Philippine Energy Policy Wiki

DC2010-06-0007 — Preparations for WESM Ancillary Services Trading

Status
operative
Confidence
high
Effective date
2010-06-01

Department Circular No. DC2010-06-0007, issued June 2010 by Acting DOE Secretary Jose C. Ibazeta. Circular directing all concerned agencies and electric power industry participants to prepare for the establishment and commencement of the spot market for ancillary services (reserves) as an integral part of the Philippine Wholesale Electricity Spot Market (WESM).

Implements EPIRA (RA 9136) Section 37 mandate to DOE to ensure reliability, quality, and security of electric power supply and Section 30 mandate to establish WESM to facilitate transparent, competitive, reliable electricity market [DC2010-06-0007, Whereas, 2010-06]. DOE, jointly with electric power industry participants, formulated WESM Rules promulgated on 28 June 2002 through DC-2002-06-003 [DC2010-06-0007, Whereas, 2010-06]. Philippine Electricity Market Corporation (PEMC) constituted as autonomous group market operator of WESM [DC2010-06-0007, Whereas, 2010-06]. WESM commenced commercial operations in Luzon on 26 June 2006 per DOE declaration in DC-2006-06-0008 [DC2010-06-0007, Whereas, 2010-06]. WESM Rules Section 10.3 initially restricted trading to energy only; Section 10.3.2.3 provided that when applicable and reasonably feasible, Market Operator shall establish spot market mechanism for competitive reserve trading with DOE declaring commencement [DC2010-06-0007, Whereas, 2010-06]. WESM Price Determination Methodology approved by ERC (Decision dated 20 June 2006 in ERC Case No. 2006-007 RC) embodies principle of co-optimization of reserve and energy in pricing and scheduling processes [DC2010-06-0007, Whereas, 2010-06].

Scope and reserve market mechanism

Circular applies to all named agencies/entities and all electric power industry participants [DC2010-06-0007, §1, 2010-06]. Spot market for ancillary services shall be integral part of WESM, covering reserve categories prescribed in WESM Rules and as proposed by Market Operator in consultation with System Operator and approved by Philippine Electricity Market Board [DC2010-06-0007, §2, 2010-06]. Co-optimization of reserve and energy principle per WESM Rules and approved WESM Price Determination Methodology shall always be followed [DC2010-06-0007, §2, 2010-06].

PEMC responsibilities

Philippine Electricity Market Corporation shall complete preparations for reserve market establishment. Preparatory activities include [DC2010-06-0007, §3.1, 2010-06]:

  • Securing regulatory approval of reserve pricing and cost-recovery methodology, consistent with WESM Rules and approved WESM Price Determination Methodology [DC2010-06-0007, §3.1(a), 2010-06]

  • Ensuring WESM Market Management System and other market infrastructure (hardware, software, necessary interfaces) are in place supporting reserve trading operations [DC2010-06-0007, §3.1(b), 2010-06]

  • Ensuring readiness of all WESM members, trading participants, and WESM service providers through training, stakeholder consultations, and information dissemination fully informing participants of reserve trading methodologies and processes [DC2010-06-0007, §3.1(c), 2010-06]

  • Reviewing existing WESM Rules, manuals, and internal business processes relevant to reserve trading and ancillary services provision; proposing and securing approval for necessary changes [DC2010-06-0007, §3.1(d), 2010-06]

  • Complying with all DOE directives on reserve market establishment [DC2010-06-0007, §3.1(e), 2010-06]

NGCP responsibilities

National Grid Corporation of the Philippines shall ensure its ancillary services functions comply with EPIRA, EPIRA Implementing Rules and Regulations, WESM Rules, Philippine Grid Code, Open Access Transmission Service Rules (OATS Rules), and other relevant rules and regulatory issuances [DC2010-06-0007, §3.2, 2010-06]. NGCP shall closely coordinate with PEMC and DOE to ensure all pre-requisites and conditions for reserve market establishment are complied with and completed in timely manner [DC2010-06-0007, §3.2, 2010-06].

NEA and electric cooperative support

National Electrification Administration shall render appropriate assistance to electric cooperatives (ECs) ensuring their readiness for WESM reserve market commencement [DC2010-06-0007, §3.3, 2010-06]. NEA shall submit regular reports to DOE on status of activities undertaken with ECs in performing responsibilities under this Circular [DC2010-06-0007, §3.3, 2010-06].

Market participant readiness

All WESM Members and Trading Participants, as well as non-registered WESM electric power industry participants, are directed to undertake their own preparations ensuring readiness for WESM reserve market commencement [DC2010-06-0007, §3.4, 2010-06]. All qualified participants intending to participate as ancillary services providers shall obtain necessary regulatory approvals and comply with WESM Rules and requirements set by PEMC and NGCP for registration and accreditation of ancillary services providers [DC2010-06-0007, §3.4, 2010-06].

DOE determination and commencement criteria

Pursuant to its mandate, DOE shall determine feasibility and reasonability of reserve market commercial operations commencement [DC2010-06-0007, §4, 2010-06]. DOE shall establish appropriate criteria for assessing readiness of all electric power industry participants to participate and readiness of NGCP and PEMC to operate reserve market [DC2010-06-0007, §4, 2010-06]. DOE shall declare commencement of reserve market commercial operations upon determination that set conditions and criteria have been substantially complied with [DC2010-06-0007, §4, 2010-06].

Monitoring, oversight, and governance

For purposes of monitoring compliance with Circular directives, PEMC, NGCP, NEA, and other relevant agencies shall submit reports on preparations and readiness progress to DOE from time to time [DC2010-06-0007, §5, 2010-06]. DOE shall continue to oversee WESM development including reserve trading, undertaking actions provided in EPIRA, EPIRA Implementing Rules and Regulations, and WESM Rules in connection with WESM establishment [DC2010-06-0007, §6, 2010-06].

No amendment of existing laws

Nothing in this Circular shall amend, supplant, or repeal any mechanisms, institutions, or responsibilities already existing or allocated under existing laws, rules, or contracts [DC2010-06-0007, §7, 2010-06].

Publication and effectivity

Circular effective immediately upon publication in two (2) newspapers of general circulation [DC2010-06-0007, §8, 2010-06]. PEMC directed to publish this Circular in WESM Market Information Website [DC2010-06-0007, §8, 2010-06]. Remains in effect until otherwise revoked [DC2010-06-0007, §8, 2010-06].

Full text: Cleaned copy