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( (
ats
" Republic of the Philippines

Sa) DEPARTMENT OF ENERGY
e& e® (Kagawaran ng Enerhiya)

DEPARTMENT CIRCULAR NO. DC 202!- 07-0022 ii

ADOPTING FURTHER AMENDMENTS TO THE WHOLESALE ELECTRICITY
SPOT MARKET (WESM) MARKET MANUAL ON CONSTRAINT VIOLATION
COEFFICIENTS AND PRICING RE-RUNS FOR THE IMPLEMENTATION OF
ENHANCEMENTS TO WESM DESIGN AND OPERATIONS
(Provisions for Self-Scheduled Generation)

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 28 June 2002, the DOE, with the endorsement of the electric power
industry participants, promulgated the WESM Rules through Department Circular No.
DC2002-06-003;

WHEREAS, any changes, amendments, and modifications to the WESM Rules,
Retail Rules and their Market Manuals shall be undertaken in accordance with the
provisions of Chapter 8 of the WESM Rules;

WHEREAS, on 10 June 2019, the Market Operator submitted to the Rules Change
Committee (RCC) its proposed amendments to the Market Manual on Constraint
Violation Coefficients (CVC) and Pricing Re-Runs for the implementation of
enhancements to WESM design and operations;

WHEREAS, the proposal aims to include additional CVCs to reflect the dispatch and
curtailment hierarchy for non-scheduled, priority dispatch and must-dispatch
generating unit classifications — collectively called self-scheduled generating units;

WHEREAS, on 21 June 2019, the RCC during its 153° RCC Meeting discussed with
the Market Operator the abovementioned proposal, and thereafter approved the
publication of the proposed amendments in the Philippine Electricity Market
Corporation’s (PEMC) information website to solicit comments from market
participants and other interested parties:

WHEREAS, on 16 August 2019, the RCC during its 155t" RCC Meeting deliberated
on the proposal giving due course to the comments received from market
participants, and thereafter finalized and approved for endorsement to the PEM
Board;

WHEREAS, on 28 August 2019, after due evaluation and deliberation, the PEM
Board, during its 15" Regular PEM Board Meeting, approved for endorsement to the
DOE the above stated RCC-approved proposal;

Energy Center, Rizal Drive, Bonifacio Giobal City, Taguig City, Metro Manila, Philippines 1632
Trunkline No. (632) 8479-2900

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WHEREAS, on 04 September 2019, the PEM Board-approved amendments to the
Market Manual on Constraint Violation Coefficients (CVC) and Pricing Re-Runs were
submitted to the DOE for final approval, in compliance with Chapter 8 of the WESM
Rules;

WHEREAS, on 18 March 2020, the DOE posted the draft Department Circular
adopting the proposed amendments in the DOE website to solicit comments from the
market participants and other interested parties;

WHEREAS, on 15, 17 and 19 June 2020, the DOE conducted virtual public
consultations on the proposed amendments to solicit further comments from the
stakeholders and other interested parties;

NOW THEREFORE, after careful review of the PEM Board-approved proposal and
the comments and recommendations received on the same, the DOE, pursuant to its
authority under the EPIRA and the WESM Rules, hereby adopts, issues, and
promulgates the following amendments to the WESM Market Manual Constraint
Violation Coefficients (CVC) and Pricing Re-Runs, Issue No. 6:

Section 1. Amendments to the WESM Market Manual. The following provisions in
the WESM Market Manual on Constraint Violation Coefficients (CVC) and Pricing
Re-Runs, Issue No. 6, are hereby amended:

a. Section 4.3.1 (Order of Constraint Violation Coefficients) under Constraint
Violation Coefficient is amended to read as —

“4.3.1 The order of relaxing soft constraints shall be set such that constraints
resulting in the lowest reduction in the capability of the network, load or
generating units shall be allowed to occur first, as follows:

a. Tertiary or Dispatchable Reserve Requirement Constraint

b. Primary or Contingency Reserve Requirement Constraint

jal Nodal Value of Lost Load (VoLL) or Nodal Energy Balance
Constraint

d. System Energy Balance Constraint

e. Self-Scheduled Generation Constraint — Non-Scheduled
Generation

A Self-Scheduled Generation Constraint — Priority Dispatch
Generation
Self-Scheduled Generation Constraint — Must Dispatch
Generation

Thermal Contingency Constraint — Transformer

Thermal Contingency Constraint — Line

Thermal Contingency Constraint - Branch Group
Secondary or Regulating Reserve Requirement Constraint
Thermal Base Case Constraint — Transformer

Thermal Base Case Constraint — Line

Thermal Base Case Constraint — Branch Group.”

b. Section 4.3.4 (Order of Constraint Violation Coefficients) under Constraint
Violation Coefficient is amended to read as —

DC — Adopting Further Amendments to the Wholesale Electricity Spot Market (WESM)
Market Manual on Constraint Violation Coefficients and Pricing Re-Runs for the Implementation of
Enhancements to WESM Design and Operations (Provisions for Self-Scheduled Generation)

Page 2 of 6

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"4.3.4 The following table provides the constraint 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.

Constraint Violation
Coefficient Name

SO Action

Primary or Contingency
Reserve Requirement
Constraint

3 Nodal Value of LostLoad 800,000
| or Nodal Energy Balance |
| Constraint |
4 | System Energy Balance

| Constraint

|

Re-dispatch generation
and/or drop load as
necessa

For over-generation, identify
generating units to be shut
down to eliminate excess

1,300,000

For under-generation,
identify must-run units that
can be dispatched or drop
load as necessary.
Self-Scheduled 1,400,000 | The schedule of loading
Generation Constraint-— | level of the relevant non-
Non-Scheduled scheduled generating unit(s)
| Generation shall be curtailed.

