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

DEPARTMENT CIRCULAR NO. 0C2023-07- 0023 »

ADOPTING FURTHER AMENDMENTS TO THE WHOLESALE ELECTRICITY
SPOT MARKET (WESM) RULES AND MARKET MANUALS

(Provisions on Penalty Framework for Test and Commissioning)

WHEREAS, Sections 30 and 37(f) of the Republic Act (RA) No. 9136 or the “Electric
Power Industry Reform Act of 2001” (EPIRA) mandate the Department of Energy
(DOE) to supervise the restructuring of the electricity industry and in addition thereto,
a) ensure the reliability, quality, and security of supply of electric power; b) jointly with
the electric power industry participants, establish the wholesale electricity spot market
and formulate the detailed rules governing the operations thereof; and c) monitor
private sector activities relative to energy projects to attain the goals of the
restructuring, privatization, and modernization of the electric power sector as provided
for under existing laws;

WHEREAS, on 28 June 2002, the DOE, with the endorsement of the electric power
industry participants, promulgated the WESM Rules through Department Circular (DC)
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 03 June 2021, the DOE promulgated DC No. DC2021-06-0013, titled
“Adopting a General Framework Governing the Test and Commissioning of
Generation Facilities for Ensuring Readiness to Deliver Energy to the Grid or
Distribution Network’, which provided clear-cut procedures and timelines on the
conduct of test and commissioning;

WHEREAS, Section 9 of said DC mandates the Governance Arm to propose changes
to the WESM Rules and relevant Market Manuals in accordance with the enforcement
and compliance with the policy provided in the subject Circular and to recommend to
the DOE and the Energy Regulatory Commission (ERC) the possible sanctions and
other measures that will promote compliance of the concerned stakeholders with the
policies stated in the same Circular;

WHEREAS, on 05 May 2022, the Governance Arm or the Philippine Electricity Market
Corporation (PEMC), submitted to the Rules Change Committee (RCC) its proposed
amendments to the WESM Manuals regarding Penalty Framework for Test and
Commissioning which sought to provide the penalty mechanism or omission of a
Trading Participant with facility or plant whose test and commissioning period has
expired;

Energy Center, Rizal Drive, Bonifacio Global City, Taguig City, Metro Manila, Philippines 1632
Tel. No. (Trunkline) (632) 8479-2900
Website: hip: www aloe gov ph: Email: infocenteradoe.yev.ph
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WHEREAS, on 16 June 2022, the DOE issued DC No. DC2022-05-0015 to
supplement DC No, DC2021-06-0013, allowing the power plants to continue to inject
energy to the grid after successful completion of the test and commissioning process
to support the anticipated increase in demand, particularly during the summer period;

WHEREAS, the RCC, in consultation with the Market Surveillance Committee (MSC)
and Compliance Committee (CC), deliberated on the proposal to consider the
comments received from interested parties and harmonizing with the DOE DC No.
DC2022-05-0015, it was subsequently finalized and submitted to the Philippine
Electricity Market (PEM) Board;

WHEREAS, in a letter dated 02 December 2022, the PEM Board submitted a proposal
for the DOE's final approval, in compliance with Chapter 8 of the WESM Rules;

WHEREAS, on 11 January 2023, the proposal was posted on the DOE website to
solicit comments from the stakeholders and other interested parties;

WHEREAS, the DOE, to ensure transparency and consistency with the objectives of
the EPIRA and the WESM, conducted the following public consultations on said
proposed amendments:

Date | Lea Venue
| 09 February 2023 Luzon guic
| 16 February 2023 | Visayas Cebu Ci
| 28 February 2023 Mindanao Davao Ci

NOW, THEREFORE, pursuant to its authority and mandate under the EPIRA and its
IRR, and after due consideration of the inputs and recommendations from various
stakeholders, the DOE hereby issues, adopts, and promulgates the following:

Section 1. Amendments to the WESM Rules. The following provisions of the WESM
Rules are hereby updated as follows:

