=== dc2014-12-0022-pages-01.ppm === Republic of the Philippines DEPARTMENT OF ENERGY DEPARTMENT CIRCULAR NO, OC 2014 ~!2- 0022 i PROMULGATING THE PROTOCOL FOR THE CENTRAL SCHEDULING AND DISPATCH OF ENERGY AND CONTRACTED RESERVES IN PREPARATION FOR THE COMMERCIAL OPERATION OF THE WHOLESALE ELECTRICITY SPOT MARKET (WESM) RESERVE MARKET WHEREAS, Section 37 of Republic Act No. 9136, otherwise known as the “Electric Power Industry Reform Act of 2001” (EPIRA), mandates the Department of Energy (DOE) to among others: (a) ensure the reliability, quality, and security of supply of electric power; (b) encourage power sector investments in the electricity sector and promote development of indigenous and renewable energy sources and develop policies and procedures, and; {c) 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, Section 30 of the EPIRA mandates the DOE to establish the Wholesale Eleciricity Spot Market (WESM), and upon endorsement of electric power industry participants, promulgate the WESM Rules; WHEREAS, on 28 June 2002, the DOE, upon the joint endorsement of the electric power industry participants, promulgated the WESM Rules through Department Circular No. DC2002-06-003; WHEREAS, Section 10.3.2.3 of the WESM Rules authorized the DOE to declare the commencement of the spot market for ancillary services, when applicable and reasonably feasible; WHEREAS, on 02 December 2013, the DOE declared the Commercial Launch Date of WESM Reserve Market on 26 March 2014 through Department Circular No. DC2013-12-0027, subject to fulfilment of certain conditions such as Philippine Electricity Market Corporation's (PEMC) certification attesting that all systems and procedures are in place for the operation of the Reserve Market; WHEREAS, on 14 March 2014, PEMC submitted its report to the DOE stating that the WESM Reserve Market may not commercially operate on 26 March 2014 pending the regulatory approval of the Pricing and Cost Recovery Mechanism (PCRM) of the WESM Reserve Market and the completion of the registration of ancillary service providers; WHEREAS, on 26 March 2014, the DOE declared the new Commercial Launch Date of WESM Reserve Market on 26 May 2014, subject to the approval by the Energy Regulatory Commission (ERC) of the PCRM for the WESM Reserve Market, and directed the implementation of the Central Scheduling and Dispatch of Energy and Contracted Reserves through Department Circular No. DC2014-03-0009; Energy Center, Rizal Drve, Bonifacio Global City, Taguig Gity. Philippines Trunkline: (832) 479-2900, Telefax: 840-2008, 840-2134; Website: www.doe.gov.ph; E-mail; info@doe. gov.ph === dc2014-12-0022-pages-02.ppm === WHEREAS, the Central Scheduling and Dispatch of Energy and Contracted Reserves would provide the DOE better monitoring of all available generation capacity in both energy and reserve, and provide more preparations to the participants for the eventual commercial operation of the WESM Reserve Market; WHEREAS, pursuant to the said Circular, PEMC and National Grid Corporation of the Philippines (NGCP) jointly formulated the Protocol for the Central Scheduling and Dispatch of Energy and Contracted Reserves in consultation with the Ancillary Service Providers under Ancillary Services Procurement Agreement (ASPA) contracts of NGCP; WHEREAS, on 22 April 2014, the said Protocol was submitted by PEMC to the DOE for consideration and final approval pursuant to Department Circular No. DC2014-03-0009; NOW THEREFORE, pursuant to its mandate under the EPIRA and the WESM Rules, the DOE hereby issues, adopts and promulgates the following: Section 1, Approval and Adoption of the Protocol for the Central Scheduling and Dispatch of Energy and Contracted Reserves. In consideration of the foregoing, the WESM Market Manual on the Protocol for the Central Scheduling and Dispatch of Energy and Contracted Reserves (The Protocol) presented as Annex “A” to this Circular is hereby approved and adopted. The implementation of this Protocol shall immediately cease upon the Commercial Operation of the WESM Reserve Market or upon declaration of its cessation by the DOE. Section 2. Responsibilities of PEMC, NGCP and Trading Participants. PEMC as the Market Operator, NGCP as the System Operator and all affected Trading Participants shall