6 Self-Scheduled 1,500,000 | The projected output of the
Generation Constraint — relevant priority dispatch
Priority Dispatch generating unit(s) shall be
Generation curtailed.

Self-Scheduled 1,600,000 | The projected output of the
Generation Constraint — relevant must dispatch
Must Dispatch generating unit(s) shall be
Generation curtailed.

co Thermal Contingency 2,500,000 | Re-dispatch generation
Constraint — Transformer and/or in load as

10 | Thermal Contingency 3,000,000
Constraint — Branch

Group

11. | Secondary or Regulating | 5,600,000 | Re-dispatch generation
Reserve Requirement and/or drop load as
Constraint necessary.

Thermal Base Case Re-dispatch generation
Constraint — Transformer and/or drop load as
__13 | ThermalBase Case _| 6,000,000 | necessary.

DC — Adopting Further Amendments to the Wholesale Electricity Spot Market (WESM)
Market Manual on Constraint Violation Coefficients and Pricing Re-Runs for the Implementation of
Enhancements to WESM Design and Operations (Provisions for Self-Scheduled Generation)

Page 3 of 6

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|__| Constraint — Line

14 Goretani=Breneh | Base Case
Goretani=Breneh | — Branch
Group
Table 1. Order of Constraint Violation Coefficients”

c. Section 5.3.1 (Automatic Pricing Re-Run Parameters) under Automatic Pricing
Re-Runs is amended to read as —

“5.3.1 The corresponding constraint relaxation formulas for the constraint
violation coefficients during pricing re-runs shall be as provided in Table 2

below:
‘ Constraint
eae, Violation Relaxatio
Order weosiel cvc | Variable n durin
Coefficient crete,
Value Pricing
Name
Re-Run
1 Tertiary or / 400,000 x 0.1 x+delta | EDP AND
Dispatchable RP
Reserve
Requirement
| Constraint
| Primary or ; . x+delta | EDP AND
Contingency | RP
Reserve
Requirement
Constraint
3 Nodal Value of | 800,000 x 0.1 x+delta | EDP AND
Lost Load or | RP
Nodal Energy
Balance
Constraint
4 System 1,300,000 x delta Excess
Energy Price for
| Balance over-
_ Constraint | generatio
| n
Shortage
Price for
under-
generatio
n
Self- 1,400,000 0.1 x+delta | EDP AND

Scheduled RP
Generation

Constraint —
Non-
Scheduled
Generation

DC — Adopting Further Amendments to the Wholesale Electricity Spot Market (WESM)
Market Manual on Constraint Violation Coefficients and Pricing Re-Runs for the Implementation of
Enhancements to WESM Design and Operations (Provisions for Self-Scheduled Generation)

Page 4 of 6

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Constraint
Violation
Coefficient

Name

Self-
Scheduled
Generation
Constraint —
Priority
Dispatch
Generation

7 Self-
Scheduled
Generation
Constraint —
Must Dispatch
Generation

8 Thermal
Contingency
Constraint —
Transformer
9 | Thermal
Contingency
Constraint —
Line
Thermal
Contingency
Constraint —
Branch Group
Secondary or
Regulating
Reserve
Requirement
Constraint

11

12 | Thermal Base
Case
Constraint —
Transformer
Thermal Base
Case
Constraint —
Line
Thermal Base
Case
Constraint —
Branch Group

13

14

CVC

1,500,000

1,600,000

2,500,000

2,500,000

3,000,000

5,600,000

6,000,000 x
6,000,000 x
6,500,000 x

Violation
Variable
Value

x 0.1
x 0.1
x 0.1

Constraint
Relaxatio
n during
Pricing
Re-Run
x + delta

x + delta

x + delta

Table 2. Automatic Pricing Re-Run Parameters”

DC

- Adopting Further Amendments to the Wh
Market Manual on Constraint Violation Coefficients
Enhancements to WESM Design and Operations (Pr:

EDP AND
RP

EDP AND
RP

EDP AND
RP

EDP AND
RP

EDP AND
RP

EDP AND
RP

EDP AND
RP

EDP AND
RP

olesale Electricity Spot Market (WESM)
and Pricing Re-Runs for the Implementation of
ovisions for Self-Scheduled Generation)

Page 5 of 6
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Section 2. Transitory Provisions. This amended Market Manual 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 Market Manual on Constraint Violation Coefficients, Issue No. 4, shall remain
valid and effective for the commercial operation of the integrated WESM and Retail
Market using the current MMS.

Section 3. 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 4. Effectivity. This Circular shall take effect fifteen (15) days following its
publication in two (2) newspapers of general circulation. Copies thereof shall be filed
with the University of the Philippines Law Center — Office of National Administrative
Register (UPLC-ONAR).

Issued on 2020 at the Energy Center, Rizal Drive, Bonifacio Global

City, Taguig City.
Oe
FONSO'G! cus!

cretary

DEPARTMENT OF ENERGY
a5 IN REPLYING PLE, CITE

7 DOE-AGC-21003677
HUQ 0 LY AMM 4

JUN 25 2021

DC — Adopting Further Amendments to the Wholesale Electricity Spot Market (WESM)
Market Manual on Constraint Violation Coefficients and Pricing Re-Runs for the Implementation of
Enhancements to WESM Design and Operations (Provisions for Self-Scheduled Generation)

Page 6 of 6