3.5.5 Generation Offers and Data
XXX XXX XXX

3.5.5.5 Each Non-Scheduled Generation Company shall submit a standing
nomination of loading levels for each of its non-scheduled generating units
for each dispatch interval in each trading day of the week in accordance
with the timetable. The standing nomination of loading /eveils shall apply
until revised or updated by the Non-Scheduled Generation Company,

3.5.5.6 Generation Companies shall provide to the Market Operator and the
System Operator the standing projected outputs in respect of their must
dispatch generating units and priority dispatch generating units for each
dispatch interval in each trading day of the week in accordance with the
relevant Market Manuals and provisions of the Grid Code. The standing

De eee Oe ee
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3.5.5.7

3.5.5.8

3.5.5.9

3.5.5.10

3,.5.5.11

3.5.5.12

3.5,5.13

projected outputs shall apply until revised or updated by the relevant
Generation Company.

A Trading Participant who fails to submit the projected outputs for its must
dispatch generating unit or priority dispatch generating unit as provided
under Clause 3,5.5.6 may be liable for the sanctions imposed under Clause
7.2.

Each Generation Company shall submit check data to be used by the
Market Operator, in accordance with the relevant Market Manuals, to assist
in determining the validity of any projected output submitted in respect of a
must dispatch generating unit or a priority dispatch generating unit under
Clause 3.5.5.6.

Must dispatch generating units shall comply with the forecast accuracy
standards, in respect of their projected outputs submitted under Clause
3.5.5.6, consistent with the Grid Code.

The Enforcement and Compliance Office shall evaiuate annually the
forecast accuracy standards complied with by must dispatch generating
units in accordance with Clause 3.5.5.9.

A Trading Participant who fails to meet the requisite forecast accuracy
standards set out in accordance with Clause 3.5.5.9 in respect of projected
outputs for a must dispatch generating unit submitted under Clause 3.5.5.6
may be liable for the sanctions imposed under Clause 7.2.

The Enforcement and Compliance Office shall report to the PEM Board and
the DOE the monthly and annual compliance of each must dispatch
generating unit with the forecast accuracy standards in respect of its
projected outputs.

Each Generation Company that has secured a Final Certificate of Approval
to Connect but with pending issuance of Certificate of Compliance from the
ERC shall submit, as applicable:

a) Standing nomination of the loading levels for each of its scheduled
generating units, battery energy storage systems, and pumped-siorage
units; or

b) Projected outputs in respect of its must dispatch generating units and
priority dispatch generating units.

The Generation Company shall submit its nomination of the /oading levels
or projected outputs for each dispatch interval on each trading day of the

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week in accordance with the timetable. The standing nomination of the
loading levels and projected outputs shall apply until revised or updated by
the Generation Company.

3.5.5.14 A Generation Company that has secured a Final Certificate of Approval to
Connect but with pending issuance of the Certificate of Compliance from
the ERC for its must dispatch generating unit shall comply with the forecast
accuracy standards in respect of its projected outputs which shall be
evaluated by the Enforcement and Compliance Office, in accordance with
Clauses 3.5.5.8 to 3.5.5.12.

XXX XXX XXX
3.8.4 Dispatched Trading Participants
XXX XXX XXX

3.8.4.5 Agenerating unit that has secured a Final Certificate of Approval to Connect
but with pending issuance of the Certificate of Compliance from the ERC
shall likewise comply with the obligations, as applicable, of dispatched
Trading Participants prescribed in Clause 3.8.4.

XXX XXX = - XXX
3.8.6 Sanctions of Trading Participants

Any Trading Participant, including those that have secured a Final Certificate of
Approval to Connect but with pending issuance of the Certificate of Compliance from
the ERC, that (a) does not comply with the dispatch conformance standards or (b)
consistently fails to use its reasonable endeavors to comply with the dispatch
instructions issued by the System Operator under Clauses 3.8.3, 6.3, and 6.5, shall
be liable for sanctions imposed under Clause 7.2.

