=== dc2013-05-0008-pages-01.ppm === Republic of the Philippines DEPARTMENT OF ENERGY Department Circular No. _O¢ 20/3 ~05- DOO$ LAL PROMULGATING THE INTERIM MINDANAO ELECTRICITY MARKET (IMEM) IMPLEMENTING RULES WHEREAS, Section 2 of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA), declares as a policy of the state to ensure the quality, reliability, security, and affordability of the supply of electric power; WHEREAS, Republic Act No. 7638 or the "Department of Energy Act of 1992", as amended by Section 37 of the EPIRA, authorized DOE to exercise supervision and control over all government activities relative to energy projects and to formulate rules and regulations necessary to implement the objectives of these laws; WHEREAS, Section 37 (i) of the EPIRA mandates the DOE to "[d]evelop policies and procedures and, as appropriate, promote a system of energy development incentives to enable and encourage electric power industry participants to provide adequate capacity to meet demand including, among others, reserve requirements'; WHEREAS, the Mindanao grid has been experiencing rotating brownouts due to generation capacity deficiencies to meet the energy and ancillary services requirement, ranging from 150 MW to 300 MW in 2012; WHEREAS, after the conduct of the Mindanao Power Summit last April 2012 and a series of focused group discussions, consultations and meetings with relevant electric power industry participants in Mindanao and concerned energy agencies, the DOE came up with a roadmap to sustainable solutions to the Mindanao power situation taking into consideration the current and future power supply and demand situation and the socio-economic, environmental and peace and order factors, among others; WHEREAS, as part of the roadmap, a market for the transparent and efficient utilization of available capacities shall be established to encourage participation of existing power generating facilities and interruptible loads, and entry of new generating capacities in Mindanao; WHEREAS, on 9 January 2013, DOE issued Department Circular No. DC 2013-01-0001 entitled, "Directing the Philippine Electricity Market Corporation to Develop and Energy Center, Rizal Drive., Fort Bonifacio, Taguig City, Metro Manita, Philippines Trunkline: 479-2900 Website: www.doe.gov.ph E-mail: info@doe.gov.ph === dc2013-05-0008-pages-02.ppm === Implement an Interim Mindanao Electricity Market (IMEM) as a Measure to Immediately Address the Power Supply Situation in Mindanao"; WHEREAS, pursuant to DOE Department Circular No. DC2013-01-0001, PEMC submitted to the DOE the draft IMEM Implementing Rules last 25 March 2013; WHEREAS, the draft IMEM Implementing Rules was posted on the DOE website for comments on 25 March 2013 and was subjected to public consultation on 3, 10, and 12 April 2013 in Zamboanga, Cagayan de Oro, and Davao City respectively; WHEREAS, the DOE also closely coordinated with PEMC and the National Grid Corporation of the Philippines (NGCP) to ensure a smooth implementation of the IMEM; WHEREAS, during the public consultation, the DOE received no major objections to the establishment of an interim electricity market in Mindanao; NOW THEREFORE, premises considered, the DOE hereby adopts the attached IMEM Implementing Rules and further states: Section 1. Scope. The IMEM Implementing Rules shall apply to all Electric Power Industry Participants in Mindanao. For this purpose, an Electric Power Industry Participant refers to any person or entity engaged in the generation, transmission, or distribution of electricity in Mindanao. Section 2. Declaration of Policy. All Electric Power Industry Participants in Mindanao are hereby enjoined to participate in the IMEM in the most judicious and efficient manner bearing in mind the higher goal of supporting the economic growth of the Mindanao grid through the provision of a safe and reliable supply of electric power pending the entry of new capacities in 2015. For this purpose, all acts detrimental to the attainment of this goal including but not limited to the commission ~ of anti-competitive behavior that will defeat the purpose of IMEM shall be dealt with accordingly by the appropriate government agency. All entities in Section 3 tasked to implement the IMEM are enjoined to perform their responsibilities in the most diligent manner. Section 3. Responsibilities. In addition to their responsibilities under existing laws, the following are enjoined to extend their full cooperation and action for the smooth implementation of the IMEM. (a) Philippine Electricity Market Corporation (PEMC). PEMC is hereby designated as the IMEM Operator responsible for the overall implementation of the IMEM in Mindanao. === dc2013-05-0008-pages-03.ppm === (b) (c) (d) (e) National Grid Corporation of the Philippines (NGCP). Consistent with the directive under DOE Department Circular No. 2013-01-0001, the NGCP shall perform its obligation of ensuring and maintaining the reliability, adequacy, security, stability and integrity of the nationwide electricity grid in accordance with the performance standards for the operations and maintenance of the grid, as set forth in the Philippine Grid Code, while at the same time taking into consideration the current and future power supply and demand situation of Mindanao. The NGCP shall perform the obligations provided in the attached IMEM Implementing Rules and shall constantly coordinate with the IMEM Operator for the purpose. National Transmission Corporation (TransCo). As the owner of the national grid, TransCo shall provide the necessary technical support to DOF and PEMC to assess the power situation and to ensure the compliance of NGCP to the responsibilities indicated herein. Power Sector Assets and Liabilities Management Corporation (PSALM) and National Power Corporation (NPC). Consistent with the directive under DOE Department Circular No. 2013-01-0001, PSALM and NPC shall continue to fully utilize all available capacities of all power plants in the Mindanao region. PSALM shall provide appropriate financial support to the NPC-owned power plants and obligations under the IPP contracted capacities, subject to existing PSALM and NPC arrangements. Meanwhile, NPC shall ensure efficient operation of the NPC-owned power plants. National Electrification Administration (NEA). NEA is directed to assist in ensuring the financial and technical capability of Mindanao Electric Cooperatives (ECs) in the implementation of the IMEM, including but not limited to, by: a. Guaranteeing the transactions of the ECs in the IMEM pursuant to Section 5 of Republic Act 10531 or otherwise known as “National Electrification Administration Reform Act of 2013” b. Providing capacity building programs to Mindanao ECs on forecasting, contracting and all other aspects of their operations c. Ensuring that ECs comply with the requirements of the IMEM Operator for their active participation in the IMEM. === dc2013-05-0008-pages-04.ppm === (f) All Mindanao Distribution Utilities, Grid-Connected End-Users and Generating Facilities. All Mindanao Distribution Utilities, Grid-Connected End-Users and Generating Facilities (other than self-generating facilities) are hereby mandated to comply with the requirements of the IMEM Operator. Section 4. Full Accounting of Supply. To ensure transparency and maximization of available supply in Mindanao, all registered Generating Facilities are hereby mandated to fully account all of their capacities in the IMEM. Section5. Authority to file the Price Determination