ensure compliance with this Circular and the said Protocol for the better achievement of this policy. PEMC shall continuously submit an assessment report to the DOE on its implementation of this Protocol and the development of the WESM Reserve Market. Section 3. Separability Clause. If for any reason, any section or provision of this Circular including the attached Annex is declared unconstitutional or invalid, such parts that are not affected shall remain in full force and effect. Section 4. Effectivity. This Circular shall take effect fifteen (15) days after publication in two (2) newspapers of general circulation, PEMC is directed to publish this Circular in the market information website. Issued this November 2014 at the DOE, Energy Center, Rizal Drive, Bonifacio Global City, Taguig City, Metro Manila. CARLOS JERICHO L. PETILLA Secretary Reve or eNeReT WARLPLYING PLS OTE. E-JLP-1 4007309 mi DEC O? 2014 nN === dc2014-12-0022-pages-03.ppm === ANNEX “A” WESM Manual Protocol for Central Scheduling and Dispatch of Energy and Contracted Reserves Abstract This document describes the processes involved in the central scheduling and dispatch of energy and contracted reserve capacities | through the WESM ——— —e J === dc2014-12-0022-pages-04.ppm === Table of Contents SECTION 41 INTRODUCTION 2022.00. ceceeccepeesevevvecevvnseevereevevanvenseevevese 3 ST oe: |: ee saeomesies 3 A Preece serepcansennsnerseruean eon ceresccieceanseecucnaqestammnenonaaineenepsieaes 3 1.3 GEOR ccsccnconsanemmonmannnammncmeicens 5b BRA MRNAS EE RESTS TENA ESTERACERUNSRLINTS 4 SECTION 2 DEFINITIONS, REFERENCES AND INTERPRETATION .....000000....... 4 25 4 ERNGTIOMG isco AARON 4 BR .| _. e PRRRTE C DORR TY ERR RCLONE SEN OME Sa ene RTE AAT RS eee ARRON ee 4 aide | ETERPUUTATION eRe 5 SECTIONS: RESPONGIBUS G ia sicssicccisiscssdisccestesa a smear 5 Si Ry COBO ssa asa aati sph gh pshewonerncentnnenrnnonencrnnrsenrarennsenner § 3.2 SYSTEM OPERATOR ..0.o.o..0.. coc c ccc cceececceseesseeeceeesrcerereneees oo evcbvesceeeveueeevssseeeveeteevevees 5 3.3. TRADING PARTICIPANTS AND WESM MEMBERS ..............0...0....000ccccccececeeeeeseeeeseeeees 5 SECTION 4 CENTRAL SCHEDULING OF RESERVE CAPACITIES .........0.0.0000000..... 6 4.1 DETERMINATION OF RESERVE REQUIREMENTS ....0.0....000000002006ccecccececeseeessecesseeeeenes 6 4.2 SUBMISSION OF GENERATION AND RESERVE OFFERS FOR MARKET PROJECTIONS ...6 4.3. DAY-AHEAD SCHEDULING OF RESERVES BY THE SYSTEM OPERATOR..............0000055 7 4.4 SUBMISSION OF GENERATION AND RESERVE OFFERS FOR THE REAL-TIME CORA TICES CERT DY iiss ccscccis ts scatcncicossy¥ocsceenaceseuanecdaeteuntnstaneistoronanseeses wispaoataesians 7 4.5 RE-NOMINATION OF RESERVE CAPACITIES 0000.00.00 ooo ccccccccccceveeseeseaeeeeereceeeeeencesrevenees 7 4.6 SETTING OF CONSTRAINT VIOLATION COEFFICIENTS DURING TRANSITION................. 4 4.7 REAL-Time DisPATCH SCHEDULING AND DISPATCH IMPLEMENTATION...................... 8 4.8 ISSUANCE OF PRICING ERROR NOTICES 022002000000. o260occocc ccc cc cceccceevesseeeeeeeeeseeveeeees 9 4.9 SETTLEMENT OF RESERVE CAPACITIES .:....0..0:0--cecccsesssscecsssnnsccevssnantessocrecsenssescasnas 9 4.10 OTHER SUBMISSION REQUIREMENTS ............... wieteneets Shikai eEa Res aR EANERERERENSION 10 SECTIONS PERFORMANCE STANDARDS ....00....0......cccccccccscesesccssseeseseeescousensasees 10 SECTION6 MODIFICATIONS AND EFFECTIVITY .......00.00.000000000ccccecccceeceeeeeeees 10 2 === dc2014-12-0022-pages-05.ppm === | SECTION 1 INTRODUCTION 1.1. BACKGROUND 1.1.1 On 26 March 2013, the Department of Energy (DOE) issued DOE Department Circular No. DC2014-03-0009 entitled “Declaring a New Commercial Launch Date for the Wholesale Electricity Spot Market (WESM) Reserve Market and Directing a Central Scheduling and Dispatch of Energy and Contracted Reserves”. The Department Circular No. DC2014-03-0009 sets forth the following directives: a. A central scheduling and dispatch of energy and contracted reserve capacities for WESM shall be in effect as part of the trial operations in order for the DOE to monitor all available generation capacity in both energy and reserve, and to prepare the participants for the eventual commercial operation of the WESM Reserve Market b. The National Grid Corporation of the Philippines (NGCP) and the Philippine