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Republic of the Philippines
DEPARTMENT OF ENERGY
(Kagawaran ng Enerhiya)

DEPARTMENT CIRCULAR NO, OC2021- 06-0018

“

DECLARING THE COMMERCIAL OPERATIONS OF ENHANCED
WHOLESALE ELECTRICITY SPOT MARKET (WESM) DESIGN AND
PROVIDING FURTHER POLICIES

WHEREAS, Section 30 and 37 of the Electric Power Industry Reform Act of 2001
("EPIRA") provides that the Department of Energy ("DOE"), jointly with the electric
power industry participants, shall establish the WESM and formulate the detailed rules
governing the operations thereof;

WHEREAS, the DOE, on 28 June 2002, pursuant to its mandate, in consultation with
the electric power industry participants, promulgated Department Circular (“DC”)
2002-06-0003 or the WESM Rules:

WHEREAS, the DOE, on 23 October 2015, issued DC 2015-10-0015 providing the

policies for the implementation of the Enhanced WESM Design and Operations
(“EWDO");

WHEREAS, the DOE, on 04 May 2017, issued DC 2017-05-0009 entitled “Declaring
the Launch of the WESM in Mindanao and Providing for Transition Guidelines”,
effective 26 June 2017, to provide sufficient time for the Market Operator ("MO"),
System Operator ("SO") and WESM Participants to prepare and familiarize
themselves in WESM operations;

WHEREAS, the Energy Regulatory Commission (ERC), on 29 December 2020,
promulgated the Price Determination Methodology for the EWDO;

WHEREAS, in anticipation of the eventual commercial operations of the EWDO, the
DOE, on 24 May 2021, posted for comments the draft circular declaring the
commercial operations date of the EWDO and subjected the same for a one week
period of comments:

WHEREAS, on 27 May 2021, the Philippine Electricity Market Corporation (PEMC)
submitied to the DOE a certification on the readiness of the Luzon, Visayas, and
Mindanao Grids in compliance to the readiness criteria in the implementation of EWDO
pursuant to DC2017-05-009;

WHEREAS, on 11 June 2021, the Independent Electricity Market Operator of the
Philippines submitted to the DOE the report on the Limited Live Dispatch Operations
(“LLDO”) from 28 May 2021 to 04 June 2021: and

WHEREAS, the DOE, upon evaluation of the reports submitted by PEMC on the
readiness of the conditions for the commercial operation of EWDO in Luzon, Visayas,
and Mindanao, and by the MO on the results of the LLDO, found that needed
preparations have been met, however, the DOE deemed it necessary to provide

Energy Center, Rizal Drive cor. 34th Street. Bonifacio Global City, Taguig City, Philippines 1632
Tel. No. (Trunkline) (632) 8479-2900:

PY Website: fnttpe/ sw fe ston ph: Eemailt witete doe ses pls S&S
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additional support and measures to ensure efficient transition of the Trading
Participants.

NOW, THEREFORE, from the foregoing premises and pursuant to its authority under
the EPIRA and the WESM Rules, the DOE hereby adopts, issues, and promulgates
the following:

Section 1. Declaration of Commercial Operation Date of the EWDO. The DOE
nereby declares the commercial operation of the EWDO effective 26 June 2021
(“Commercial Operation Date”) in Luzon, Visayas, and Mindanao. For this purpose,
all WESM Members and concerned Electric Power Industry Participants shall comply
with the provisions of this DC, the WESM Rules and Market Manuals covering the
EWDO; Provided, that the following shall be observed during the initial phase of the
commercial operation of EWDO:

1.1. For Luzon and Visayas, the compliance to Dispatch Conformance Standards
shall be relaxed for the first three (3) months from Commercial Operation
Date in accordance with the Section 3 of this DC.

1.2. For Mindanao, the WESM Central Scheduling shall continue to be
implemented until 25 July 2021 based on WESM Central Scheduling
Guidelines as provided for in Annex “A” of this DC. During this period, the
resulting WESM prices for Mindanao will not be binding on any party and all
energy transactions shall be settled in accordance with applicable power
supply agreements.

Thereafter, actual commercial operations shall commence in accordance
with the relaxation for the first three (3) months of the following:

1.2.1. Posting of Prudential Requirements ("PR"); and
1.2.2. Dispatch Conformance Standards.

Section 2. Relaxation of PR. The posting of PR by Mindanao WESM Trading
Participants shall be relaxed for three (3) months subject to Section 1 of this DC. For
this purpose, the following shall be observed:

2.1. The Mindanao WESM Trading Participants shall be allowed to post the
required PR within the three (3) month relaxation period.