Methodology. To implement the IMEM, PEMC is hereby authorized to file with the ERC the price determination methodology developed in accordance with the IMEM Implementing Rules. Section 6. Policy and Regulatory Support and Coordination. Pursuant to their respective mandates under the EPIRA, the DOE and the ERC shall closely coordinate in order that any policy or regulatory issue arising from the operation of the IMEM shall be jointly resolved by the DOE and ERC in consultation with the [MEM Operator. Section 7. Noamendment or repeal of existing laws. Nothing in this Circular shall be construed as to amend, supplant, or repeal any of the mechanisms or institutions already existing or responsibilities already allocated and provided for under any existing law, rule or contract. Section 8. Effectivity. This Circular shail take effect fifteen (15) days after publication in two (2) newspapers of general circulation. Done this , Energy Center, Rizal Drive, Bonifacio Global City, Taguig City. - CARLOS JERICHO L. PETILLA Secretary PTA ‘DEPARTMENT OF ENERGY IN REPLYING PLS CITE: eT === dc2013-05-0008-pages-05.ppm === IMEM Implementing Rules Interim Mindanao Electricity Market === dc2013-05-0008-pages-06.ppm === Table of Contents Chapter 1 — INtrOductiOn .............cccccccssssscccccssssccccenssseccccssssceccenssceccecsscecsecesssceccansecscsonsssesseeessseees 6 1.1 OVERVIEW ....csecccccsssececesssececsesneeecsesaneececsneecssaneecseseeeececeaeeecseeaaecscaeaecseeasecseeesecsseeeseceseeaecsseeaaeceseeaaees 6 1.1.1 About the Interim Mindanao Electricity Market RUI@S ..........ccccccssssscccececessessneeeeeesesessstaeeeeess 6 1.1.2 The Regulatory Framework ............cccessccceceesssssssaeeeeeceseeseeeseeeeeceseeseeaeeeeeescessesaaeseeeesesesesneaeeeeess 6 1.1.3 Description of the IMEM ..........cecccccsssecececessesssssceceeecessesesaeseeeeecesseseaseseeeeseesseseaaeeeseessessesneaeeeeess 7 1.1.4 Objectives of the IMEM ou... cecccccssssecececessesssssaeeeeecesseseaeseeeeecesseaaeeeeeescesseseaaeaeeeesseesesneaeeeeess 7 1.2. IMEM OPERATOR AND MINDANAO SYSTEM OPERATOR ......ssescccesseececeesseeecesseecececseneeceseeeseceeseeaeceseenaeeeseenaees 7 1.2.1 The IMEM Operatol..........ccccccccccscssssssnseeececeseesssneaeeeeecsseesesaeseeeeecesseseaaeseeeescesseseaaeaeseeseseseeaaeeeeess 7 1.2.2 The Mindanao System Operator .......c.cccccccccssssssssecececessesecneseeeeecessesesaeeeeeesessseseeaeseseessessesnaaeeesess 8 1.3. MARKET FEES........cssccccsssseccceeseececeesnneeceesneececsaeeecesseeeeceseaeeecsseaeecssaeeeceesaasecseseesecesaesecseeeaaeceeseaaecseeeaaees 9 1.3.1 Basis for Market Fe@S ..........cccscccessssseceeseeececseesecesseeaececeeeaececseaaececseaaececeeaaececseaaeeeseeaaeeeeeeaaeeeeeaas 9 1.3.2 Preparation and Publication of Structure and Level of Market Fees ............cccssssccceseessessseeeeees 9 1.4 GOVERNANCE OF THE IMEM..........ccsseccecesseececessenceceeseeecessaeeecesseneecsseeeeceeeasecssnsecscuasecseeeeaeceeeenaeceeeenaees 9 1.4.1 Definition and RESPONSIDbILities .......... cc ceccsssssceeeeeceseeseneseceeecessessaaeseeeescesseseaaeseeeessesseseaaeeeeess 9 1.4.2 Composition of the IMEM Governance COMMIttee ..........cccccccccesssssceeeeecessesseceeeesceesesseaeeeeess 10 1.4.3. Voting and Quorum of the IMEM Governance COMMittee ...........ccccccccecsssssssseceeeeeeessessaeeeeees 10 1.4.4 Activities of the IMEM Governance COMMIttee..........cceccceessececeessececeenaeeeesesaeeeceeaeeeeeeaeeeeneaas 10 1.5 TRANSITION TO THE WHOLESALE ELECTRICITY SPOT MARKET ........seesscceceeseececeeaececeeaaececeeaececseaaeeeeeeaaeeeeeaas 11 Chapter 2 — Membership and Registration. .............ssssccccsssssecccsssssccccssssceccecssseeeccsssscsccessceceaeeess 12 2.1 — PARTICIPATION IN THE IMIEM..........ccecsscceceessececeesaeeeceesaececseauececsesaeeecsesaececeeaaeeeceesueeeesesaeeeeseaaeeeeeeaaeeeeesgas 12 2.1.1 =. Mandatory Participants .........c.ccccccccccsssssssecececesseseeseseeeeecesseeeaeeeeeessessesasaeseeeessessasaeeeesesseeseaaeas 12 2.1.2 Voluntary Participants ..........ccccccccccessssssscecececessesecseseeeesceseeseaseeeeeessessesaeaeeeeeessessesaaaeeeesesseeseaaeas 12 2.1.3 Registration of IMEM Members ...........c::cccccccssssssssseeececesseseeaeeeeeeseeeseeaaeseeeessesseaeaeeeeseeseeseaaeas 12 2.2 — IMEM MEMBER CATEGORIES.....ss:cccesssccecessececeesaecececaececeesueeeceesaeeeceesaeeeceesaeeecsesaeeecsesaeeessesaeeeseesaeeeenaas 12 2.2.1 IMEM R@SOUICES 2.0... eeeeeeeceeeeereneceneeeeeaeeeaeaeaeaaaeaeaeaaaeaaaaaeaaaaaaaaaaaaaaaaaaaaaaaaaaaeaaaaaaaaaaaeaeaeaaaeaeaeaee 12 2.2.2 IMEM CuStOMe lS 2.00... ceeeeseeeneneneneneeeeeeeeeeaeaeaeaeaeaeaaaeaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaeaaeaaaeaaaeaaaes 13 2.2.3 IMEM Service Provider s..........cscccccsssccecsssnececeesnececsesececsesaeeeceesaeeecseaaeeecsesaeeecsesaeeecseseeeceeqeeeseas 13 2.3 QUALIFICATIONS OF IMEEM MEMBERS. ........ssscccceessececeessececseaececeeueeeceesaececeesaececsesueeeceesaececeeaaeeeseeaaeeeeseaas 13 2.3.1 Gemeral Qualifications 00.0... eccccccssececsssseeeceesnececeesnececsesneeecseqeeecseqeeecseqeeeeseeeeecseceeeeseneeeeees 13 2.3.2 Qualifications Of IMEM R@SOUPCES..........csccccessscecesstececeesneeeceeaeeecseueeecseaueeecseaueeecseaeeeeeeeeeeeees 13 2.3.3. Qualifications Of IMEM CUStOMelS.........ccccccecssececesstececsesnececeesaeeeceeseeecsesueeecseaueeecsesueeeeseeeeeeees 14 2.3.4 Qualifications of IMEM Service Providers ..........:cccsccccssssceceessececeesneeecsesaeeeceeseeecsesneeeeseseeeeees 14 2.4 RESPONSIBILITIES OF IMEEM MEMBERG.........ssccccesssecececsnececeesaecececsaeeecsesueeeceesueeeceeaueeeceesaeeeceeaueeeeseaaeeeenaas 14 2.4.1 General RESpOnsibilities ........c ee eccssssscecececessessnseseeeeeeesseaseeeeeessesseaaaeseeeeesesseeaeeeesesseeseeaeas 14 2.4.2 Additional Responsibilities of IMEM R@SOUMCES ...........cccceessssececeeecessesneaeeeeeessesseasaeeeeseeseeseaaeas 15 2.4.3. Additional Responsibilities of IMEM Service Providers .........ccccccccccsssssssscececesessessaeeeeseesesssaeas 15 2.5 APPLICATION AND REGISTRATION .......cssccccesssececeesecececuececsesaececsesaeeecsesaeeecseaaeeecsesueeecsesaeeeceeaaeeeeeeaaeesensaas 15 2.5.1 Registration Process for Mandatory Participants.............cccessscccccecessessnneceeeeesessessaeeeeeeesesseaees 15 2.5.2 Registration Process for Voluntary Participants ..............ccccessscccececessessaeeeceeesessesneaeeeeseeseeseaaeas 16 2.5.3 Registration Manual ............cccccccccccessssssssecececessesenseseeeeeceseesesaeeeeeessessesaaaeeeeeesseeseensaeeeesesseeseaaeas 16 2.6 CESSATION, SUSPENSION, DISCONNECTION AND DEREGISTRATION......cccccessssceeeesececeeaeeeceeaececeeaaeeeeeeaeeeeeeaas 16 1 === dc2013-05-0008-pages-07.ppm === 2.6.1 Cessation Of REgiStration.........c.ccccccccssssssccececessesenseceeeeecessesesaeseeeescesseeaaeeeeeessesseeaeeeesesseeseaaeas 16 2.6.2 Suspension and DiscONNection...........cccccsscccceessececsesnececsesnececeesneeecsequeeecseceeeecsecueeecssceeeeeeesneeeeees 17 2.6.3 Dre giStratiOn ....... ccc ccececessesscnececeeeeeeeeaaeaecececeeeesaaaeceeeeeeeseesaaaeeeceeeseeeaaaaeceeeeeeeeaaaaeeeeeeeeeeaaaeas 18 Chapter 3 — Market Operation. .............ssccccsssssccccsssssccccesssccccecsscecsccsssscsccsssceccecsseeesecesssseecssseees 19 3.1 — IMEM INTERVALS AND TIMETABLE.........ssccccesssececessnececeeseeeceeseeeceeueeeceesaeeecsesueeecsesaeeecsesaeeeseeaaeeeseeaeeeees 19 3.1.1 — Intervals and Trading Intervals ............cccccssssccceceeessesseseeececeseeseeeaeeeeecesseeaeseeeeeeesseeaaeaeeeesensees 19 3.1.2 Timetable for