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Republic of the Philippines
DEPARTMENT OF ENERGY

DEPARTMENT CIRCULAR NO. _DC 2022 - 03-0009 ,)

ADOPTING FURTHER AMENDMENTS TO THE WHOLESALE ELECTRICITY
SPOT MARKET (WESM) RULES AND WESM REGISTRATION MANUAL
(PROVISIONS FOR DE-REGISTRATION AND CESSATION OF REGISTRATION)

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
including its Market Manuals shall be undertaken in accordance with the provisions
of Chapter 8 thereof;

WHEREAS, Chapter 2 of the WESM Rules and WESM Manual on Registration,
Suspension and De-Registration Criteria and Procedures (“Registration Manual")
provide the guidelines and procedures for the registration, suspension and
de-registration by the Market Operator of WESM Members;

WHEREAS, the market operations audit for the period 26 June 2015 — 25 December
2019 (7th MO Audit) finds that the Market Operator does not immediately publish the
notice of cessation of registration of a WESM Member in view of the need to
validate such notice;

WHEREAS, on 23 May 2021, to address the said findings, the Independent
Electricity Market Operator of the Philippines (IEMOP) submitted proposed
amendments to the WESM Rules and Registration Manual to enhance the process
of de-registering WESM Members that has recently become ineligible for
membership, and to provide a validation period for cessation requests;

WHEREAS, on 16 April 2021, the RCC during its 177th Regular Meeting, approved
the publication of the proposal for solicitation of comments from all WESM Members
and interested parties until 02 June 2021;

WHEREAS, on 18 June 2021, the RCC during its 180"" Regular Meeting, deliberated
the proposal giving due course to the comments and recommendations received
from Governance Arm, WESM Technical Committee (TC), AC Energy, Aboitiz Power,
and Meralco, and thereafter approved for endorsement to the PEM Board;

Energy Center, Rizal Drive, Bonifacio Global City, Taguig City, Metro Manila, Philippines
Tel. No.: 8840-2267 * Trunkline: 8479-2900
Website: www.doe.gov.ph * E-mail: info@doe.gov.ph

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WHEREAS, after due evaluation and deliberation, the PEM Board approved for
endorsement to the DOE the above stated RCC proposal;

WHEREAS, on 01 October 2021, the PEM Board-approved amendments to the
WESM Rules and Market Manual on Registration were submitted to the DOE for
final approval, in compliance with Chapter 8 of the WESM Rules;

WHEREAS, to ensure transparency and consistency with the objectives of the
EPIRA and the WESM, conducted virtual public consultations on the said proposed
amendments on various dates as follows;

Platform
15 November 2021 Microsoft Teams
17 November 2021 Visayas and Mindanao Microsoft Teams

WHEREAS, the DOE reviewed and finalized the said PEM Board-approved
proposals, made revisions thereto taking into consideration the comments and
recommendations received from the public consultations;

NOW THEREFORE, pursuant to its authority under the EPIRA and the WESM
Rules, the DOE hereby adopts, issues, and promulgates the following amendments
to the WESM Rules and various Market Manuals:

Section 1. Amendments to the WESM Rules. The following provisions in the
WESM Rules are hereby amended:

a. Clause 2.3.3.9 (Trading Participant) under Categories of WESM Member is
amended to read as —

“2.3.3.9 Trading Participant

If at any time a Trading Participant ceases to be eligible to be registered
as a Trading Participant in accordance with Clause 2.3.3.4, that Trading
Participant shall inform the Market Operator accordingly and, as soon as
practicable after the Market Operator becomes aware that a Trading
Participant is no longer eligible to be registered, the Market Operator
shall:

a. issue a suspension notice in respect of that Trading Participant
in accordance with Clause 3.15.8; or

b. coordinate with relevant external parties for confirmation of
ineligibility in accordance with the relevant Market Manual.”

b. Clause 2.6.3 (Notifying all WESM members) under Ceasing to Be a WESM
Member is amended to read as —

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WESM Registration Manual regarding De-registration and Cessation

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“2.6.3.

Section 2.

Notifying all WESM members

On receipt of a notice with proof of disconnection, as applicable, under
Clause 2.6.1, the Market Operator shall confirm the cessation and
notify the relevant WESM Member. After such notification, the Market
Operator shall notify all WESM members that the person or entity who
gave the notice shall cease to be registered as a WESM member in the
relevant category and the date on which that will occur.”