2.2. For each of the spot transactions during the period of relaxation of the posting
of PR, the concerned Mindanao WESM Trading Participants shall ensure
timely settlement of its monthly bills with the MO. Otherwise, interest shall
apply in accordance with the applicable provisions of WESM Rules and
Market Manuals.

2.3. Prior to the lapse of the three (3) month relaxation period, the Mindanao
Trading Participants who may not be able to post the required PR may opt
to change its registration status to Indirect WESM Membership and transact
in the WESM through its Direct WESM Member counterparty. Otherwise,

DEPARTMENT CIRCULAR NO. Dc2o2i-06-00I5 “DECLARING THE COMMERCIAL
OPERATIONS OF THE ENHANCED WESM DESIGN AND PROVIDING FURTHER POLICIES”
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applicable sanctions and/or penalties shall be imposed in accordance with
the applicable provisions of WESM Rules and Market Manuals.

Section 3. Relaxation of Compliance to Dispatch Conformance Standards. The
compliance to Dispatch Conformance Standards shall be relaxed for three (3) months
subject to Section 1 of this DC. For this purpose:

3.1. The WESM Trading Participants in Luzon, Visayas, and Mindanao shall be
exempted from sanctions and penalties in case of breach of Dispatch
Conformance Standards provided under the WESM Dispatch Protocol during
the three (3) month relaxation period as provided under Section 1 hereof.
Notwithstanding, the Enforcement and Compliance Office (ECO) shall
continue to monitor the observance of Dispatch Coniormance Standards by
the Trading Participants for the purpose of evaluation of the initial
commercial operation of EWDO.

All Trading Participants shall ensure full compliance to all other obligations
under the WESM Rules and Market Manuals.

3.2. Upon the lapse of the three (3) month relaxation period, the Trading
Participants shall ensure full compliance to Dispatch Conformance
Standards in accordance with the applicable provisions of WESM Rules and
Market Manuals.

Section 4. Assignment of Metering Service Provider (“MSP”) for Embedded
Generators (“EG”). The host Distribution Utility (DU) of EGs may provide metering
services to EGs operating within their franchise area until such time that the ERC
promulgates appropriate rules. For this purpose:

4.1. The host DU who intends to register as MSP for the EGs within its franchise
area shall submit an intention letter to ERC prior to the Commercial
Operation Date.

4.2. The host DU acting as MSP shall ensure compliance to the applicable
provisions of the WESM Rules and Market Manuals to include metering
standards and timely submission of metering data among others.

4.3. The DU-MSP shall be regularly subject to the conduct of MSP audit
undertaken by the PEM Audit Committee.

Section 5. Compliance to WESM Registration. Subject to Section 2 of this DC, all
Trading Participants shall ensure completion of their WESM registration prior to
Commercial Operation Date. Otherwise, applicable sanctions and/or penalties shal!
be imposed in accordance with the applicable provisions of WESM Rules and Market
Manuals and other relevant issuances of the DOE.

Section 6, Regulatory Support. The ERC shall ensure the provision of support in the
regulatory requirements and approvals consistent with the policies set forth under this
Circular and in accordance with existing laws and procedures. It shall impose penalties

DEPARTMENT CIRCULAR NO. OC %2I-0G- 00K “DECLARING THE COMMERCIAL
OPERATIONS OF THE ENHANCED WESM DESIGN AND PROVIDING FURTHER POLICIES”
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for any violation to this Circular.

Section 7. Separability. If any provision of this Circular is declared invalid or
unconstitutional, the other provisions not affected thereby shall remain valid and
subsisting.

Section 8. Repealing Clause. All issuances inconsistent with the provisions of this
Circular are hereby repealed or amended accordingly.

Section 9. Effectivity. This Circular shall be effective immediately upon its publication
in the Official Gazette or two (2) newspapers of general circulation. Copies hereof shall
be filed with the University of the Philippines Law Center — Office of National
Administrative Register (UPLC-ONAR).