Operation of the IMEM......cccccccccccccsssssssscececesecsesnssecececessesnaeseceeseesseseaeseeeeseesees 19 3.2. SYSTEM INFORMATION AND DETERMINATION OF IMIEM DEMAND .........ccesssececeestececeeseeeceenueeeceesaeeeeeenaeeeeess 20 3.2.1 The Week-Ahead Customer Demand Fore casts........c:cccccssscccesssscecesseneeceeseeeecssseeaecesseaeesseenaees 20 3.2.2. The Week-Ahead Generation Requirement FOrecast ...........cccssssccccecessesscseceeeeeeessessaeseeeesensees 21 3.2.3. The Week-Ahead Distribution Network Information Reports .............cccesssscceeeeessesssseeeeeeseesees 21 3.2.4 The Week-Ahead Power System Information Report ............cccsssccccecessesesssceeeeeeessessnaeseeeesensees 21 3.2.5 The Week-Ahead Generator Contract Allocations ...........cccccccsssssecesseneeceeseeeecesseeaeceeeeaaeeseeenaees 22 3.2.6 The Week-Ahead Contract Allocations REPOFt.........ccccccccccsssssssssseceeecessesscseseeeescesseseneseeeeseesees 22 3.2.7. The Week-Ahead Customer IMEM Demand ............ccccecesssnceceseeeeeceeseneeceeseneeceseeeaecesseaaeeeseenaees 23 3.2.8 The Expected Demand of Load Curtailment RESOUMCES ..........cccccccccecessesssssceeeeeeessessseseeeesensens 23 3.2.9 The Week-Ahead IMEM Demand Report ...........cccseessssscececeseesenneaeeececesseseaeaeeeeseesseseaaeaeeeeseeses 23 3.3 | SUBMISSION AND VALIDATION OF IMIEM OFFERS ........ccsssscceceesnececeesececeesueeeceeaeeecsesueeecsesueeecseueeeeseqeeeees 23 3.3.1 FOr Of OFFELS ooo... eeeeccccsssccecesseececeeseeeeceeseeeeceeeeeecseseeeeceeseeeceeeeaecsceesaeceeeeeaecsseeeaecseeeaaeceseenaees 24 3.3.2 Standing OFFELS .........ccccccccccecssssssnseceeeeecessesenaeeeeeeesesseseeaeeeceeeseesesaeaeeeeeeeseeseaaeseeeeeesseesauaeseeeesensees 24 3.3.3 SUbMisSION Of OFFELS...... ee eeceenecesseececeesnececeeseeeecessesececeeeecseeaaecsesessecseeeeaecsseeeaeceeeeaaeceseenaees 25 3.3.4 Validation of OffFErS........ eee ccsssseecessseeeceeseececeesenceceseeeeeceeseeecseeeeaecsceeesecseseeaeceseeeaeceeeeaaeeeseenaees 25 3.4 — SCHEDULING AND PRICING........cccssseccceesnececeeseeecsesaeeeceeaeeecsesaeeecsesaeeeceesaeeecseaueeecsesueeecseaueeeesesaeeeeeeaeeeeees 25 3.4.1 Day-Ahead IMEM Schedulles........c.ccccccccsssssssecececesessesseaeeececesseseaeaeeececeseeseeaeseeeeseesseeuaeaeeeeseesees 25 3.4.2 Day-Ahead Schedules ............ccccessscccccecessessnaececececeesesneaeeececeseesesaeaeeeseceseesaeaeaeeeeeeeseeseaaeseeeeseesees 26 3.4.3 IMEM Schedule Optimization Model ..........ccccccccccsssssssecececeseesecseaeeeeeeesseseasseeeeeeeseessaeseeeesensees 26 3.4.4 IMEM Day-Ahead PIice............cscssccccccecsssessnececececessesnnaeeeeeeeseesesaeaeeeeeceseesnuaeaeeeeeeeseeauaeaeeeeseesees 26 3.4.5 IMEM Merit Order Table ..........cccecesscecesssneeceeseececeeseeeecesseeeecseseeaecseceeeecseseeeeceseeeaecseeeaaeceeeenaees 26 3.4.6 Implementation of the Day-Ahead Schedules. .........ccccccccccssssssssssecececesseseceeseeeescesseseseseeeesensees 27 3.5 —IN-DAY DISPATCH OF IMIEM RESOURCEG........ssccccesssececeesnececeesneeeceesaeeeceeueeeceesueeecsesaeeecsesueeeceeaeeeeeeaeeeeees 27 3.5.1 — In-Day Dispatch INStructiONs..........cccccccccssssssececececsesesseaeeececeseeseceseeeeecesseeaaeseeeeseesseseaaeaeeeeseesees 27 3.5.2 —In-Day Dispatch in Exceptional CirCUMStaNCeS.........ccccccccccessssesssecececessesesseseeeeecessesseseeeesensees 28 3.5.3 Implementation of In-Day Dispatch INStructiOns ...........ccccccccsssssecececessesscneseeeeeeessessaeeeeeesensees 29 3.5.4 FOrced OUtAES.........ccccccccccecsssessnsececececeeseseeaeeeeeeeeeeseseeaeeeseesseeseaeeaeeeeecesseseeaeaeeeeeeesseseuaeaeeeesensees 29 3.5.5 Recording and Reporting on In-Day Dispatch EVents.............ccssscccccecessesssseceeeeeeesseseneeseeeeseesees 29 3.6 —IMEM TRADING INTERVALS WITH INSUFFICIENT SUPPLY ........cccssccecessnececeesaeeeceesaeeeceesueeecsesueeeceesueeeeeeaeeeees 29 3.6.1 — Insufficient SUPPly CONCITION........... ce cccsessececececeesesseaeeeeeeeseesesaeaeseeecessesnsseseeeeseesseeaaeaeeeesensees 29 3.6.2 — LOAM-TO-Maintain ..........cccccecessscecesssececeeseececeeseeeecseseeeeceeeeeecseseeeecscseeaecseseesecsseeeaeceeeeaaeeeeeenaees 30 Chapter 4 — Metering ...........cccccsssssccccsssscecccnssseccccssssceccenssceccecssceesccesssceccecssceccausscessoeesssseecensseees 31 4.1 METERING SERVICES.......0:cccssssecccesssececeesnecececseneecseuneecesseeeececensececaesececesecscseeaeceseeeeeceseeeaecseeeaaeeseeenaees 31 4.1.1 Provision of Metering Services ..........ccccccccssssssscecececesseseaeseceescesseseaaeeeseessessesaaaeeeseeseessesssaeeeeess 31 4.1.2 Registration of IMEM Metering Services Providers ........c.cccccccsssssssscesececessessaeeeceeseessessaeeneees 31 4.2 OBLIGATIONS RELATED TO METERING SERVICES ........ssescccessececessecceceeseneeceseeneecscseeaecessaeeceseenaeceeeeaaeeseeenaees 31 4.2.1 IMEM Metering Services Providers ..........cccsscccsssssececsesnececseeececeenaececeeaaeeeceeaaeeeceesaeeeeseaaeeeeneaas 31 4.2.2 IMEEM Operator. ........eeeeecesccececeeeeeeseaececeeeeeeeesaaaececeeeeeeeesaaaececeeeeeeeesaaaececeeeseeseaaaaeceeeeseeeseaaaeeeeess 31 === dc2013-05-0008-pages-08.ppm === 4.3 METERING INSTALLATIONS .........ccccccececececececececececeeeeecececeeeeeeeeeeeeeceeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeseeeeese 32 4.3.1 Registration of Metering Installations...........c.cccccccccssssssssececececeesesseaeeeseescessesaaeeeeeesesesesssaeeeeess 32 4.3.2 Metering Installation REQUIFEMENKs ............ccccccccccecessesssseseceeecessesenaeseseesceeseaaaeeeeeeseessessaeeeeess 32 4.3.3 Use Of Meters... cecccccccesssnecesseeeecessensecessenaecessesaeceseeaaeceseeaaeceseeaaeeeseeaaeeeeeeaaeeeceeaaeeseseaueeeesaas 32 4.3.4 Performance of Metering Installations ...........ccccccccccsssssssceceeecessessaeeeseescesseaseeeeeesesesesssaeeeeess 33 4.3.5 Meter Time oo. eceeccsscsecececeeeeeennaaececeeeeeeeesaaaeeeceeeeeeeesaaaeceeeeeeeeesaaaececeeeeeeseaaaaeceeeeeeeeseaaaeeeeees 33 AZ.4 METERING DATA.......ccesssccecesssececessneeceesececeeseeeecssuneecesseneecsseensecessaeeececuasecsseaaeceseaseceseeaaecseeeaaeeseeenaees 33 4.4.1 Data Transfer and Collection ..........cccecssccesssssecesseeececeeaececseaaececeeaaeeeeeeaaeeeceeaaeesesesaeeeeseaeeseneaas 33 4.4.2 Metering Services Provider Database ..........ccccccccccccssssssssesecececessessaeeeseescessesaaeeeseessessesnaaeeeeess 34 4.4.3 Metering Database ..........cccccccccccsssssscecececessesensesecececesseeeaeseeeeseessesaaeseseessesseseaaeeeeeessessessaaeeeeess 34 4.4.4 — Rights of Access to Metering Data.............cccccssssccccecsssessssececececessesesaeseseescesseseaaeeeeeeseessessaaeeeeess 34 4.4.5. Validation and Substitution of Metering Data .............ccccccccccecsssessssececeeecessesseaeeeeeessessessaeeeeees 34 Chapter 5 — Settlement and Billing................sscccccsssssccccssssceccecsscececcssssccccesssceccacescecsecessscsecessseees 36 5.1 SETTLEMENT TIMETABLE ......ssccccesssccecsessececeesceececsaeeecseaeeeceesaeeeceesaeeecsesueeecseaueeecseaaeeecseaueeeesesaeeeeeeaeeeeees 36 5.1.1 Frequency of Settlement and Billing ............cccsessssecececeseesesseseeeeecesseseeaeeeeeeeeeseesaaeaeeeeseesees 36 5.1.2 Timetable for Settlement and Billing............cccsessssecececessesssseseeececessesesaeaeeeeeeesseseeaeaeeeeseesees 36 5.2 SETTLEMENT QUANTITIES .....ssccccessscecsesnececeeseeececaeeecsesaeeeceesaeeeceesaeeecsesueeecsesueeecseaaeeecseaueeeeseaaeeeeeeaeeeees 36 5.2.1 Metered Quantities 0.0... cccsscecssssneceessececeeseeeecseseeeeceeseeeeceeseeeecssseesecseseeaecsseeeaeceseeaaeeeseenaees 36 5.2.2 Ex-Post