution utlilities) kasi may kanya-kanya silang motor units na sila mismo nagma-manage ng operations ng mga embedded generators, so nasanay sila sa concept na ganun (DUs are used to managing their own operations),” Mr. Descanzo said.

They are also worried about incurring additional charges if their partner generators trade on the market.

“There are concerns na sinasabi ng DUs na even ang cost recovery ng generator na ‘yan binabayaran ko na. So, ‘pag naglaro siya (embedded generators) sa market, makakabenta siya sa labas, partly ako naman ang nag-subsidize (The concern is that they will partly be subsidizing power sold to external customers)“ Mr. Descanzo said.

The utilities also fear additional costs once the privately-owned National Grid Corp. of the Philippines (NGCP) assumes the role as the market’s sole metering service provider.

“According to them, may cost silang binabayaran na ‘di nila mare-recover… ang sinasabi nila baka magkaroon pa ng additional cost/charges ang NGCP sa kanila,” (There might be costs that they cannot recover in the process. They might incur additional charges from the NGCP),” he said.

He also noted that utilities are reluctant to relinquish their control over metering activities involving their partner generators.

IEMOP said the issues can be resolved through the on-going fine-tuning activities for the market and regulatory processes.

“Overall, makikita mo may benefit ka (you can see you will benefit) from the market; these little things, fine-tuning lang kailangan d’yan (is only needed),” he said.

Separately, he said WESM in Mindanao can proceed even if the Mindanao-Visayas Interconnection Project (MVIP) is not yet complete as the region has “excess” generation capacity.

“We can integrate Mindanao in the WESM even without the interconnection. The current situation there is mayroon tayong (we have) excess generation… ‘Di naman isyu na show-stopper ang delay ng interconnection (The delay of the project is not a deal breaker),” Mr. Descanzo said.

The Department of Energy has ordered the NGCP to fast-track its various interconnection projects, which were delayed by the pandemic and right-of-way issues.

The P52-billion MVIP, in particular, was said to be delayed for another year from its target launch in 2020.

Along with the new market, an ungraded WESM design, which will introduce a five-minute trading interval, is also being tested out to participants in the Luzon and Visayas markets. It is also expected to be launched by year’s end. — Adam J. Ang