Issued on at the Energy Center, Rizal Drive, Bonifacio Global City,

Taguig City.
NSOg: l/
Secretary
YES epantwent oF ENERSY
, "DOE-AGC.21003679
UU RECT NAM
JUN 25 2775
DEPARTMENT CIRCULAR NO. _062021-06- 00K “DECLARING THE COMMERCIAL r

OPERATIONS OF THE ENHANCED WESM DESIGN AND PROVIDING FURTHER POLICIES”

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GUIDELINES ON THE WESM CENTRAL
SCHEDULING IN MINDANAO

18 June 2021
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1. BACKGROUND

All Mindanao Generator Trading Participants are expected to implement the 5-minute dispatch
schedules generated from the New Market Management System (MMS) during the WESM Central
Scheduling (or WCS) period. Settlement shall be based on the existing contractual arrangements
in Mindanao. There shall be no settlement of transactions in the WESM.

All Generators that are required to register in the WESM, including those that voluntarily
registered, shall participate in the WCS. These shall include grid-connected and embedded
generators.

2. RESPONSIBILITIES

2.1. Generators

2.1.1. Generators shall ensure that they have access to their generation resources in the
User Interface of the MMS’ Market Participant Interface (MPI). For this purpose, they
shall have an updated Digital Certificate and valid user credentials.

2.1.2. Alternatively, Generators can transact in the MMS using the MPI’s API Web Service
(optional).

2.1.3. Trading Participants and their counterpart plant operators shall ensure that they have
a communication protocol in place for the timely communication and coordination of
dispatch targets.

2.1.4. Generators shall inform the Market Operator on any issues and/or concerns
encountered during the WCS.

2.2. System Operator

2.2.1. The System Operator shall ensure that its Energy Management System (EMS) is
available for the Market Operator to capture real-time data via the Inter-Control Center
Communications Protocol (ICCP).

2.2.2. The System Operator shall submit the input constraints in the MMS (e.g. overriding
constraints, outages, transmission limits, reserve requirements, etc.).

2.2.3. The System Operator shall submit information on all their re-dispatch instructions to
the Market Operator.

2.2.4. The System Operator shall submit a report to the Market Operator on their
observations on the WCS implementation.

2.2.5. The Metering Services Providers shall continue to submit metered quantity (MQ) data
to the Central Registration and Settlement System (CRSS). It is provided, however,
settlements during the WCS shall be in accordance with the current contracted
arrangements in Mindanao.

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2.3. Market Operator

2.3.1. The Market Operator shall regularly update regional demand forecasts for the market
projections (WAP, DAP, and HAP) and for the real-time dispatch (RTD) market runs.

2.3.2. The Market Operator shall ensure that the MMS is available to provide accurate and
timely dispatch schedules to the Generators and the System Operator.

2.3.3. The Market Operator shall ensure that the Market Participant Interface (MPI) is
always available for access by the Market Participants.

2.3.4. The Market Operator shall submit to the DOE an evaluation of the WCS considering
all inputs from the Generators and the System Operator.

3. PROCEDURES DURING WCS

3.1. Current Contractual Obligations and Implementation of Interim Mindanao Dispatch Protocol
3.1.1. All generators and customers shall still perform their existing processes in
accordance with their contracts.
3.1.2. All generators and customers are still expected to perform their responsibilities as
provided for in the Interim Mindanao Dispatch Protocol.

3.2. Submission of Working Offers
3.2.1. Scheduled Generators are expected to submit working offers in the MMS based on
their Day-Ahead Generation Schedule (DAGS).
3.2.1.1. The MW quantity block up to the DAGS should be offered at PO.00/MWh.
3.2.1.2 Scheduled generators shall submit their preferred offer price for MW
quantity block beyond the DAGS up to their maximum available capacity.

Figure 1. Sample Offer Profile Based on DAGS

OFFER PROFILE IN NMMS-MPI
DAGS 100 = 0 0.00 ZERO PMIN
MAX AVAILABILITY 120 100 0.00 -DAGS

120 4,000* MAX AVAILABILITY

*Based on TP input (e.g. production cost)

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3.3.

3.4.

3.5.

3.2.2. Generators shall also consider the commitment of the technical Pmin of their
generation units when submitting offers in the MMS.

3.2.3. Generators shall revise their working offers in the MMS in consideration of their in-
day re-nominations.

3.2.4. During tripping of their generation units, generators shall cancel their working offers
in the MMS.

3.2.5. Generators can only declare up to three (3) ramp rate break quantities for their
generation unit’s ramp rate profile.

