Philippine Energy Policy Wiki

DC2023-09-0026 (Reserve Market Commercial Operations)

Status
operative
Confidence
high
Effective date
2023-10

Document: Department Circular No. DC2023-09-0026 Title: Declaring the Commercial Operations of the Reserve Market and Providing Further Policies Issued: September 2023 Issuing authority: DOE Secretary Raphael P.M. Lotilla Pages: 6 (image-based PDF; OCR via tesseract)

What This Document Does

Officially declares the start of commercial operations of the Reserve Market — the co-optimized ancillary service mechanism within WESM — and sets a two-stage transition timeline: a non-binding Final Preparations Stage (FPS) through December 25, 2023, followed by financially binding Full Commercial Operations from December 26, 2023.

Background

The Reserve Market has been under preparation since DC2010-06-0007 (directing preparations) and DC2021-03-0009 (operationalization framework). A Trial Operations Program (TOP) was launched via DOE Advisory on June 26, 2023. The ERC granted an Interim Relief on the Price Determination Methodology (PDM) application (ERC Case No. 2023-002 RC) on August 24, 2023, clearing the last regulatory precondition.

Key Provisions

Section 1.1 — Final Preparations Stage (post-effectivity to December 25, 2023).

  • MO conducts live parallel operations (end-to-end testing): non-production system; transactions not binding for settlement
  • MO, WESM Governance Arm, SO, and all Trading Participants (TPs) must complete readiness requirements
  • WESM Governance Arm must certify readiness and audit completion for full commercial operations

Section 1.2 — Full Commercial Operations (from December 26, 2023 or earlier if declared).

  • Co-optimized energy and reserve schedules and prices from Market Dispatch Optimization Model become financially binding
  • 1.2.1 ROCC/RCS compliance: WESM Governance Arm’s ECO to finalize guidelines for Reserve Offer Capacity Compliance (ROCC) and Reserve Conformance Standards (RCS) by November 15, 2023; ECO monitors and imposes sanctions for non-compliance, considering transitional nature of operations
  • 1.2.2 SO Prudential Requirements: SO must post Prudential Requirements (PR) per WESM Rules by March 25, 2024; SO must settle monthly bills with MO per Reserve Market billing timetable

Section 2 — AS Provider Registration. All GenCos with SO-issued AS certificates must complete WESM registration before December 26, 2023. Failure = applicable sanctions. Registration continues beyond October 26, 2023 for GenCos receiving AS certificates after that date.

Section 3 — ERC Support. ERC to: approve the PDM; promulgate reserve price caps/floors; promote competition and penalize market power abuse; evaluate all ASPAs including replacement capacity guidelines; ensure SO/AS Provider compliance with Grid Code; provide cost recovery support to MO and WESM Governance Arm.

Note on actual implementation: The DOE declared Full Commercial Operations target of December 26, 2023, but per PEP 2023-2050 Vol. II reporting, Phase 1 actual commercial operation was achieved on March 26, 2024 — indicating the December 26 date slipped by approximately three months.

Policy Significance

This circular completes a 13-year sequence (from DC2010-06-0007 in 2010 to this declaration in 2023) for establishing the Reserve Market. The ROCC/RCS requirement and the SO’s obligation to post Prudential Requirements are the key accountability mechanisms ensuring that generators actually deliver the reserves they offer, and that the SO meets its payment obligations as the single buyer of reserves.

Pages Expanded

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