Contract QUANTitieS...... cece cscesececeeeeeeeeaaeaeeeeeeeeeesaaaeaeeeeeeeseesaaaeaeceeeeeeeeaaaeeeeeeeeneees 37 5.2.3 Scheduled and Dispatched Quantities............cccccccssssssscececessssesseseeececesseseaeaeeeeecesseseaeeeeeeseesees 37 5.2.4 Expected Demand QUANTItY............ccccccssssssseceeececeesesseaeeececeseeseeeseeeeeceseeeaaeseeeeseesseeuaeaeeeesensees 38 5.2.5 Variation Tolerance ..........ccccccesssccecessencececsnececeeseececseseeeecsseeeecssaeecsseeeaecssseeaeceseeeaeceseeaaeesseenaees 38 5.2.6 Trading Quantities Of IMEM CUStOMELS ...........cccccseesssececeeeseesenneaeeeeecessesneaeaeeeeecessesaaeeeeeeseesees 38 5.2.7. Variation Quantities Of IMEM CUStOMETSS .........c:ccccssssceceesececesseececesseeeecesseneecsseeeaecseseaaeceseenaees 39 5.2.8 Trading Quantities of IMEM Load Curtailment RESOUICES ..........cccccccesssssstsceeeeeeesseseneseeeesensees 39 5.2.9 Variation Quantities of IMEM Load Curtailment RESOUICES ............ccssceseetecesseeeeeseenseeeseenaees 40 5.2.10 Trading Quantities of IMEM Generators ...........ccccceessssecececessesenseaecececeseeseeaececeeeeesseseaeaeeeesensees 40 5.2.11 Variation Quantities of IMEM Generators ..........ceccessecesssneceeseeeeceeseeeeceeseeeeceseeeaecseeeaaeeeseenaees 41 5.3 SETTLEMENT PRICE AND ADJUSTMENT RATES .......csssscceceesnececeeseeecsesueeeceeueeeceeueeecscaaeeeceeaueeecseaaeeeeeeseeeeees 41 5.3.1 Settle Ment Price ........ ce ecceccccesssncecessseeeceeseeeeceeseeeecseseeeecesseeeecseeeeecseseeaecseseesecsseeeaecseeeaaeceeeenaees 41 5.3.2 Settlement Adjustment Rates for Variation QUANTITIES ...........ccccccceseesssseceeeeeeessessaeeeeeesensees 41 5.4 SETTLEMENT AMOUNTS. .......ssccccesssececsesececessaeeececaeeecsesaeeecsesaeeecsesaeeeceesaeeecsesaeeecsesaeeecsesueeeseesaeeeeeeaeeeeees 42 5.4.1 Trading Interval Supply Amounts of IMEM R@SOUICES............:::sssccececeseesssseceeeeecesseseaeeeeeesensees 42 5.4.2 Trading Interval Amounts of IMEM CUStOMeSs.........ccccccccccesssssssceeececessessaeseeeeseeseesaaeeeeeesensees 43 5.4.3 Trading Interval Dispatch Compensation RECOVery RateS........ccccccccccsssssssssseeeeecsssesssseseeeeseesees 43 5.4.4 Trading Interval Dispatch Compensation Recovery AMOUNTS...........cccccsesssceceeeesssessnteeeeeesensees 44 5.4.5 Total Trading Interval AMOUNTS .............cccsessccececeeessesseaeeececeseeseaeaeeececesseseaaeaeeeeseesseeaaeseeeesensees 44 5.4.6 Billing Period Settle Ment AMOUNES ..........:c:cccccccecssssssseeececesseseseeaeeeeecesseseeaeseeeeeeesseseaaeseeeeseesees 45 5.5 — BILLING AND PAYMENT ........ssccccesssececeessececeeseeeceeaeeececaeeeceesaeeeceesaeeeceesaeeecsesueeecseaaeeecsesueeeesesueeeseesaeeeeees 45 5.5.1 — Preliminary Settlement StateMent ..........c.cccccccecsssesssseeececeseesesneaeeeeecessesesaeseeeeecesseseaeaeeeeseesees 45 5.5.2 Final Settlement StateMent .........cccccccssssseeceesececssseeeeceesneeecseeeeeeceeeeeaecseseeaecsseeeaeesseeaaeeeseenaees 45 5.5.3 Disputes on Settlement StateMent.........ccccccccccscsssssssseeececessesesseseeeeecesseseaeseeeeecesseseaeseeeesensees 46 5.5.4 = PAYMANHS 2... eeeeessscecececeneeneeeeeeeeeeneaeeeeeeeeeeeeeaeeeeeeeeeeeeeeeaeeeseeeeeeeeeaesaaeseeeeeeeeeaaaaeaeseeeeeeseauaaaaeseess 46 5.5.5 Def AUNt eee ceceeeccesssececessnececessnececesseeeececeneecsesneecseeeeeecssueeecseseusecseeeesecseseeaececeeeaeceeeeaaecseeenaees 47 5.5.6 COnditions Of PAyMENt ...........cccesscsccccecessesseececececeeseseeaeeececsseeseaeaeeeeeceseeseaseaeeeeeeessesaaeaeeeesensees 47 5.6 — PRUDENTIAL SECURITY .......ccssccccessscceceesececeeueeeceeueeeceesaeeecsesaeeeceesaeeeceesaeeeceesueeecseaaeeeceesueeecseaueeeseeaeeeeees 48 === dc2013-05-0008-pages-09.ppm === 1k © Pat Rn © Y=) AV] (=), ce 48 5.6.2 Amount and Form of Prudential S@CUIity..............cccssssscececeseesesseseceeeeesseseaeseceeeessseseaaeaeeeeseesees 48 5.6.3 Exposure Monitoring and Margin Calls ...........cccccccsssssscccecsssesesseseeececessessaeseeeeecesseseeaeaeeeesensees 49 5.6.4 Drawdown of Prudential S@CUrity.............ccccccccccecsssessnseeececessesesneseeececessesnsaeseeeeseesseseaaeaeeeesensees 49 Chapter 6 Market Information. .............csccccssssseccccssssccccesssceccecsscececcssssceccsssceccacsscessecessececeeesseees 51 6.1 = MARKET INFORMATION .......ssccccessscceceesnececeesuceeceeueeeceesueeecsesaeeeceesaeeeceesueeecsesueeecseaueeecseaueeeesesueeeseesaeeeeees 51 6.1.1 — Provision Of INFOPMAtION...........cccccesssneecesseececeeseececeeseneeceeueeeceeeaeececeaeeceeseeaeceseeeaeceeeeaaeceseenaees 51 6.1.2 Electronic Information Exchange............ccccssccccccscsssessseeececeseesesnsaeeeeecessesneaeseeeeseesseseeaeaeeeesenses 51 6.1.3 Market Information WebSite... .cccccccsssceceesececeeseeeecesseeeeceseeeeecseceesecseseeeecsseeeaecsseeaaeeseeenaees 52 6.2 CONFIDENTIALITY OF INFORMATION .......ssccccsssscceceesnececeeseeeeceeaeeececsaeeeceesaeeecseaaeeecsesaeeecseaueeeesesaeeeseeaeeeees 52 6.2.1 Confidentiality ........... cc ccccsssssssecececeeessessnaeeeeececeseeeaeaeeeeecsseeseaaeaeeeeeceseeseeaeaeeeeeeeseesaaaeaeeeesensees 52 6.2.2 — EXCEPtiONS ..............cccesesessssseseeeeseeeseeeseseeeeeeeeeeeseseseseeeeeeeseseeeseeeeeeeeeeeeeeeseeeeeeceeseseseeeeeeeeeeeeeseeeeeees 52 6.2.3 Indemnity and Survival .............ccccccccccecsssessnececececessesenaeeeeeeeseeseaeseeeeeceseeseeaeaeeeeseesseeaaeaeeeesensees 53 Chapter 7 — System Security and Market Suspension ............ccssscccssecccsseeccssecccsseccesscccsssceasesceaees 54 7.1 — MARKET SUSPENSION ........ccssccecesssececsesececeeueeeceeaaeeecsesaeeeceesaeeecsesaeeeceesaeeeceesaeeecsesaeeecsesaeeeseesaeeeeeeaeeeeess 54 7.1.1 Market Suspension and Intervention ..........c.ccccccccsssssssecececessssesseseeeeecessesesaeaeeeesessseseaaeaeseesensees 54 7.1.2 Exemption from Liability due to Market Suspension and Intervention .............ccccesseeeeeeeeees 55 7.1.3 Declaration of Market Suspension and Intervention .............cccccsccccecessesssseceeeeeeessessneseeeesensees 55 7.1.4 — Effect of Market Suspension and INterVentiOn ........ccccccccccssessessssecececessesseeseceeeceseessaeseeeesensees 55 7.1.5 Market SUSPeNSioN REPOFts ........cccccccecesssssssececececeesesseaeeececesseseeeaeeeeecessesneaeseeeeseesseseuaeaeeeesensees 56 7.1.6 — INtErveNntiONn REPOFts .............cccccesesssseseeeeeeeeeeeeeeeseeeeeeeeeseseseeeeeeeeceeeeseeeeeeeeeeeeeseseseeeeeseeeeeeeseeeeeees 56 7.2. EMERGENCIES......ssccccesssccccesssececessececeeseeeceeseeeceesaeeeceesaeeeceesaeeecessaeeeceesaeeecseaaeeeceesaeeecseaueeeceeaaeeeseesaeeeeees 57 7.2.1 Declaration of EMergencies.........ccccccccccsssssssecececeesesesseaeeeceeeseesecneaeeeeecesseeaaeaeeeeseesseaaeaeeeesensees 57 7.2.2 ACTIONS IN AN IMEM EMEePgency...........:ccccccesesseeeeeeeeeeeeeeeseseseseeeseeeseeeeeeeeeeeseeeseseseeeeeeeseeeeeseseeeees 57 7.3 SYSTEM SECURITY THREATS ......cccsssccececssececeeseeeceeaeeeceesaeeecsesaeeeceeaeeecsesueeecsesueeecsesaeeecseaueeeesesaeeeeeeaaeeeees 59 7.3.1 Notice of System Security Threat ...........ccccscccccccecssssssceeeceesseeseceeseeeeecesseseaaeseeeeesessesaaeseeeeseesees 59 7.3.2 Response to System Security Threat ........ccccccccccccssssssssecececssecseseeseeesecesseseaeseeeeecesseseeaeaeeeesensees 59 7.4 FORCE MAJEURE ........cssccccesssececeesnececeesueeeceesaeeeceeaeeeceeaeeeceesaeeeceesaeeeceesaeeeceesaeeeceeaaeeecsesaeeeseeaaeeeseesaeeeeees 60 7.4.1 Definition of Force Majeure EVeNt ...........ccccccccccessssesssseeececeseesecneseeeeecessesneaeseeeeeeesseseaaeaeeeesensees 60 7.4.2 Obligations of the IMEM Operator and IMEM Trading