Central Scheduling of Contracted Ancillary Services in the WESM
3.3.1. Scheduled Generators that obtained a Day-Ahead Ancillary Service Schedule (DAASS)
from the System Operator shall update their working offers to include reserve offers.
3.3.2. All reserve offers should contain two offer break quantities: the first MW should be
zero, the next MW should be based on the DAASS (except for regulation reserve).
3.3.2.1 Regulation reserve providers shall submit half of their DAASS for regulation
up (RU), and another half for regulation down (RD).
3.3.2.2 For contingency and dispatchable reserve providers, their reserve offers
should be equal to their DAASS
3.3.3. The two (2) reserve offer break quantities should be offered at P0.00/MWh.
3.3.4. Generators may revise their reserve offers based on re-nominations with the System
Operator.

Submission of Working Nominations

3.4.1. Must-Dispatch, Priority Dispatch, and Non-Scheduled Generators are expected to
submit accurate 5-minute MW nominations in the MMS’ MPI.

3.4.2. Must-Dispatch, Priority Dispatch, and Non-Scheduled Generators shall amply revise
their working nominations to reflect the best estimate of their generator’s output in
the immediate horizon.

3.4.3. During tripping of their generation units, the Generators shall cancel their working
nominations in the MMS.

Submission of Standing Offers and Nominations

3.5.1. Scheduled Generators shall submit Standing Offer Profiles in the MMS.

3.5.2. Must-Dispatch, Priority Dispatch, and Non-Scheduled submit Standing Nomination
Profiles in the MMS.

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3.6. Start-up and Shutdown Procedures

3.6.1.

3.6.2.

Generators whose generating units are scheduled to start-up or shutdown shall
request clearance from the System Operator at least four (4) hours before scheduled
start-up.

Once cleared by the System Operator, Generators shall manage the start-up and
shutdown sequence of their generation facilities through their offers (e.g. reflect
accurate ramp rate profiles, manage offer MW/price blocks, etc.).

3.7. Implementation of 5-minute Dispatch Schedules

3.7.1. Except for scheduled ancillary service providers, generators are expected to ramp to
their target 5-minute dispatch schedules as generated from the MMS while
considering their DAGS or in-day re-nominations.

3.7.1.1 If the 5-minute dispatch schedule is greater than their DAGS or in-day re-
nomination, then generators are expected to dispatch their generating
facility up to their DAGS or in-day re-nomination.

3.7.2. The System Operator shall provide dispatch instructions to scheduled ancillary
service providers.

3.7.3. The System Operator may re-dispatch generators based on the following.

3.7.3.1 Available ancillary services; or
3.7.3.2 Load Adjustment Notice.
3.7.4. Generators are expected to follow SO re-dispatch instructions.
3.7.4.1. For compliance reporting purposes, Generators are expected to ask for the
reason of SO’s re-dispatch instruction: (i.e. ancillary service and Load
Adjustment Notice)
3.7.4.2 Generators should log reason provided by the System Operator in the MMS-
MPI’s Dispatch Conformance Display.
3.7.5. In cases where 5-minute RTD schedule is below Pmin:
3.7.5.1 If expected to start-up/shutdown, ramp towards RTD schedule; or
3.7.5.2 If currently online, ramp towards Pmin; or
3.7.5.3 If currently offline, stay offline.
3.7.5.4 Immediately revise offers to ensure generating unit is scheduled at
intended MW level (e.g offline or at least at Pmin).
3.7.5.5 The above guidelines may still be overridden by the System Operator for
reliability reasons.
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3.8. Settlement During WCS

3.8.1.

3.8.2.

3.8.3.

Generators, Customers, the System Operator, and the Market Operator shall perform
their responsibilities as provided for in the Interim Mindanao Dispatch Protocol.
Settlement shall be based on the existing contractual arrangements between
Generators and Customers in Mindanao.

There is no settlement of WESM transactions.

3.9. Complying to the 5-minute Dispatch Schedules and Instructions

3.9.1.

3.9.2.

Generators are expected to follow the procedures of generation dispatch as provided
in section 3.7 of this document.

Should Generators be unable to comply with the procedures of generation dispatch
in section 3.7 of this document, they shall report the reasons for such non-
compliances to PEMC’s Enforcement and Compliance Office. They shall provide the
same reason for non-compliance to the Market Operator near real-time through the
Dispatch Conformance Standards (DCS) module of the Market Participant Interface.

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