Amendments to the WESM Registration Manual. The following

provisions in the WESM Registration Manual are hereby amended:

a. Section 2.9.4 (Cessation of eligibility) under Continuing Compliance is amended
to read as —

“2.9.4

Subject to Clause 2.9.5, as soon as practicable, after the Market
Operator becomes aware that a WESM Member no longer meets any
one of the membership criteria or requirement, the Market Operator
shall issue a suspension notice in respect to that WESM Member. The
suspension shall continue until the WESM Member is able to rectify or
remedy the non-compliance or the defect to the satisfaction of the
Market Operator. The Market Operator may, at its discretion, prescribe
a period within which the noncompliance or defect is to be remedied.
The failure of the WESM Member to remedy or rectify the defect is a
ground for deregistration. Suspension and deregistration shall be
implemented in accordance with the conditions and procedures set
forth in the WESM Rules and this Manual. Non-compliance with
prudential requirements shall be governed by relevant provisions of the
WESM Rules and relevant Market Manuals.”

b. New Clauses 2.9.5 to 2.9.8 under Continuing Compliance are added to read as:

“2.9.5

2.9.6

2.9.7

lf a Trading Participant fails to submit a valid interconnection
agreement with a Network Service Provider, the Market Operator shall
coordinate with its respective Network Service Provider to check if the
registered Trading Participant continues to be connected to the
transmission system or distribution system.

A Network Service Provider that receives a notice from the Market
Operator under Section 2.9.5 shall provide the information to the
Market Operator within fifteen (15) calendar days from the receipt of
the notice.

Upon receipt of confirmation from the Network Services Provider that
the registered Trading Participant is no longer connected to their power
system, the Market Operator shall notify the Trading Participant to
submit a notice of cessation.

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2.9.8 Upon the receipt of the notice from the Market Operator, the registered
Trading Participant shall initiate cessation of its registration within
fifteen (15) calendar days. If the Market Operator does not receive a
notice of cessation within fifteen (15) calendar days, the Market
Operator shall initiate the de-registration of the Trading Participant.”

c. Section 4.2.3 Non-compliance with the membership criteria or requirement is
amended to read as —

"423 The Market Operator has determined that the WESM Member is no
longer compliant with any one or all of the criteria and requirements for
continuing membership in the WESM and is incapable of rectifying the
defect or fails to rectify the defect despite notice from the Market
Operator subject to Section 2.9.5.”

d. Section 5.2.3.1 Cessation of Registration is amended to read as —

“5.2.3.1. Upon receipt of the notice with proof of disconnection, as applicable,
from the WESM Member, the Market Operator shall confirm the
cessation and notify the relevant WESM Member. After such
notification, the Market Operator shall issue a Notice of Cessation to all
WESM Members stating the cessation of registration of the relevant
WESM Member, the category in which it ceases its registration, and
the effective date of cessation.”

e. Sections 5.4.1.4 and 5.4.1.5 under Initiation of Deregistration Procedures are
amended to read as —

“5.4.1.4 For WESM Members that have been disconnected from the grid at the
instance of parties other than the Market Operator pursuant to
prevailing rules and regulations on disconnection, upon receipt by the
Market Operator of a copy of the order or notice of disconnection and
the report from the relevant Network Service Provider confirming that
the WESM Member has actually been disconnected from the grid and
after the WESM Member failed to initiate cessation of its membership
in accordance to Section 2.9.8.

5.4.1.5 For WESM Members registered under Metering Service Provider
Category, upon submission by the Market Operator or the relevant
WESM governance unit to the PEM Board of its report that said
Metering Services Provider —

a) Has committed material breach and that it failed to remedy the
breach within seven (7) business days after notice of the
breach; or

b) Has committed an unethical act or behavior.”

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f. Section 5.4.2.1 Issuance of Notice of De-registration and Disconnection is
amended to read as —

"9.4.2.1 After fifteen (15) calendar days from receipt or submission of the
document/s specified in the foregoing section, the Market Operator
shall issue a Deregistration Notice to the WESM Member sought to be
deregistered. The Deregistration Notice shall be in writing and shall
include the ground/s for deregistration; date of effectivity of the
deregistration; and notice that the WESM Member subject to
deregistration shall still be liable for its outstanding obligations to the
WESM.”

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
complete 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 MAR | / 202¢21 at the Energy Center, Rizal Drive, Bonifacio Global
City, Taguig City.

Republic of the Philippines
DEPARTMENT OF ENERGY
IN REPLYING PLS. CITE:

DOE-AGC-22000933
WAIN ANA

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