Participants............cccccccsssssssseseeseeeees 60 Chapter 8 — Compliance, Audit and Dispute ReSOIUtION...............ccsssccssseeccsseeccsscccnsscecseecesesceaees 62 8.1 COMPLIANCE.......ssscccesssececeesnececeeseeecseaeeeceeaeeecesaeeeceesaeeeceesaeeecessaeeeceesaeeeceesaeeeeseaaeeecsesueeeeseaaeeeeeeaaeeeees 62 8.1.1 Enforcement and Compliance Off{CEDr .........ccccccssssssecececessesenseaeeececessesesaeseceeeeesseseaaeseeeesensees 62 8.1.2 Investigation Of IMEM Me@mbe’s.............:scsscccceceesssesseseeeceeeseesesneaeeececesseeaaeseeeeseeseeauaeaeeeesensees 62 8.1.3 SANCTIONS... eee ecceenne cece ce eeeeeaaaeee cece eeeeaaaaeceeeeeeeeeaaeaeeeeeeeseesaaaeaeceeeeeseesaaaeaeceeeeeeeesaaaeeeeeeeeneaes 62 8.1.4 Reporting of IMEM Operator and Mindanao System Operator Breaches ............::essscccceeeesees 63 B.2 AUDIT ve ceeesccccessscceceesnececeesnececeeaeeeceesaeeeceesaeeeceeaeeeceesaeeeceesaeeeceesaeeeceesaeeeceesueeecsesaeeecseaueeeeseaaeeeeeeaeeeeees 63 8.2.1 Testing of Market Software ......cccccccccccsssssssececececsssesseaeeeeecesseseaeseeeeecesseseeaeaeeeeseeseeaaeaeeeesensees 63 8.2.2 Audit of the IMEM Operator, Mindanao System Operator and Metering Services Providers 63 8.2.3 Audit of IMEM Trading Participants ............c:ccccccccsssssssscececessesesseseeececessesnsaeaeeeeeeesseseaaeaeeeesensees 63 8.3 DISPUTE RESOLUTION .........cssccccesssececsesnececeeseeeceeaeeeceesaeeeceesaeeeceesaeeecsesaeeecseaaeeecseaaeeecsesueeecseaaeeeeeeaeeeeees 64 8.3.1 Application and Guiding Principles............c.cccccccecessessssecececessesesseseeececesseseeaeseceeeeesseseaeeeeeesensees 64 8.3.2 Dispute ReESOIUtION PrOCeSS .......cccccccccecssssssssececececessesnsaeeececeseeseaeaeeeeecesseseeaeaeeeeseesseseaaeseeeeseesees 64 8.3.3 Dispute Resolution AAMINIStrator ............ccccccccccecessessceeececeseesenneseeececesseseasseeeeeeeseeseaaeaeeeesensees 64 === dc2013-05-0008-pages-10.ppm === Chapter 9 — Interpretation and Applicability ..................ccscccsssssceccccssssccccssssceccecsseececcessscsceessseees 65 9.1 INTERPRETATION OF THE IMEM RULES ........ssccesscecsssceesseessseecsseeessaecsssaecsceeceaeessaaesseseeceeesesaseussaeeseaseseaess 65 9.1.1 Format CONVENtions 00.0.0... ee cece cecececeeeeeeseeaeceeeeeeeeeaaeaeeeceeeseesaaaeaececeeeeeesaaaeaeceeeeeeeesaaaeeeeeeeeeeaes 65 9.1.2 Expressions and Reference ........cccccccscesssssssececececsssesneaeeececeseeseeseeeeeeessesesaeaeeeeecesseseuaeaeeeesensees 65 9.1.3 Times And Dates 00... ecceccecesssncecessseeeceeseececeeseececseseeeeceeseeeecseeuaecsseeeaecseseeaeceseeeaeceeeeaaeeseeenaees 66 9.1.4 — NOICOS 2... eee ececeeeensenececeeeeeeeeaaaaececeeeeeeeaaaaeceeeeeeeesaaaaaeeeceseseesaaaeaeceeeseseesaaaeaeceeeeeeeeaaaeeeeeeeeneaes 66 9.2 — APPLICABILITY OF THE IMEEM RULES .........cssssccesscecssscessaeessseeceseeessaecsssuecsseeecaeessauecseseeceenseseaeesesaeesenaeesanes 67 9.2.1 Scope Of Application ..........cceccccessscccccecessessaeeeeececessesseaeeeeeceseeseaeaeeeesceseeseeaeseeeeseesseseuaeseeeeseesees 67 9.2.2 Rights And Ob] gations ..............ccsscsccccecsssesssececececeesesseaeeececeseeseeseeeeeceseesneaeaeeeeeeesseaaeseeeeseesees 67 9.2.3 Severability 0... ccccsscccccecessessnseseeeeecesseseeaeeeeeeesesseseaeeeeeceseeeaaeaeeeseceseeseaaeseeeeseeseesaaaeaeeeesensees 68 Chapter 10 — Glossary...........cccccsssssccccssssceccenssceccccssssccccecssceccecesseesecesssceccecssceccausssessccsssseseesseees 69 === dc2013-05-0008-pages-11.ppm === Chapter 1 - Introduction 1.1 OVERVIEW 1.1.1 About the Interim Mindanao Electricity Market Rules 1.1.1.1 1.1.1.2 1.1.1.3 1.1.1.4 1.1.1.5 This document shall be known as the Interim Mindanao Electricity Market Rules ("IMEM Rules") and also as the IMEM Implementing Rules. The IMEM Rules establish the basic rules, requirements and procedures that govern the operation of the Interim Mindanao Electricity Market (“IMEM”). In particular, the IMEM Rules seek to: (a) Facilitate the efficient operation of the IMEM; (b) Specify the terms and conditions to which entities may be authorized to participate in the IMEM; (c) Specify the authority and governance framework for the IMEM; (d) Provide for adequate sanctions in cases of breaches of the IMEM Rules; and (e) Provide a timely and cost-effective framework for resolution of disputes among IMEM Members, the Mindanao System Operator and the IMEM Operator. The IMEM Rules were formulated in consultation with electric power industry participants; The IMEM Rules shall be interpreted in accordance with the provisions of Chapter 9, with the objectives of the EPIRA, and with other provisions of law. In the IMEM Rules, words and phrases that are capitalized and italicized are defined in Chapter 10. 1.1.2. The Regulatory Framework 1.1.2.1 1.1.2.2 1.1.2.3 The Department of Energy (“DOE”) is mandated under Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (“EPIRA”), to exercise supervision and control over all government activities relative to energy projects to attain the goals provided for in Republic Act No. 7638, as amended, otherwise known as the Department of Energy Act of 1992. It is likewise mandated to formulate rules and regulations as may be necessary to implement the objectives set forth in Republic Act No. 7638. The Energy Regulatory Commission (“ERC”) is the independent, quasi-judicial body created under EPIRA with the mandate to promote competition, encourage market development, ensure customer choice and penalize abuse of market power in the restructured electricity industry. Under EPIRA, the ERC is mandated to act on applications for cost recovery and return on demand-side management projects, as well as to establish and enforce a methodology for setting transmission and distribution wheeling and retail rates for the captive market of a distribution utility, taking into account all relevant considerations, including the efficiency or inefficiency of regulated entities. In addition, it also has the specific mandate to monitor the activities in the generation and supply of electric power industry with the end view of promoting free market competition and ensuring that the allocation or pass through of bulk purchase cost by distributors is transparent and non- discriminatory. Pursuant to their other respective functions and authorities, the DOE approves, and promulgates the /MEM Rules and IMEM Manuals, and any amendments of the same, while === dc2013-05-0008-pages-12.ppm === 1.1.3 1.1.4 1.2 1.2.1 1.1.2.4 the ERC approves the IMEM Price Determination Methodology and the IMEM Cost Recovery Mechanism. Any policy or regulatory issue arising from the operation of the /MEM shall be jointly resolved by the DOE and ERC in consultation with the IMEM Operator. Description of the IMEM 1.1.3.1 1.1.3.2 1.1.3.3 1.1.3.4 1.1.3.5 1.1.3.6 1.1.3.7 The IMEM is an interim wholesale electricity market for the trading of electricity in the Mindanao Power System. Registration in the MEM is mandatory for all generation capacities within the Mindanao Power System, all Mindanao Distribution Utilities and all End-Users that are directly connected to the Mindanao Grid. The IMEM allows for the participation of End-Users willing to curtail their consumption of electricity from the Mindanao Power System in the provision of supply. The IMEM is based on a binding day-ahead market. The IMEM provides real-time imbalance correction through the use of a merit order table. The IMEM is an energy-only market and does not include the procurement of Ancillary Services. The /MEM is a single-price market and does not account