=== dc2018-04-0012-pages-01.ppm === Republic of the Philippines DEPARTMENT OF ENERGY DEPARTMENT CIRCULAR NO. PC 2o1h- of - opId a ADOPTING FURTHER AMENDMENTS TO THE WHOLESALE ELECTRICITY SPOT MARKET (WESM) MARKET MANUALS ON PRICE DETERMINATION METHODOLOGY AND CONSTRAINT VIOLATION COEFFICIENTS AND PRICING RE-RUN FOR THE IMPLEMENTATION OF ENHANCEMENTS TO WESM DESIGN AND OPERATIONS WHEREAS. Sections 30 and 37/f of the Electric Power Industry Reform Act (EPIRA) Provides that the DOE, jointly with the electric power industry participants, shall establish the Wholesale Electricity Spot Market (WESM) and formulate the detailed rules governing the operations thereof; WHEREAS, on 26 June 2002, the DOE, with the endorsement of the electric power industry participants, promulgated the WESM Rules thraugh Deparment Circular No. DC2002-06-003; WHEREAS, any changes, amendments, and modifications to the WESM Rules including its Market Manuals shall be undertaken in accordance with the provisions of Chapter 8 thereof, WHEREAS, on 11 April 2017, the Philippine Electricity Market Corporation (PEMC} submitied to the Rules Change Committee (RCC) the Proposed Amendments to the WESM Market Manuals on Price Determination Methodology (PDM) and the Constraint Violation Coefficients and Pricing Rerun (CVC-PR) for the implementation of enhancements to WESM design and operations: WHEREAS, the PEMC's proposed amendments to the POM Manual primarily aims to correct the calculation of price adjustments for customers during marke intervention or suspension, and to clarify provisions on additional compensation for Must-Run Units and constrained-on generating units: WHEREAS, the PEMC's proposed amendments to the CVC-PR Manual primarily aims to provide details and additional constraints on transmission equipment, revise the order and nomenclature of the CVCs for consistency with the newly amended Philippine Grid Code; WHEREAS, during the 128" RCC Meeting on 11 April 2017, discussed the said proposed amendments to the POM and CVC-PR Market Manuals, which thereafter approved the publication of the proposal in the WESM website to solicit comments from marke! participants and other interested parties; Energy Gener. Fizal Grive, Boriacio Glohal Giy. Taguig City, Meir Mace. Pidippines Tels: (Trurés) #404401 io ot; Fao Bel-2067F; B4O-2958) BAD? (Domestic: 602-840-243: Gee: AOR eT [irieerintronal i === dc2018-04-0012-pages-02.ppm === === dc2018-04-0012-pages-03.ppm === WHEREAS, on 09 June 2017, the RCC during its 130" RCC Meeting, further deliberated on and finalized the proposal, which thereafter approved its endorsement to the PEM Board: WHEREAS, on 18 September 2017, after due evaluation and deliberation, the PEM Board during its 127" PEM Board Meeting approved for endorsement to the DOE the above stated RCC proposal: WHEREAS. on 02 October 2017, the above stated PEM Board-approved amendments to the POM and CVC-PR Market Manuals were submitted to the DOE for final approval, in compliance with Chapter 8 of the WESM Rules: WHEREAS, the DOE reviewed the said PEM Board-approved proposal, and deemed it consistent with the objectives of the WESM and the DOE policies on the enhancements of WESM design and operations: NOW THEREFORE, pursuant to its authonty under the EPIRA and the WESM Rules. the DOE hereby adopts, issues, and promulgates the following amendments to the WESM Market Manuals for the implementation of enhancements to WESM design and operations: Section 1. Amendments to the Price Determination Methodology Manual. The following provisions in the Price Determination Methodology Manual promulgated by the DOE for the enhancements to WESM design and operations through Department Circular No. OC2016-10-0014 are hereby amended: (a) Section 7.1.2 under Scope of Administered Prices is amended to read as - ‘T.i2 The administered pice shall be established by the Market Operator in accordance with the following guiding principles: AKER aX RAR @. The administered price shall be applied in the region where the market suspension of market intervention is declared. For this purpose, the ragions are Luzon, Visayas and Mindanao. f. The administered price will apply only to transactions above the declared bilateral contract quantities.” (Db) Section 7.3.4 under Customer Energy Administered Price is amended to read aS - “T.3.4 ln case only one region is under market suspension or market intervention and the said region is exporting power to the other region and the nodal energy dispatch prices in the region that is not under market SUSRENSION of market intervention were determined in accordance with WESM Rules Clause 3,6, the nodal energy dispatch prices for the customer resources within the region that is not under market suspension or market intervention shall be adjusted by adding the following: 2/8 Marvels On Price Doterminaiion Mathodology and Gongtraint Violation Goefficients arid Pricing Re-Run for the implareniaion of Enhanmenent bo WESM Deion and Ooerstions === dc2018-04-0012-pages-04.ppm === === dc2018-04-0012-pages-05.ppm === NARAPA wag = Where: NARAPAn wari Site GWAP Han GWAEAP, EDSpmarj B-N AR; b-NAR _ 8Qirc, *(GWAEAP, — GWAP yap |) Ebconan, EDS