Electricity Market Corporation (PEMC) are hereby directed to convene and formulate the Central Scheduling and Dispatch of Reserves Protocol (The Protocol} 1.1.2 WESM Rules Clause 3.3.1.2 states that ancillary services may include the following without limitation a. The provision of sufficient regulating reserve to meet the fluctuations in load occurring within a trading interval b. The provision of sufficient contingency reserve to maintain power system frequency c. The provision of dispatchable reserve available to respond to a re-dispatch performed during a trading interval, on either a regular or an ad hoc basis; d. The provision of reactive support to guard against power system failure; and e. The provision of black start capability to allow restoration of power system operation after a complete failure of the power system or part of the power system. 1.1.3 Pursuant to WESM Rules Clause 2.3.5.1, a Trading Participant or Network Service Provider providing ancillary services shall register with the Market Operator. 1.2 PURPOSE 1.2.1. Pursuant to the DOE Department Circular No. DC2014-03-0009, this Protocol implements the directive for NGCP and PEMC to formulate the Central Scheduling and Dispatch of Reserves Protocol. This Protocol shall be referred to as the “Protocol for Central Scheduling and Dispatch of Energy and Contracted Reserves”. 1.2.2 This Protocol shall be read together with the WESM Dispatch Protocol Manual. The WESM Dispatch Protocol Manual aims to define functions and responsibilities among the Market Operator, the System Operator, and WESM Members with respect to the scheduling and dispatch of reserve capacities. 1.2.3. All normal and emergency procedures defined in the WESM Dispatch Protocol Manual shall apply. This Protocol shall define specific arrangements among the Market Operator, System Operator, and Trading Participants for a limited period === dc2014-12-0022-pages-06.ppm === during the Central Scheduling of eneray and reserves covered by Ancillary Services Procurement Agreement (ASPA) for WESM tradable reserve categories. 1.2.4 This Protocol provides for the mechanism to centrally schedule all energy and reserve capacities covered by Energy Regulatory Commission (ERC)-Approved ASPA in the WESM. 1.3. SCOPE This Protocol covers specific guidelines in the scheduling and dispatch of reserve capacities during normal and emergency conditions during the Central Scheduling of energy and reserves. 1.3.1. This Protoco! shall apply to the Market Operator, the System Operator and all WESM Members, including intending WESM Members, and Participants in the electric power industry for a limited period and shall immediately cease upon New Commercial Launch Date of the WESM Reserve Market pursuant to the provisions of the DOE Department Circular No. DC2014-03-0009. 1.3.2 Pursuant to the provisions of the DOE Department Circular No. DC2014-03-0009, all scheduled ASPA Contracts shall be settled in accordance with the respective provisions of their contract and no settlement of reserves shal! be made in the WESM SECTION 2 DEFINITIONS, REFERENCES AND INTERPRETATION 2.1 DEFINITIONS 2.1.1. “Central Scheduling” shall refer to the activities taken prior to Commercial Launch Date of the WESM Reserve Market for the purpose of central dispatch of energy and reserve categories traded in the WESM. It intends to reflect the entire capacities in the WESM, including the reserve capacities contracted by NGCP, so that these can be centrally scheduled for either energy or reserve. No settlement of reserves shail be made through the WESM, but rather these shall be settled based on the respective provisions of their ASPA. 2.1.2 Unless otherwise defined in the Glossary of this document or unless the context provides otherwise, all terms used in this Protocol that are defined in the WESM Rules shall have the meaning as so defined in the WESM Rules and relevant Market Manuals. 2.2 REFERENCES 2.2.1 This Protocol should be read together with WESM Dispatch Protocol Manual, including Chapters 3 and 6 of the WESM Rules, whenever applicable, and the DOE Department Circular No. DC2014-03-0009. === dc2014-12-0022-pages-07.ppm === 2.3. INTERPRETATION 2.3.1 The rules on interpretation set out in Chapter 9 of the WWESM Rules, as these may be amended from time to time, shall govern the interpretation of this Protocol. 