for network losses and congestion in its determination of the IMEM Day-Ahead Price. Objectives of the IMEM The objectives of the IMEM (collectively the “IMEM Objectives”) are: 1.1.4.1 1.1.4.2 1.1.4.3 To facilitate the transparent and efficient utilization of all available capacities in Mindanao in order to minimize the perennial power shortages in the region; To reflect the true cost of electric power in order to attract investment in new generating capacities in Mindanao; and To ensure free and fair competition and public accountability. IMEM OPERATOR AND MINDANAO SYSTEM OPERATOR The IMEM Operator 1.2.1.1 1.2.1.2 The IMEM will be administered and conducted by the /MEM Operator. The IMEM Operator shall, generally and non-restrictively: (a) Administer the operation of the /MEM in accordance with the IMEM Rules; (b) Allocate resources to enable it to operate and administer the [MEM on a non-profit basis; (c) Carry out the development, improvement and maintenance of systems, processes and procedures to be used in the operation of the IMEM. (d) Administer the registration, suspension and de-registration of IMEM Members; (e) Maintain and publish an up-to-date register of all IMEM Members; (f) Determine the Day-Ahead Schedule of each IMEM Resource in accordance with the IMEM Rules; === dc2013-05-0008-pages-13.ppm === 1.2.1.3 (g) (h) (i) (j) (k) (I) Determine the MEM Merit Order Table for use by the Mindanao System Operator in correcting real-time imbalances; Coordinate with the Mindanao System Operator in the implementation of the Day- Ahead Schedule of all IMEM Resources and the IMEM Merit Order Table to help ensure the reliability of the Mindanao Power System if necessary; Conduct transaction billing and settlement procedures; Publish and make available to the [MEM Trading Participants relevant information on the Day-Ahead Schedules, Day-Ahead IMEM Schedules and IMEM Prices in accordance with 5.6.4.4 of the IMEM Rules; Monitor and report on trading activities in the IMEM; and Comply with each of the requirements and obligations imposed on it under the MEM Rules and other applicable laws or regulations. In exercising its discretions and performing its obligations under the IMEM Rules, the IMEM Operator shall: (a) (b) (c) (d) (e) Act in accordance with any standard of performance provided for by any statute, regulation or authorization condition to which the [MEM Operator is subject; Act in a reasonable, ethical and prudent manner; Act in good faith; Take into consideration, act consistently with, and use its reasonable endeavours to contribute towards the achievement of the /MEM Objectives; and Ensure an audit trail of documentation that is fully adequate to substantiate and reconstruct all relevant actions performed. 1.2.2.| The Mindanao System Operator 1.2.2.1. The Mindanao System Operator shall implement the Day-Ahead Schedule produced by the IMEM Operator. 1.2.2.2 The Mindanao System Operator shall, generally and non-restrictively: (a) (b) (d) (e) (f) (g) (h) (i) Be responsible for and operate the Mindanao Grid in accordance with the IMEM Rules, the Grid Code and any instruction issued by the IMEM Operator, the DOE or the ERC in accordance with the IMEM Rules and IMEM Manuals, EPIRA and other relevant laws or issuances; Prepare generation requirement forecasts in accordance with Chapter 3 of the IMEM Rules; Provide all necessary information that will allow the IMEM Operator to determine the Day-Ahead Schedule of all IMEM Resources in accordance with the IMEM Rules; Issue dispatch instructions for all IMEM Resources in the Mindanao Power System and shall implement the IMEM Merit Order Table submitted by the IMEM Operator; Continuously monitor the Mindanao Power System to ensure compliance by IMEM Generators to In-Day Dispatch Instructions; Monitor all IMEM Generators within the Mindanao Power System as regards to their Available Capacity and technical ability to comply with In-Day Dispatch Instructions; Assist the IMEM Operator in enabling it to perform its obligations under the [MEM Rules; Contribute towards the development, improvement and maintenance of procedures, processes or systems, and assist with any aspect of the operation of the /MEM, in coordination with the MEM Operator; and Comply with each of the requirements and obligations imposed on it under the MEM Rules, Grid Code, and other applicable laws or regulations. 8 === dc2013-05-0008-pages-14.ppm === 1.2.2.3 In exercising its discretions and performing its obligations under the IMEM Rules, the Mindanao System Operator shall: (a) Act in accordance with any standard of performance provided for by any statute, regulation or authorization condition to which the Mindanao System Operator is subject; (b) Actin a reasonable, ethical and prudent manner; (c) Actin good faith; (d) Take into consideration, act consistently with and use its reasonable endeavours to contribute towards the achievement of the /MEM Objectives; and (e) Ensure an audit trail of documentation that is fully adequate to substantiate and reconstruct all relevant actions performed. 1.3. MArKET FEES 1.3.1 1.3.2 1.4 1.4.1 Basis for Market Fees 1.3.1.1 1.3.1.2 1.3.1.3 1.3.1.4 1.3.1.5 The cost of administering and operating the IMEM shall be recovered by the IMEM Operator through a charge imposed on IMEM Trading Participants and/or IMEM transactions. To the extent practicable, the structure of Market Fees shall be transparent. To the extent practicable, Market Fees shall consider the budgeted revenue requirements for the IMEM Operator and the IGC. To the extent practicable, the structure and level of Market Fees should not favour or discriminate against a category or categories of IMEM Members. The components of Market Fees shall take into consideration all costs necessary for the IMEM Operator to perform their functions under the IMEM Rules. Preparation and Publication of Structure and Level of Market Fees 1.3.2.1 1.3.2.2 1.3.2.3 The IMEM Operator shall develop the structure and level of Market Fees. Upon the approval of the IGC, the IMEM Operator shall file the proposed structure and level of Market Fees with the ERC for approval. Upon the approval of the ERC, the MEM Operator shall publish the structure and level of Market Fees and the methods used in determining the structure. GOVERNANCE OF THE IMEM Definition and Responsibilities 1.4.1.1 1.4.1.2 IMEM governance is the process by which decisions are made and implemented within the IMEM to ensure attainment of the IMEM Objectives. The ultimate governance of the MEM is the responsibility of the PEM Board. The majority of governance functions will be carried out by the IMEM Governance Committee (“IGC’), provided further that the functions and responsibilities of the /GC and the PEM Board under the IMEM Rules shall be assumed by the Independent Market Operator as defined under the EPIRA and its implementing rules, once the Independent Market Operator is established. === dc2013-05-0008-pages-15.ppm === 1.4.2 1.4.3 1.4.4 Composition of the IMEM Governance Committee 1.4.2.1 The IGC shall be made up of five (5) voting members and one (1) non-voting member, consisting of: (a) One representative from the IMEM Operator; (b) One representative from the DOE; (c) Three (3) members independent of the Philippine electric power industry and the Philippine Government, provided that members of the academe from public schools and universities shall not be considered part of the Philippine Government for purposes of this Clause 1.4.2.1; and (d) One representative from the Mindanao System Operator, who is the non-voting member. 