war | refers to the non-administered region administered price adjustment for a customer resource within the non-administered region for dispatch interval i refers to the snapshot quantity of the interconnection for dispatch interval | refers to the generator weighted average price at the non-administered region using energy dispatch schedule for dispatch interval | refers to the generator weighted average energy administered price using snapshot quantity for dispatch interval | refers to the energy dispatch schedule of customer resource b within the non-administered region for dispatch interval i refers to the set of all customer resources within the non-administered region for dispatch interval relers [0 @ customer resource within the non- administered region” (c) Section 8.3.1 under Additional Compensation is amended to read as - “6.3.1 A Trading Participant may be entitled to additional compensation when the costs incurred in complying with dispatch instructions are not sufficiently covered by the trading amounts related to settlament intervals with dispatch intervals under any of the following conditions: a. Market suspension or market intervention and was paid at the administered price in accordance with Section 7: or b. When thé same Trading Participant was designated as must-run unit or constrain-on generating unit and was paid at the WESM orice in accordance with Section 4,12," Section 2. Amendments to the Constraint Violation Coefficients and Pricing Re-runs Manual. The following provisions in the Constraint Violation Coefficients and Pricing Re-runs Manual are hereby amended: (a) Section 2.1.2 under Definitions is amended to read as - “2.1.2 The following terms as used in this Market Manual shall have the following meaning — a8 ee eee eee DO py po - Adopting Fumner Amendments to the Wholesale Elecincty Spot Markel (WESM) Markel Manueis 07 Prise Betanninaion Methodology and Constraint Viwalion Gaeiiaen and Praing Re-Riun for fe af of Enhancamenis to WESM Design and Operations === dc2018-04-0012-pages-06.ppm === Cit === dc2018-04-0012-pages-07.ppm === a. Soft Constraints. Constraints which are allowed to be violated in the market dispatch optimization mode! such thal the optimization process will produce a Solution. b. Branch Group. A group of lines and/or transformers.” (6) Section 4.2 under Constraint Violation Coefficient is amended to read as - “4.2 Soft Consirainis The following soff constraints may be relaxed in the markef dispateh optimization mode and shall have an associated consfraint violation coshicieny, xx XX xxx a. Thermal Base Case Constraint, where the power flow through a ransmission equipment should be within its normal (base case) limit. e, System Energy Balance Constraint, where the total generation scheduled should meet the demand requirement. f. Noda! Voll or Nodal Energy Balance Constraint, where the power going into a node should be equal to the power going outside of the same node This ¢aistraint also refers to the nodal energy balance constraint, which may vary from node to node, and/or be set so as to reflect oad shedding pnornties.” (¢) Section 4.3.1 under Order of Constraint Violation Coefficients is amended to read a5 - “4.3.1 The order of relaxing soft constraints shail be sei such that consiraints resulting in the lowest reduction in the capability of the network, load or generating units shall be allowed to occur first, as follows: . Tertiary Reserve Requirement Constraint . Primary Reserve Requirement Constraint . Nodal VoLL or Nodal Energy Balance Constraint . System Energy Balance Constraint . Self-scheduled Generation Constraint Thermal Contingency Constraint — Transformer g. Thenmal Contingency Constraint — Line h. Thermal Contingency Consiraint — Branch Group |, Secondary Reserve Requirement Constraint { Thennal Base Case Constraint — Transformer k. Thermal Base Case Constraint — Line l. Thermal Base Case Constraint — Branch Group” Sb Oo ew (d) Section 4.3.4 under Order of Constraint Violation Coefficients is amended ta fead as - 4/8 OCre-63-282— Adeoing Furher Amendments to the Wiedesale Elactmony Spot Market WES] Market Manuiels On Pose Oreination Methodotogy and Constraint Vietalion Cosiicents ane Pricing ResRum for ite Impenpentation of Enancemes to WESM Designer anc Operations === dc2018-04-0012-pages-08.ppm === === dc2018-04-0012-pages-09.ppm === “4.3.4 The following table provides the canstraint violation coefficients, which is reflective of the order of relaxing soft constraints established in Section 4.3.1 of this Market Manual, and the corresponding action by the System Operator. | Order VW 1Z Constraint Violation Coefficient Name Tertiary Reserve Requirement Primary Reserve Reguirament Nodal Value of Lost Load or Nodal Energy Balance | Gonstraint | Systam Energy Balance Constraint Self-Scheduled | | Generation Constraint | Thermal Contingency | Constraint - Transformer Thermal Contingency Constraint - Line Thenial Contingency Constraint - Branch Grou Secondary Reserve Requirement Thermal Base Case Sonstraint - Transtonmer Thermal Base Case Constraint — Line Thermal Base Case Canstraint — Branch Groun $0 Action 100,000 | None 200,000 | Nene 600,000 | Re-tispatch generation and/or droog load as 1,300,000 | For avergeneration, _ iGentity generating units lo be shut down te eliminate BxGeSS. capacity, For under-generation, identify must-un units that can be dispatched or odmop load as necessa 1,400,000 | The projected output or schedule of loading lavel of the relevant generating unit(s) shall be curtailed, 1,500,000 | Re-dispatch generation and/or drop load as Necessary. 