2.3.2 In the event of inconsistencies, issuances of later date and those specific to Central Scheduling shall prevail over the earlier and/or general WESM Rules, WESM Market Manuals or issuances insofar as central scheduling and dispatch are concerned. SECTION3 RESPONSIBILITIES 3.1. MARKET OPERATOR 3.1.1. The Market Operator is responsibie for the administration of the Wholesale Electricity Spot Market (WESM) in accordance with the WESM Rules. Among other functions, it is responsible for determining the energy and reserve schedules of all facilities in the WESM, which shall then be submitted to the System Operator for implementation (WESM Rules Section 1.3.1). 3.1.2 In administering the operations of the WESM, the Market Operator shall carry out its functions by performing and complying with the obligations and procedures set out in this Protocol and the WESM Dispatch Protocol Manual, 3.2 SYSTEM OPERATOR 3.2.1 The System Operator shail be responsible for and shall operate the power system in accordance with the WESM Rules and applicable Market Manuals, the Grid Code and the dispatch schedule communicated by the Market Operator. Its primary responsibilities iriclude providing central dispatch to all generation facilities and loads connected, directly and indirectly, to the transmission system in accordance with the dispatch schedule submitted by the Market Operator (VWVESM Rules Section 1.3.3). 3.2.2 The System Operator shall carry out its functions by performing and complying with the procedures and obligations set out in this Protocol! and the WESM Dispatch Protocol Manual. 3.2.3 The System Operator shall continue to perform the monitoring, and settlement of reserves pursuant to each provider's ASPA. 3.3. TRADING PARTICIPANTS AND WESM MEMBERS 3.3.1 All Trading Participants and other WESM members shall comply with the timetable and procedures for scheduling and dispatch that are set out in this Protocol and the WESM Dispatch Protocol Manual as such procedures apply to them. === dc2014-12-0022-pages-08.ppm === 3.3.2 They shall endeavor to adopt internal processes, systems and infrastructure, as well as protocols with their counterparties, to comply with this Protocol and the WESM Dispatch Protocol Manual. 3.3.3 Pursuant to WESM Rules Clause 2.3.1.7, scheduled generation companies are required to operate their scheduled generating units in accordance with the scheduling and dispatch procedures described in Chapter 3 of the WESM Rules. | SECTION4 CENTRAL SCHEDULING OF RESERVE CAPACITIES 4.1 DETERMINATION OF RESERVE REQUIREMENTS 4.1.1 Appendix A.12 — Section 4 of the WESM Dispatch Protocol Manuai provides the criteria for the determination of reserve requirements wherein all reserve requirement levels are set by the System Operator through the Ancillary Services Procurement Plan (ASPP) or as ERC-approved level of reserve requirement. 4.1.2 The Market Operator shall use the results of the hourly forecasted demand of the 1200H Day-Ahead Projection (DAP) for the regulating, contingency, and dispatchable reserve requirements for the next day. 4.1.3 Should the System Operator prescribe regulating, contingency, and dispatchable reserve requirements for relevant periods, the Market Operator shall use such levels as input to the MDOM for consistency. 4.2 SUBMISSION OF GENERATION AND RESERVE OFFERS FOR MARKET PROJECTIONS 4.2.1 All Trading Participants shall submit their generation offers pursuant to the provisions of the WESM Rules Appendix A1. 4.2.2 Only trading Participants with ERC-Approved ASPA shall submit reserve offers for the market projections (WAP and DAP) of the WESM. The reserve offers shall correspond to their ancillary nominations to NGCP pursuant to the provisions of their respective ASPAs. 4.2.3. Trading Participants shall submit their generation and reserve offers consistent with the WESM Timetable for the Week-Ahead and Day-Ahead market projections to provide a more accurate determination of reserve requirements as set forth in Section 4.1 of this Protocol. 4.24 The submission of nominations and offers for Ancillary Services shall be based on per single unit per single type per interval of reserve service in accordance with Appendix A.12 of the WESM Dispatch Protocol Manual. 