1.4.2.2. The members of the /GC shall be appointed by the DOE in accordance with the required composition of the /GC as set out in Clause 1.4.2.1, having regard to the expertise necessary for the /GC to carry out its functions. 1.4.2.3. The DOE shall designate one [GC member as /GC Chairperson. Voting and Quorum of the IMEM Governance Committee 1.4.3.1 A majority of the total number of members shall constitute a quorum for the transaction of business of the /GC. 1.4.3.2. Except as provided in Clause 1.4.3.3, every decision of at least a majority of votes of members present at any meeting shall be valid as an /GC act. If voting is equal, the /GC Chairperson has a casting vote. 1.4.3.3. The IGC may likewise pass resolutions through referendum, provided that the same is passed with the written assent of a majority of all voting members of the /GC. Activities of the IMEM Governance Committee 1.4.4.1 The /GC shall, generally and non-restrictively: (a) Oversee and monitor the activities of the MEM Operator and the Mindanao System Operator with regard to [MEM processes to ensure that they fulfil their responsibilities under the /IMEM Rules; (b) Establish working groups to perform the tasks set out in Clause 1.4.4.4; (c) Oversee and monitor the activities of the working groups established under Clause 1.4.4.1(b) to ensure that they fulfil their responsibilities under the IMEM Rules; (d) Oversee and monitor the activities of IMEM Members to ascertain and determine compliance or non-compliance with the IMEM Rules; (e) Pursuant to its oversight and monitoring functions over the /MEM, require any IMEM Member or the Mindanao System Operator to submit information as may be necessary to fulfil its mandate; (f) Refer any suspected incidents of non-compliance with the IMEM Rules to the Enforcement and Compliance Officer for investigation under Section 8.1.2; (g) Impose penalties or exempt the imposition of the same for breaches of the /MEM Rules or IMEM Manuals based on the investigation findings and recommendations of the Enforcement and Compliance Officer in accordance with Section 8.2; and (h) Issue resolutions or advisories on any matter related to the IMEM. 10 === dc2013-05-0008-pages-16.ppm === 1.5 1.4.4.2. The /GC shall perform the functions set out in Clause 1.4.4.1 under the oversight of the PEM Board, regularly reporting to the PEM Board in all matters and abiding by all legal and valid directions issued to them by the PEM Board. 1.4.4.3 1.4.4.4 1.4.4.5 In exercising its discretions and performing its obligations under the IMEM Rules, the IGC shall: (a) (b) (c) (d) (e) Act in accordance with any standard of performance provided for by any statute, regulation or authorization condition to which the /GC is subject; Act in a reasonable, ethical and prudent manner; Act in good faith; Take into consideration, act consistently with and use its reasonable endeavours to contribute towards the achievement of the /MEM Objectives; and Ensure an audit trail of documentation that is fully adequate to substantiate and reconstruct all relevant actions performed. The /JGC may appoint appropriate persons to form working groups to: (a) (b) (c) (d) (e) (f) Monitor activities conducted by IMEM Members in the IMEM; Monitor technical matters relating to the operation of the IMEM; Report to the /GC on the activities of IMEM Members in the IMEM, and matters concerning the operation of the IMEM generally; Report to the /GC on apparent or suspected incidents of anti-competitive behaviour by any IMEM Member; Report to the /GC on any matter of a technical nature which causes or appears to cause unintended or distortionary effects to the operation of the IMEM; and Propose, assess and prepare for DOE approval any changes to these /IMEM Rules. The PEM Board, IGC or their respective members shall not be liable for any damage or loss suffered by any [MEM Member, or any other entity or person, save if the same was due to bad faith, manifest partiality or gross negligence. TRANSITION TO THE WHOLESALE ELECTRICITY SPOT MARKET The DOE, in consultation with the stakeholders, shall determine the timeline for the transition from the IMEM into the Wholesale Electricity Spot Market. 11 === dc2013-05-0008-pages-17.ppm === Chapter 2 - Membership and Registration 2.1 ~~ PARTICIPATION IN THE IMEM 2.1.1 2.1.2 2.1.3 2.2 2.2.1 Mandatory Participants 2.1.1.1 2.1.1.2 Mindanao Distribution Utilities and Grid-Connected End-Users shall be registered in the IMEM by the IMEM Operator as IMEM Customers under Section 2.2.2. Entities with Generating Plants, other than Self-Generating Facilities, within the Mindanao Power System, shall be registered in the IMEM by the IMEM Operator under one of the IMEM Generator categories specified in Section 2.2.1. Voluntary Participants 2.1.2.1 2.1.2.2 Self-Generating Facilities within the Mindanao Power System may register in the IMEM as an IMEM Embedded Generator if it satisfies the qualifications in Clause 2.3.2.2. An End-User or group of End-Users may register in the IMEM as an IMEM Load Curtailment Resource if it satisfies the qualifications in Clause 2.3.2.3. Registration of IMEM Members 2.1.3.1 2.1.3.2 2.1.3.3 2.1.3.4 2.1.3.5 Facilities and entities identified in Section 2.1.1 shall be registered by the IMEM Operator under the categories listed under Section 2.2. Facilities and entities identified in Section 2.1.2 may register with the IMEM Operator under the categories listed under Section 2.2. Participation in the /MEM, including trading and provision of services, is restricted to entities that are registered as IMEM Members, provided that such registration has not ceased. If a person or entity undertakes activities in two or more of the categories listed under Section 2.2 and registration in each of those categories does not violate any provision of the EPIRA, that person or entity shall register or be registered, as the case may be, in each of those categories in accordance with the procedures in Section 2.5. The IMEM Operator shall maintain and publish an updated list of registered IMEM Members indicating the categories in which they are registered and their membership status, as well as the status of pending applications in accordance with the provisions of 5.6.4.4. IMEM MEMBER CATEGORIES IMEM Resources IMEM Resources are facilities capable of providing generation to or curtailing load from the Mindanao Power System and are as follows: (a) IMEM Grid Generators; (b) IMEM Embedded Generators; or (c) IMEM Load Curtailment Resources. 12 === dc2013-05-0008-pages-18.ppm === 2.2.2 2.2.3 2.3 2.3.1 2.3.2 IMEM Customers 2.2.2.1. IMEM Customers are entities that source electric power directly from the Mindanao Grid and are as follows: (a) Mindanao Distribution Utilities; or (b) Grid-Connected End-Users. 