XXX XXX XXX

Section 2. Amendments to the Market Manual on Registration, Suspension, and
De-registration Criteria and Procedures. The following provisions of the Market
Manual on Registration, Suspension, and De-registration Criteria and Procedures are
hereby amended as follows:

2.5.4.4 Generation Registered Capacities

A Generation Company shall include in its application for registration the maximum
stable load (Pmax), the minimum stable load (Pmin), the ramp up rate, and the ramp
down rate of each generating unit or aggregated generating units that are included in
its application.

For Generation Companies applying for the Test and Commissioning registration, the
information on the generating unit parameters provided to the Market Opereior shall

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be consistent with that contained in the ERC Form 7 (General Piant Description) duly
received by the ERC.

For Generation Companies applying for the Commercial Operations registration, the
information on the generating unit parameters provided to the Market Operator shall
be consistent with that contained in the Certificate of Compliance or the Provisional
Authority to Operate issued by the ERC, as well as the submissions made to the ERC
in relation to the issuance thereof. If the generating unit is a battery energy storage
system, the Generation Company shall include the generating unit's energy storage
efficiency and the maximum storage capacity in its application. If the generating unit
is a pumped-storage unit, the Generation Company shall include the generating unit's
maximum pump load.

XXX XXX XXX
2.5.7.3. Guidelines for the Test and Commissioning Registration

XXX XXX XXX

j) The Market Operator shall submit a monthly report on the status of the Test and
Commissioning of the generating units to the Enforcement and Compliance Office,
copy furnished the DOE and ERC, indicating information such as but not limited to:

(i) Whether a WESM Member has been duly notified of the impending expiration
of its Provisional Certificate of Authority to Connect;

(ii) Whether a WESM Member is given a Final Certificate of Authority to Connect,
Certificate of Compliance, or the Provisional Authority to Operate, including the
effectivity date/s, if such is known to the Market Operator, and

(iii) Any relevant information affecting the obligations set forth in paragraphs (a),
(d), and (h) of this Section for its appropriate enforcement action.

An investigation may likewise be initiated motu proprio by the Enforcement and
Compliance Office as may be authorized under Section 7.2.1 of the
Enforcement and Compliance Manual.

XXX XXX XXX
3.3.1 Registered Capacities and Reserve Capabilities

3.3.1.1. The Trading Participant wishing to change the registered capacities
and/or ramp rates of its generating unit/s shall request in writing to the
Market Operator. Such changes shall be in accordance with the latest
Certificate of Compliance, any ERC-certified document, or the Generating
Unit Capability Test issued by NGCP.

3.3.1.2, Request for changes submitted by the Trading Participant, in connection
with the registered capacities and/or ramp rates of its generating units, shall
be approved by the Market Operator based on the latest Certificate of

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Compliance, any ERC-certified document or Generating Unit Capability
Test issued by NGCP.

3.3.1.3. The Market Operator shall notify the PEM Board, ERC, and DOE of any
changes in the registered capacities and/or ramp rates of the generating
units inthe WESM within three (3) working days from the date of the Market
Operator's approval of such change in registration.

XXX XXX XXX

Section 3. Amendments to the Market Manual on Dispatch Protocol. The following
provisions of the Market Manual on Dispatch Protocol are hereby updated as follows:

2.1 Definitions
XXX XXX XXX

2.1.2 The following words and phrases as used in this Market Manual shall have the
following meaning:

XXX XXX XXX

ff. Self-scheduled nomination. Nominations of loading levels by the Non-
Scheduled Generation Companies, projected oufpuis of Generation
Companies with must dispatch generating units and priority dispatch
generating units, and loading levels or projected outputs of the generating
units, as applicable, that has been issued with a Final Certificate of
Approval to Connect but with pending issuance of Certificate of
Compliance by the ERC.