4.2.5 The Trading Participant shall see to it that the nomination submitted to the Market Operator shall be based on the day-ahead ancillary service schedule (DAAS) approved by the System Operator. For Regulating Reserves, only 50% (one-half) of the approved capacity by the System Operator shall be reflected by the Trading Participant to the Market Operator through the Market Participant Interface (MP1). === dc2014-12-0022-pages-09.ppm === 4.3. DAY-AHEAD SCHEDULING OF RESERVES BY THE SYSTEM OPERATOR 4.3.1 4.3.2 4.3.3 ASPA Providers shall observe the same nomination and scheduling process prescribed in their ASPA for the day-ahead scheduling of ancillary services Trading Participant shall ensure that they nominate all available capacity to the Market Operator based on the approved day-ahead ancillary schedule, The System Operator shall provide the approved day-ahead ancillary service schedule (DAAS) to the Market Operator and ASPA providers not later than 1700H. 4.4 SUBMISSION OF GENERATION AND RESERVE OFFERS FOR THE REAL-TIME DISPATCH 4.4.4 4.4.2 4.4.3 4.44 (RTD) All Trading Participants shall submit generation offers that represent their maximum available capacity pursuant to the provisions of WESM Rules Clause 3.5.5.2. Trading Participants that were scheduled by the System Operator to provide a specific reserve for a specific trading interval shall submit a reserve offer in the WESM equivalent to the capacity scheduled by the System Operator in accordance with Section 4.3 of this Protocol. a. Only two (2) reserve offer break quantities shall be submitted b. The first block should have a quantity (MVV) of O MW c. The second block should have a quantity equivalent to the day-ahead schedule identified in Section 4.3 of this Protocol for that relevant trading interval d. The first and second price offer blocks shall be priced at PhP0.0/MWh only. For Trading Participants that were scheduled by NGCP to provide regulation service for the next day(s), they shall submit a reserve offer equal to one-half (1/2) of their day-ahead ancillary schedule to account for the upward and downward dispatch. All Trading Participants shall observe the “Open Market Window” in submitting generation and reserve as stated in Section 4.4 of Appendix A.1 of the WESM Dispatch Protocol Manual. 4.5 RE-NOMINATION OF RESERVE CAPACITIES 4.5.4 45.2 All ASPA providers may re-nominate capacities for reserve during the actual day of implementation subject to the re-nomination and approval process set forth by the System Operator. Should an ASPA provider's re-nominated capacity be approved by the System Operator, the ASPA provider shall update its generation and reserve offer in the WESM for the relevant trading intervals while observing the “Open Market Window" as stated in Section 4.4 of Appendix A.1 of the WESM Dispatch Protocol Manual. 4.6 SETTING OF CONSTRAINT VIOLATION COEFFICIENTS DURING TRANSITION In order to ensure that energy supply is prioritized over contingency and dispatchabie reserve during under-generation condition, the recently approved WESM Manual on Constraint Violation Coefficients shall be used. === dc2014-12-0022-pages-10.ppm === Constraint Violation Coefficient Name Coefficient 8 Deficit Interruptible Load Reserve 100,000 Deficit Dispatchable Reserve 200,000 | | 300,000 = Contingency (N-1 Thermal Limit) 400,000 | | Nodal Value of Lost Load 800,000 (1,000,000) Deficit Contingency Reserve Over Generation Under Generation 1,000,000 | 3a | Deficit Regulating Reserve 1,300,000 ae TCG Constraint 1,400,000 |. 4 | Base Case Constraint 1,500,000 4.7 REAL-TIME DISPATCH SCHEDULING AND DISPATCH IMPLEMENTATION 4.7.1 Trading Participants shall ensure that their generators are at the appropriate loading levels prior to the trading intervals where it is expected to provide reserve service. This is to ensure that they obtain their intended energy and reserve schedules for the Real-Time Dispatch (RTD) considering their ramping characteristics. 4.7.2 The System Operator may constrain-on or constrain-off the output of generating unit/s in accordance with the WESM Merit Order Table (WMOT) and may designate must-run units (MRUs) in real-time if all available ancillary reserve capacity has been exhausted or depleted. 