2.2.2.2 For clarity, facilities that source electric power directly from the Mindanao Grid and intend to act as an IMEM Load Curtailment Resource shall also register as a Grid-Connected End- User. IMEM Service Providers IMEM Service Providers are entities that provide technical services required for operating the MEM and are as follows: (a) IMEM Network Service Providers; and (b) IMEM Metering Services Providers. QUALIFICATIONS OF IMEM MEeEmBers General Qualifications To qualify as an IMEM Member, a person or entity must: (a) Have facilities connected to or within the Mindanao Power System; (b) Exhibit that its facilities are compliant with the technical and legal requirements in these [MEM Rules, the Grid Code, and the Distribution Code. (c) Bea resident in, or is permanently established in, the Philippines; (d) Not be under liquidation, receivership or corporate rehabilitation under Republic Act No. 10142 otherwise known as the Financial Rehabilitation and Insolvency Act of 2010, or under a similar form of administration under any laws applicable to that person or entity in any jurisdiction; (e) Not be immune from suit with respect to the obligations of an IMEM Member under these IMEM Rules; (f) Be capable of being sued in its own name in any judicial, quasi-judicial or administrative body in the Philippines; (g) Satisfy the Prudential Security Requirements, as may be applicable; and (h) Be qualified to register or be registered under one (1) or more IMEM Member categories. Qualifications of IMEM Resources 2.3.2.1. An/IMEM Grid Generator must meet the following requirements: (a) Have a total rated capacity of not less than one (1) MW; and (b) Be capable of synchronizing with the Mindanao Grid. 2.3.2.2. An IMEM Embedded Generator must meet the following requirements: (a) Have a total rated capacity of not less than one (1) MW; and (b) Be capable of synchronizing with the system it is directly connected to. 2.3.2.3. An IMEM Load Curtailment Resource must have had a daily average peak demand of not less than one (1) MW over the preceding twelve (12) months. 13 === dc2013-05-0008-pages-19.ppm === 2.3.3 2.3.4 2.4 2.4.1 2.3.2.4 By default, the Offer Type of all IMEM Resources is Standard Offer Type. However, the IMEM Operator shall assign, upon provision of proof, the Offer Type of an IMEM Load Curtailment Resource whose mode of curtailment does not allow partial curtailment to be an All-or-Nothing Offer Type for use in the process described in Section 3.3. 2.3.2.5 By default, all IMEM Resources are available for upwards and downwards in-day dispatch. However, an [MEM Resource may apply to the IMEM Operator not to be available for either upwards or downwards in-day dispatch if its facilities or mode of supply does not allow for practicable in-day dispatch. Qualifications of IMEM Customers 2.3.3.1 An Electric Cooperative, private corporation, government-owned utility, or existing local government unit that has an exclusive franchise to operate a Mindanao Distribution System in accordance with its franchise and the EPIRA shall be registered as a Mindanao Distribution Utility. 2.3.3.2. A person or entity directly connected to the Mindanao Grid requiring the supply and delivery of electricity for its own use shall be registered as a Grid-Connected End-User. Qualifications of IMEM Service Providers 2.3.4.1. A person or entity who engages in the activity of owning, controlling, or operating a transmission or distribution system with at least one (1) IMEM Trading Participant directly connected to it shall be registered as an IMEM Network Service Provider. 2.3.4.2. A person or entity performing metering services for an IMEM Trading Participant shall be registered as an IMEM Metering Services Provider. RESPONSIBILITIES OF IMEM MEMBERS General Responsibilities Each IMEM Member: (a) (b) (c) (d) (e) (f) Shall perform all its rights, duties and obligations under the IMEM Rules, and other relevant issuances, decisions and resolutions of the DOE and ERC, in good faith and with the degree of care and to the standard expected of a prudent public utility, End-User or generator; Shall at all times comply with and maintain all consents, permissions and licenses required to be obtained and maintained to participate in the /MEM for each category in which it is duly registered under; Shall maintain and satisfy its Prudential Security Requirements as may be applicable; Shall promptly pay all fees, charges and other payments arising under the IMEM Rules as they become due; Shall ensure that, any information or data it is required to submit to the IMEM Operator, Mindanao System Operator or any other entity or to maintain, as required by virtue of being an IMEM Member, shall, to the best of its knowledge and belief, be true, valid, correct, complete and accurate at the time it is given and, while it is maintained and where appropriate, it shall keep the IMEM Operator informed of errors or omissions in and corrections or updates to any information or data which it has submitted to the IMEM Operator, the Mindanao System Operator or any other entity under the /MEM Rules; Shall ensure that any information or data it is required to submit to the IMEM Operator, Mindanao System Operator, or any person as required under the IMEM Rules will be submitted 14 === dc2013-05-0008-pages-20.ppm === (g) in a timely manner to enable the MEM Operator, Mindanao System Operator or such other person to perform their obligations and functions arising under the IMEM Rules; and Shall co-operate with and provide all reasonable assistance to the [MEM Operator on request for the purposes of the IMEM Operator performing its functions and obligations under the [MEM Rules. 2.4.2 Additional Responsibilities of IMEM Resources In addition to the responsibilities in Section 2.4.1, an IMEM Resource shall be responsible for: (a) (b) (c) Dispatching its facilities according to their Day-Ahead Schedule generated by the IMEM Operator; Informing the IMEM Operator and Mindanao System Operator immediately of any event that would result or have resulted in its non-compliance with their Day-Ahead Schedule generated by the IMEM Operator; and Reporting immediately the mitigating measures it has implemented to minimize its non- compliance in case of an event resulting to its non-compliance with its Day-Ahead Schedule. 2.4.3. Additional Responsibilities of IMEM Service Providers 2.4.3.1 In addition to the responsibilities in Section 2.4.1, an IMEM Network Service Provider shall be responsible for: (a) Relaying In-Day Dispatch Instructions from the Mindanao System Operator to IMEM Load Curtailment Resources directly connected to its system; (b) Where practical, monitoring the compliance of IMEM Resources directly connected to its system to their Day-Ahead Schedule generated by the IMEM Operator and the In- Day Dispatch Instructions from the Mindanao System Operator; and (c) Reporting to the DOE, the ERC, and the IMEM Operator any system constraints resulting to the non-compliance of an MEM Resource directly connected to its system to its Day-Ahead Schedule or In-Day Dispatch Instruction. 2.4.3.2 In addition to the responsibilities in Section 2.4.1, an IMEM Metering Services Provider shall be responsible for: (a) Collecting and retrieving Metering Data from the Metering Installations of IMEM Trading Participants it is responsible for; (b) Submitting settlement-ready Metering Data to the IMEM Operator in accordance with these IMEM Rules; and (c) Reporting to the DOE, the ERC, and the IMEM Operator any Metering Installation that is not in accordance with the required Metering Installation standards under Section 4.3.2 of these IMEM Rules. 2.5 APPLICATION AND REGISTRATION 2.5.1 Registration Process for Mandatory Participants 2.5.1.1 Entities described in Section 2.1.1 that meet the qualifications under Section 2.3 shall be registered by the IMEM Operator through the formal entry of their membership in the list of IMEM Members published by the IMEM Operator in accordance with Clause 2.1.3.5. The IMEM Operator shall inform such entities of the documentation and technical information to be submitted which are necessary for the IMEM Operator to administer the IMEM. The 15