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ll Republic of the Philippines
f co DEPARTMENT OF ENERGY
ine i (KKagawaran ng Enerhiya)

DEPARTMENT CIRCULAR NO.__DC 2022 - 03- 0010 p

ADOPTING FURTHER AMENDMENTS TO THE MARKET MANUAL ON
REGISTRATION, SUSPENSION AND DE-REGISTRATION CRITERIA AND
PROCEDURES TO CLARIFY BILATERAL CONTRACTS ACCOUNTED FOR IN
SETTLEMENTS

WHEREAS, Sections 30 and 37(f) of the Electric Power Industry Reform Act (EPIRA)
provides that the Department of Energy (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.
DC2002-06-0003;

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 17 February 2020, the Independent Electricity Market Operator of the
Philippines (IEMOP) submitted to the Rules Change Committee (RCC) the proposed
amendments to the Market Manual on Registration, Suspension and De-registration
Criteria and Procedures to allow other types of bilateral contract transactions to be
accounted for in settlements in the WESM;

WHEREAS, on 27 May 2020 and 08 June 2020, the PEM Board approved the
proposal and the Philippine Electricity Market Corporation (PEMC) formally endorsed
the said proposal to the DOE, respectively;

WHEREAS, on 30 July 2020, the said proposal was posted in the DOE website to
solicit comments from the stakeholders and other interested parties;

WHEREAS, various meetings were conducted between the DOE and IEMOP to clarify
the intent of the proposal;

WHEREAS, in a letter dated 17 March 2021, the DOE remanded the proposal to the
PEM Board recommending the proponent to revisit the proposal and enhance the
same to provide clear limitation to its scope and address potential implications on the
competitiveness and security of the supply in the market as the present proposal limits
the Market Operator's knowledge as to whether an actual contract for replacement
power really exists between generators while the supply customers can declare
corresponding bilateral contract quantities;

Energy Center. Rizal Drive. Bonifacio Global City. Taguig City. Metro Manila, Philippines
Tel. No.: 8840-2267 * Trunkline: 8479-2900
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WHEREAS, on 18 June 2021, during its 180th RCC Regular Meeting, the RCC
deliberated the proposal considering the comments received from its posting in the
PEMC website of the revised proposal:

WHEREAS, on 16 July 2021, during its 181st RCC Regular Meeting, the RCC
approved Resolution No. 2021-12 entitled “Revisions to RCC Resolution 2020-09 on
the Proposed Amendments to the Registration, Suspension and De-Registration
Criteria and Procedures to Clarify Bilateral Contracts Accounted for in Settlements’;

WHEREAS, on 25 August 2021, after due evaluation and deliberation, the PEM Board
during its 39'" Regular Meeting approved for endorsement to the DOE the above
stated proposal;

WHEREAS, on 01 October 2021, the PEM Board submitted the revised proposal to
the DOE, seeking the latter’s consideration, approval and promulgation of the
proposed amendments;

WHEREAS, on 25 October 2021, 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 and 17 November 2021, the DOE conducted nationwide virtual
public consultations on the abovementioned proposed amendments to solicit inputs
and consider comments of stakeholders in the finalization of the same;

NOW THEREFORE, after careful review of the proposal and the comments and
recommendations received on the same, having find the same consistent with the
objectives of the EPIRA and the WESM Rules, the DOE, pursuant to its authority,
hereby adopts, issues, and promulgates the following amendments to the WESM
Manual on Registration, Suspension and Deregistration Criteria and Procedures:

Section 1. Amendments to the Market Manual on Registration, Suspension and
Deregistration Criteria and Procedures. The Market Manual on Registration,
Suspension and Deregistration Criteria and Procedures Issue No. 10.0 is hereby
amended as follows:

a. Section 3.5.1.2 under Section 3.5.1 (Enrolment) is hereby amended to read as:
“3.5.1.2 The notice to the Market Operator shall include the following -

(a) details on the duration of the supply contract;

(b) desired effective date on which the bilateral contract transactions are
to be accounted for in the WESM settlements. To the extent
practicable, the effective date shall coincide with the start of a WESM
billing month;

(c) identification of the market trading node or nodes associated with the
supply contract whose final energy dispatch price will be used as
reference for the supply contract during settlements;

DC ADOPTING FURTHER AMENDMENTS TO THE MARKET MANUAL ON REGISTRATION,
SUSPENSION AND DE-REGISTRATION CRITERIA AND PROCEDURES TO CLARIFY BILATERAL
CONTRACTS ACCOUNTED FOR IN SETTLEMENTS

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(d) indication whether the bilateral contract quantities submitted by the
selling participant would require confirmation by the buying
participant in accordance with the billing and settlement timetable;

(e) confirmation by the supply customer of the notice and the foregoing
information;

(f) for Replacement Power Arrangements between Generation
Companies, copy of the supply contract; and

(g) for supply to an Indirect WESM Member through its Direct WESM
Member that is a Generation Company, written confirmation by the
Indirect WESM Member of the notice and the foregoing information.”

b. Section 3.5.1.5 under Section 3.5.1 (Enrolment) is hereby added to read as:

“3.5.1.5 Generation Companies may register other Generation Companies or
Customer Trading Participants, except for Contestable Customers, as
Supply Customers. A Generation Company can only enroll another
Generation Company as a Supply Customer if:

(a) the Generation Companies have entered into a Replacement Power
Arrangement, or

(b) the Generation Company acting as the Supply Customer is the
designated Direct WESM Member of an Indirect WESM Member that
has a contract with the enrolling Generation Company.”

c. Appendix A — Glossary of Terms is amended to include and define the following
terms:

“

XXX XXX XXX

Replacement Power Arrangement — agreement entered by a generation
company with another generation company for delivery of electricity by the
purchasing generation company to its customers when its power plant is on
outage or supply deration due to seasonal dependency or resource intermittency.

XXX XXX XXX”

Supply Customer — Customers or Generation Companies that purchase
electricity under any power supply agreement, replacement power arrangement
or contract with a Generation Company or Retail Electricity Supplier.

XXX HK XXX”

Section 2. 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 3. Repealing Clause. All issuances inconsistent with the provisions of this
Circular are hereby repealed or amended accordingly.

DC ADOPTING FURTHER AMENDMENTS TO THE MARKET MANUAL ON REGISTRATION,
SUSPENSION AND DE-REGISTRATION CRITERIA AND PROCEDURES TO CLARIFY BILATERAL
CONTRACTS ACCOUNTED FOR IN SETTLEMENTS

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Section 4. Effectivity. This Circular shall take effect fifteen (15) days following its
complete publication in at least two (2) newspapers of general circulation and shall
remain in effect until otherwise revoked. Copies hereof shall be filed with the University
of the Philippines Law Center — Office of National Administrative Register (UPLC-
ONAR).

Issued on Mind 1 7 ?(&P2 at the Energy Center, Rizal Drive, Bonifacio Global City,
Taguig City, Metro Manila.

SOG. CUSI
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DOE-AGC-22000937
WAL IOUT
DC_______ ADOPTING FURTHER AMENDMENTS TO THE MARKET MANUAL ON REGISTRATION,

SUSPENSION AND DE-REGISTRATION CRITERIA AND PROCEDURES TO CLARIFY BILATERAL
CONTRACTS ACCOUNTED FOR IN SETTLEMENTS
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