XXX XXX XXX
6.4 Categories of Self-scheduled Nominations, Bids, and Offers

6.4.1. The se/f-scheduled nominations, bids, and offers that can be submitted in the
WESM are as follows:

XXX XXX = - XXX
d. Self-scheduled nominations

i. Schedule of Joading /evels (i.e. energy quantities only) for the non-
scheduled generating units of the non-scheduled Generation
Companies;

ii. Projected output (i.e. energy quantities only) of the Generation
Companies with must dispatch generating units and priority dispatch
generating units;

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XXX = XXX

iii. Schedule of loading levels of the generating units that has been issued
with a Final Certificate of Approval to Connect but with pending
issuance of the Certificate of Compliance by the ERC; and

iv. Projected output (i.e., energy quantities only) of the Generation
Companies with must dispatch generating units and priority dispatch
generating units that has been issued with a Final Certificate of
Approval to Connect but with pending issuance of Certificate of
Compliance by the ERC.

XXX

11.3 Responsibilities

XXX XXX
11.3.4
XXX XXX

XXX

A Trading Participant that has been released with a Final Certificate of
Approval to Connect but with pending issuance of the Certificate of
Compliance from the ERC for its generating units shall likewise comply with
dispatch schedules issued by the Market Operator, the dispatch
instructions issued by the System Operator to their facilities operating on
AGC mode, and the re-dispatch instructions issued to them by the System
Operator, if any.

XXX

11.5 Dispatch of Must and Priority Dispatch Generating Units

11.5.1

A must dispatch generating unit shall generate at its maximum available
output at all times unless the Market Operator or System Operator has
instructed the generating unit to restrict output. This shall likewise apply to
must dispatch generating units that have secured a Final Certificate of
Approval to Connect but with pending issuance of the Certificate of
Compliance from the ERC.

XXX XXX XXX

Section 12 Dispatch Compliance

12.1 Background

XXX = XXX

12.1.6

XXX

Scheduled generating units, battery energy storage systems, pumped
storage units, must dispatch generating units, and priority dispatch
generating units that have Final Certificate of Approval to Connect but with
pending issuance of Certificate of Compliance from the ERC shall likewise
operate in accordance with Sections 12.1.1 and 12.1.3, as applicable, and

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as prescribed in Chapter 3 of the WESM Rules.
XXX XXX XXX
12.4. Compliance with Dispatch Schedules and Instructions

12.4.1. Compliance by the Scheduled Generating Units and Priority Dispatch
Generating Units

a. All scheduled generating units and priority dispatch generating units shall
comply with their respective dispatch schedules. This obligation shall also
apply to the scheduled generating units and priority dispatch generating
units with a Final Certificate of Approval to Connect but with pending
issuance of the Certificate of Compliance from the ERC. In complying with
their dispatch schedules, said generating units shall generate in
accordance with the dispatch conformance standards prescribed in
Section 12.5 of the Dispatch Protocol. In the case of a priority dispatch
generating unit, compliance with the dispatch conformance standards
shall also apply in cases where its dispatch schedule was restricted
pursuant to WESM Rules Clauses 3.6.1.7 and 3.6.1.8 because of a
potential system security contingency.

XXX XXX XXX
12.4.2 Compliance by the Must Dispatch Generating Units

a. A must dispatch generating unit shall generate at its maximum available
output at all times, unless it has been instructed to restrict its output by the
Market Operator or System Operaior. This obligation shall also apply to
must dispatch generating units with a Final Certificate of Approval to
Connect but with pending issuance of the Certificate of Compliance from
the ERC.
XXX XXX = XXX

Section 4. Amendments to the Market Penalty Manual. The attachment of the
Penalty Manual is hereby updated as follows:

XXX XXX XXX

Section 4 - Table 1. Frequency of Occurrence Matrix

Frequency |!solated Occurrence _| Repetitive or Recurring Occurrence

Level 3

XXX XXX XXX XXX

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with

for

Frequency

One-time
requirement

timeline set |

compliance

Section 4 - Table 1, Frequen

the

XXX XXX XXX

Isolated Occurrence
Level! 1

N/A

of Occurrence Matrix

Repetitive or Recurring Occurrence

Level 2 _Level 3

Four (4) to thirty (30) | More than thirty (30)
business days of business days of
delay reckoned from delay reckoned from
the end of the | the end of the
compliance period | compliance period
provided by the | provided by the
relevant Market | relevant Market

Rules or Manuals. Rules or Manuals.