1,500,000 2,000,000 3,500,000 | Re-dispatch generation and/or drop load as nacessary. 4,000,000) Re-dispatch generation and/or drop load as Necessary. 4.000, 000 4,500,000 Table 1, Order of Constraint Violaton Coefficients * 3'B EE ________________,, oa DCW Adopting Further Armendmends to the Wholesale Elecincity Spot Markel (WESR) Marke! Manuals On Prot Betermnaton Methosology and Constraint Vietion CaeMicianis and Pnoing Aie-Run for the implemeniation of Enhancements to WESM Design and Operborns === dc2018-04-0012-pages-10.ppm === === dc2018-04-0012-pages-11.ppm === (¢) Section 5.3.1 under Automatic Pricing Re-Run Parameters is amended to read as - “6.3.1 The coresponding constraint relaxation formulas for the constraint violation coefficients during pricing re-runs shall be as provided in Table 2? bedcvy: Constraint . iol Violation Vholation Relaxation — Order Coefficient CVG Wanable | Dette during Bring’? Value | Pricing Re- | EDP AND RP Ie a00,000 x | Constraint 4 System Energy | 1,300,000 x Excess Balance | Price for Constraint overs generation | shortage | Proce for under- generation x+ della | EDP AND RP | Selt-Scheduled Generation Constraint x+ della [EDP AND | RP x+déeta | EDP AND | RP wi al BP Branch Group g Secondary 3.400000 x+delta | EOP AND Reserve RP Raeguirament 10) | Thermal Base 4.000.000 0.1 x + delta EDP AND Case RP Constraint - ‘Transfonter — 11 | Thermal Base | Base | 4.000, mised x | B | + cate EDP AND | bf DC a-ee— Adeging Further Amendments to tom Wholesmie Electricity Spot Maret (WEGH) Market Manuals On Fite Detenminaiion Methoidogy and GConsirant Violation Coaitigents and Pricing Re-Riun for the impenoaniaeen of Enhancers: to WESM Design ano Openaliors 2,000,000 === dc2018-04-0012-pages-12.ppm === === dc2018-04-0012-pages-13.ppm === Constraint | rir Violation Relaxation | Re-run Order | Coeficen: | CVC | Variable | Dets = hee alue Case RP onsiraint = | | Line | 12 | Thermal Base | 4.500.000 x x+delta | EDP AND | Case RP | Constraint — | | Branch Group Table 2. Automatic Pricang Re-Run Parameters " EDP refers to nodal energy dispatch price; and RP refers to reserve price” Section 3, Price Determination Methodology of the WESM. The Philippine Electricity Market Corporaton (PEM), as the Market Operator, is heraby directed to submit supplemental application and manifestation with the Energy Reguiatory Commission (ERC) in relation to abovementioned changes in the Price Determination Methodology (PDM) as adopted in this Circular. For this purpose, PEMC shall periodically provide updates and reports to the DOE and PEM Board on the ERC's approval of the said PDM. It shall likewise continuously assess the effectiveness of the adopted methodology for administered prices, and provide recommendations to the DOE. Section 4. Regulatory Support. For efficient implementation of the policies set herein and implementation of enhancements to WESM design and operations, the ERC is hereby enjoined to prioritize the review and promulgation of the WESM's amended PDM. Section 5. Transitory Provisions. These amended Market Manuals shall be initially used for the development of the WESM's New Market Management System (NMMS} and provide guidance for the stakeholders and WESM participants on the implementation of the enhancements to WESM design and operations. For clarity, the current WESM Rules and its Market Manuals shall remain valid and effective for the commercial operabon of the integrated WESM and Retail Market using the present MMS. Section 6. Separability Clause. if for any reason, any section or provision of this Circular is declared unconstitutional or invalid, such parts not affected shall remain valid and subsisting. section 7. Effectivity. This Circular shall take effect upon its publication in at least two (2) newspapers of general circulation and shall remain in effect until otherwise revoked, 7a 6 SS EE aE ELE. Dag oe ood Adopimgy Further Amendments to the Vihoesaie Elecinaty Soot Market (WESM) Markal Manuals On Pree Deterninaion Melhodology ane Constraint Viegton Conficients anc Poong Ais-Aun dor ihe Implementation of Enhancements io WESM Design and Goaretions === dc2018-04-0012-pages-14.ppm === === dc2018-04-0012-pages-15.ppm === Issued this February 2018 at the DOE, Energy Center, Rizal Drive, Bonifacio Global City, Taguig City, Metro Manila. Dank ote Sener & ter Pripoee i TERA RET OF Dai Lr mr he ee BOE-AGG-1ng087 TH DUOC E00 CRN WI MAR 28 2018 b/s eee GS nt-aye— Apepling Furher Amendments to the Wholesale Elecinicity Spot Market (WESM) Market Manuva On Pies Geieminatoen Meathodolegy and Constraint Violation Coeiicerns and Pricing Re-Run for the lmplenentation of Enhancements bo WES Design ang Operations === dc2018-04-0012-pages-16.ppm ===