=== dc2023-08-0024-pages-1.ppm ===
DEPARTMENT CIRCULAR NO. 02023- 06-0024 Wu

ADOPTING FURTHER AMENDMENTS TO THE WHOLESALE ELECTRICITY
SPOT MARKET (WESM) MARKET MANUAL ON BILLING AND SETTLEMENT

(Provisions on Additional Compensation Formula During Market
intervention/Suspension)

WHEREAS, Sections 30 and 37(f) of Republic Act No. 9136 or the Electric Power
Industry Reform Act of 2001 (EPIRA) provide 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 (DC)
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, on 25 June 2021, the DOE issued DC No. DC2021-06-0015, titled
“Declaring the Commercial Operations of Enhanced Wholesale Electricity Spot Market
(WESM) Design and Providing Further Policies’, changing the WESM trading and
dispatch interval from one hour to five-minutes;

WHEREAS, to support the implementation of enhancements to the WESM design and
operations, the Energy Regulatory Commission (ERC) approved the Price
Determination Methodology (PDM) to be applied in the five-minute dispatch interval
market through its Decision in ERC Case No. 2017-042RC;

WHEREAS, Section 8.3 of the WESM Manual on Price Determination Methodology
and Section 10 of the WESM Market Manual on Billing and Settlement provide the
following conditions when a Trading Participant is entitled to additional compensation:

1. During Market Suspension or Market Intervention;

2. Designated as constrain-on or must-run unit;

3. Scheduled and dispatched as constrained-on unit during price substitution
methodology; and

4. Scheduled and dispatched when ERC imposes price mitigation measure.

WHEREAS, to reflect the formula for the calculation of additional compensation
amount and specify the recovery process for additional compensation across all claim
categories based on the External Auditor's recommendations from the (Supplemental)
Audit of PDM-related Enhancements to the New Market Management System

Energy Center, Rizal Drive cor. 34th Street, Bonifacio Global City, Taguig City, Philippines 1632
Tel. Nos. (Trunkline) (632) 8479-2900
Website: http://www.doe.gov.ph; E-mail: info@doe.gov.ph
=== dc2023-08-0024-pages-2.ppm ===
(NMMS) and Central Registration and Settlement System (CRSS), the Independent
Electricity Market Operator of the Philippines (IEMOP) submitted its proposed
amendments to the WESM Market Manual on Billing and Settlement;

WHEREAS, on 01 December 2022, the PEM Board, after due process, submitted to
the DOE for final approval the proposed amendments to the WESM Market Manual
on Billing and Settlement to allow a just and transparent process for the recovery of
additional compensation during market intervention/suspension, among others;

WHEREAS, the DOE, cognizant that the intent of the proposal is consistent with the
objectives of the EPIRA and the WESM, drafted a circular to solicit comments and
recommendations from interested parties, posted the same on the DOE website on 11
December 2022 and conducted public consultations as follows;

WHEREAS, the DOE reviewed and finalized the draft Circular adopting the proposed
changes to the WESM Market Manual on Billing and Settlement submitted by the PEM
Board, incorporating the comments and recommendations received from the
stakeholders that are considered as necessary;

NOW THEREFORE, the DOE, pursuant to its authority under the EPIRA and the
WESM Rules, hereby adopts, issues, and promulgates the following amendments to
the WESM Manual on Billing and Settlement:

Section 1. Amendments to the WESM Market Manual on Billing and Settlement.
The following provisions of the WESM Market Manual on Billing and Settlement are
hereby amended:

a. Clause 10.3.3 under Quantity Eligible for Additional Compensation is amended
to read as follows:

“10.3.3 The scheduled generation of a generating unit that filed a claim for
additional compensation shall be calculated using the following formulas:

a) If due to declaration of market suspension or market intervention,

Di,;
SGi= =p

XXX XXX XXX

is smelters ies cS
DC on Adopting Further Amendments to the Wholesale Electricity Spot Market (WESM) Market Manual on Billing and Settlement
(Provisions on Additional Compensation Formula During Market Intervention/Suspension) Page 2 of 5
=== dc2023-08-0024-pages-3.ppm ===
Where:

SG,; refers to the scheduled generation of generating unit g for
dispatch interval i

XXX XXX XXX

DI,; refers to the most recent dispatch instruction from the
System Operator received by generating unit g for dispatch
interval i. In cases where there is no System Operator
dispatch instruction issued for generating unit g at dispatch
interval i during market intervention or market suspension,
then its gross energy settlement quantity at dispatch
interval i shall be used.”

b. The new Clause 10.4.1 under Billing and Settlement of Additional
Compensation is added to read as follows:

“10.4.1 Using the formula below, the Market Operator shall determine the
additional compensation claim amount in accordance with the claim

category conditions on quantity eligible for additional compensation as
set out in Section 10.3 of this Manual.