Section 5 - Table 2. Schedule of Breach and Penalties

|

13

| without

Breach

Failure of the
registered
WESM
Member to
apply for
Commercial
Operations
Registration
after receiving
the Certificate

of Compliance
or the
Provisional
Authority to
Operate
whichever is
earlier.

The failure to
apply for
Commercial
Operations
Registration is
considered
just
cause when

Market Rule
Breached &
Associated
Market
Manual

Section
2.5.7.3 (g)
and (h) of
the
Registration
Manual

Applicable
Penalty

Level 1- N/A

Level 2 -
Financial
Penalties

Level 3 -
Escalated
Financial
Penalties

Level 4 -
Suspension
/
Deregistrati
on/Disconn
ection

| P10,000 for

Level 2 -
Financial
Penalty

the first day
of default/
delay plus
P1,000 for
each day of
continuing
breach/viola
tion

The penalty
computation
will continue
until
compliance
by the
concerned
WESM
Member
with respect
to its
commercial
operation
registration
or the actual
deregistrati

Level 3 -
Escalated
Financial
Penalty

Additional
P2,000 for
each day of
continuing
breach/viola
tion

The penalty
computation

will continue
until

' compliance
| by

the
concerned
WESM
Member
with respect
to its
commercial
operation
registration
or the actual

| deregistrati

on in the
WESM | (if
Level 4

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Section 5 - Table 2, Schedule of Breach and Penalties

Market Rule | Applicable Level 2 - Level 3 -

Breached & Penalty Financial Escalated

_ Associated Penalty Financial

| Market Penalty |
Manual

is

on in the
WESM _ (if
Level 4

penalty
imposed),
as the case
may be.

the inaction,
deferment, or
delay on the
part of the penalty is
WESM imposedq),
_Member has as the case
/no basis in may be.
fact or in law,
or the cause/s
for such
failure is/are
not
established to
have been
beyond its
| control.

Generation Section Level 1- |For each
after the | 2.5.7.3 (a) | Non- count of |For each
expiry of the | (c) and (h) | Compliance | breach: breach:
authorized | of the | Letter / | P100/MWh | P200/MWh
test and | Registration | Reprimand {| x GESQ x GESQ
commissionin | Manual (MWh) _ (MWh)
g period Level 2 -
unless Financial P100 —pre- | P200 — pre-
otherwise Penalties set penalty | set penalty
authorized by amount amount
law, relevant Level 3 - |
Market Rules, Escalated
Manuals. Penalties | refers to the | refers to the
gross gross
energy energy
settlement settlement
quantity of | quantity of
generating | generating

unit as | unit as
defined in | defined in
Clause | Clause

| 3.13.6 ofthe | 3.13.6 of the

WESM
Rules.

WESM
Rules.

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Section 5 - Table 2. Schedule of Breach and Penalties

Breach Market Rule | Applicable Level 2 - Level 3 -
Breached & | Financial Escalated

i Financial

Penalty

Failure to

comply with

express

mandatory

| provisions of

the Market
]
|

Rules, that are
not otherwise
covered in |
other |

identified
| breach, but
| which
| expressly
| provide for the

penalties.

imposition of |
}

Section 5. 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 6. Repealing Clause. All issuances contrary to or inconsistent with this
Circular is hereby repealed, modified, or amended accordingly.

Section 7. 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. A copy of this Circular shall be filed with the
University of the Philippines Law Center — Office of National Administrative Register
(UPLC-ONAR).

Issued this day of July 2023 at the DOE, Energy Center, Rizal Drive cor, 34!
Street, Bonifacio Global City, Taguig City, Metro Manila. fy,

RAPHAEL P.M. LOTILLA & :
/ Secretary

JUL 20 2023

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