4.7.3 For generators that were scheduled below their respective technical Pmin for the next trading interval: 4.7.3.1 Trading Participants shall manage their offers appropriately for the following intervals so that such an incident may not recur. 4.7.3.2 If itis currently running or dispatched, then it should operate at its technical Pmin for that next trading interval. 4.7.3.3 if a generator is scheduled below its technical Pmin for the next trading interval, and it is currently off-line, then it should remain off-line for that next trading interval. 4.774 \WESM Rules Clause 3.8.4 states that Trading Participants who are dispatched shall use reasonable endeavors to achieve a linear ramp rate over the trading interval to reach the target loading level by the end of that trading interval and within the dispatch tolerances specified in WESM Rules Clause 3.8.7. Trading Participants will not be required to operate in a different fashion unless it is necessary to: 8 === dc2014-12-0022-pages-11.ppm === (a) Respond in accordance with reserve or ancillary service contracts; or (b) Respond to a direction in accordance with WESM Rules Clauses 6.3 and 6.5, 4.8 ISSUANCE OF PRICING ERROR NOTICES 4.8.1 Should the scheduling of contracted reserve capacities in the WESM affect the scheduling and pricing of energy capacities, the Market Operator may issue pricing error notice for the affected trading interval. 4.8.2 The Market Operator shall issue pricing errors and conduct market re-runs following existing guidelines and procedures. 4.9 SETTLEMENT OF RESERVE CAPACITIES 4.9.1 All reserve transactions shall be settled based on their Ancillary Service Procurement Agreement (ASPA) 4.9.2 Ifa generator that offered its day-ahead ancillary schedule in the WESM is utilized as energy based on either the RTD schedules or on its actual utilization, then it shall be treated as an ancillary service with energy by NGCP for their ASPA settlement. 4.9.3 Section 4.9.2 shall also consider the energy schedule obtained by an ASPA provider while being scheduled for regulation in the RTD because of the head-room constraint in the Market Dispatch Optimization Model (MDOM). The head-room constraint is imposed in the MDOM so that the energy and regulating reserve schedules are set in a manner so that the downward and upward dispatch of the regulating reserve will not violate the minimum stable loading (Pmin) and maximum available capacity (Pmax), respectively. Pmax Upward Dispatch Regulating .. Upward re Downward Schedule Dispatch Dispatch Energy Schedule H room Constrai Energy - Regulating Schedule > Pmin Energy + Regulating Schedule < Pmax 4.9.4 No spot transactions on reserve shall be settled in the WESM during the Central Scheduling of energy and reserves. 4.9.55 The Market Operator shall perform a simulated billing calculation following the billing cycle and to be made available to WESM members participating in the Central Scheduling and Dispatch of Energy and Contracted Reserves. === dc2014-12-0022-pages-12.ppm === 4.10 OTHER SUBMISSION REQUIREMENTS 4.10.1 The Market Operator shall submit to the System Operator the hourly ex-ante and ex- post reserve schedules not later than 8AM of the following day. SECTIONS PERFORMANCE STANDARDS | PEMC and NGCP shall endeavor to adopt measures and perform its obligations under this Protocol in accordance with comparable industry standards of due diligence. Nothing herein shall make PEMC and NGCP, its employees, officers and board members liable for any actual or compensatory damages arising from the implementation of this Protocol in the absence of willful negligence or bad faith. PEMC and NGCP shail in its reasonable opinion implement remedial measures in order to manage and mitigate any errors in the MMS arising from erroneous inputs, system failures or other related circumstances. SECTION6 MODIFICATIONS AND EFFECTIVITY In accordance with DOE Department Circular No. DC2014-03-009, this Protocol shall be in effect upon approval by the Department of Energy and shall terminate upon Commercial Operation of the WESM Reserve Market or upon declaration of its cessation by the DOE. The DOE may, in its discretion, revise Sections of this Protocol as the circumstances may require in consultation with Trading Participants. 10