ACA, = ACQ,; x [Approved Rate,; — FEDP,, ]
Where:

ACA, ; refers to the additional compensation amount of
generating unit g for dispatch interval i

ACQ,; refers to the additional compensation quantity or volume of
generating unit g for dispatch interval i

Approved Rate,; refers to the approved rate of generating unit g at
dispatch interval i based on the evaluation of the claim

FEDP,; refers to the final energy dispatch price of generating unit g
at certain dispatch interval i

SN
DC on Adopting Further Amendments to the Wholesale Electricity Spot Market (WESM) Market Manual on Billing and Settlement
(Provisions on Additional Compensation Formula During Market Intervention/Suspension) Page 3 of 5
=== dc2023-08-0024-pages-4.ppm ===
However, if the result of the computation is a negative value caused by
FEDP being higher than the approved rate, generators will not be entitled
to additional compensation or payments.”

c. The original Clause 10.4.1 under Billing and Settlement of Additional
Compensation is renumbered and amended to read as follows:

“10.4.2 The Market Operator shall determine the share in the additional
compensation amount of each Trading Participant in accordance with
the provisions under Section 8.3 of the Price Determination
Methodology Manual. For each claim category, the additional
compensation amount shall be pro-rated among the customers in the
same region based on gross energy settlement quantities in
accordance with the following formula:

GESQ,;

Allocation, ; = ACRp; x =
? Ri” Dicer GESQci
Where:

Allocation,; refers to the amount recovered for customer c at dispatch
interval i

ACRr; refers to the Additional Compensation Claim for region R at
dispatch interval i

GESQ,, refers to the gross energy settlement quantity for customer c at
dispatch interval i

Y cerGESQ;; refers to the total gross energy settlement quantity for
customer c at dispatch interval i

d. The succeeding original Clauses under Billing and Settlement of Additional
Compensation are renumbered as follows:

po 104.20 104.3

e. The new Clause 10.4.8 under Billing and Settlement of Additional
Compensation is added to read as follows:

SEE
DC on Adopting Further Amendments to the Wholesale Electricity Spot Market (WESM) Market Manual on Billing and Settlement
(Provisions on Additional Compensation Formula During Market Intervention/Suspension) Page 4 of 5
=== dc2023-08-0024-pages-5.ppm ===
“10.4.8 The Market Operator shall publish the following data relating to issued
additional compensation statements for the information of customers,
subject to the provisions of the Market Operator Information Disclosure
and Confidentiality Manual:

a. The aggregate approved and issued additional compensation claim
amount, in PhP, per region, including the total number of trading
intervals; and

b. The estimated rate impact to customers, in PhP/MWh, is computed
by dividing the aggregate approved additional compensation claim
amount by the aggregate gross energy settlement quantity of
customers per region.

Said publication shall be done on the Market Information Website no
later than 30 business days after the issuance of settlement statements
containing the additional compensation settlement amounts. The Market
Operator shall likewise submit the said data to the Energy Regulatory
Commission.”

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. Except insofar as may be manifestly inconsistent
herewith, nothing in this Circular shall be construed as to repeal any mechanisms
already existing or responsibilities already provided for under existing rules.

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.

Issued this___ day of August 2023 at the DOE, Energy Center, Rizal Drive cor. 34'
Street, Bonifacio Global City, Taguig City, Metro Manila.

RAPHABL P.M. LOTILLA a aC &
ecretary Ri fg Mi

AUG 02 2023

ee
DC on Adopting Further Amendments to the Wholesale Electricity Spot Market (WESM) Market Manual on Billing and Settlement
(Provisions on Additional Compensation Formula During Market Intervention/Suspension) Page 5 of 5