# DC2013-01-0001 — Directing PEMC to Develop and Implement the Interim Mindanao Electricity Market (IMEM) ## Department Circular No. DC2013-01-0001 Issued: 9 January 2013 by DOE Secretary Carlos Jericho L. Petilla Effectivity: Immediately; remains in effect until revoked by DOE --- ## WHEREAS RECITALS 1. DOE is mandated under EPIRA to ensure reliability, quality, and security of electric power supply. 2. The Mindanao grid has been experiencing power supply problems resulting in rotating brownouts due to generation capacity deficiencies. 3. DOE issued DC2010-10-0011 (12 October 2010) and DC2012-03-0004 (19 March 2012) enjoining industry participants to rationalize and maximize available generation capacities in Mindanao. 4. Following the Mindanao Power Summit (13 April 2012), DOE and attached agencies conducted focused group discussions and consultations with Mindanao industry participants and PEMC to operationalize measures for addressing the power supply situation. 5. A venue is needed for transparent and efficient utilization of all available capacities — particularly when contracted supply capacities of DUs and industrial customers are insufficient to meet demand — while reflecting the true cost of power to encourage dispatch and attract new generation capacity. 6. PEMC (established 2003, operating WESM in Luzon since June 2006 and Visayas since December 2010) is deemed competent to develop a market design specific to Mindanao. --- ## OPERATIVE PROVISIONS **Directive**: DOE hereby directs PEMC to develop and implement an interim electricity market design for Mindanao, to be called the **"Interim Mindanao Electricity Market (IMEM)."** **Section 1. Scope.** Applies to all electric power industry participants in Mindanao — generation companies, distribution utilities (private investor-owned utilities and electric cooperatives), and other customers. **Section 2. General Principles of IMEM.** (a) **Day-ahead market**: Market participants submit nominations a day before actual delivery or curtailment of energy. (b) **Mandatory program**: All generation capacities, directly-connected customers, and distribution customers participate, targeting only supply deficiencies in the grid. (c) **Energy efficiency incentives**: Mechanisms to encourage contribution to grid supply. (d) **Real-time imbalance correction**: Using a merit order table provided by the IMEM operator. (e) **Merit order table**: Same principles as the merit order table used in Luzon and Visayas grids. (f) **Uniform pricing**: Settlement based on a market clearing price; total cost allocated among IMEM participants. (g) **Governance framework**: Ensures free and fair competition and public accountability. PEMC is directed to provide DOE within **two (2) months** from issuance the IMEM Implementing Rules and timelines for DOE consideration and approval. Pending approval of IMEM Implementing Rules, PEMC is authorized to file with ERC for necessary funding, subject to a cost recovery methodology to be submitted to ERC. **Section 3. Responsibilities.** (a) **NGCP**: Maintain reliability, adequacy, security, stability, and integrity of the grid per Philippine Grid Code while accounting for Mindanao's power supply and demand situation. (b) **TransCo**: Provide technical support to DOE and PEMC to assess the power situation and ensure NGCP compliance. (c) **PSALM and NPC**: PSALM and NPC control approximately **74.19%** of total power generating capacities in Mindanao. Both shall sustain/improve generation capabilities and fully utilize available capacities. PSALM provides financial support for O&M of NPC-operated plants and obligations under IPP contracted capacities; NPC ensures efficient plant operation. (d) **NEA**: Assess financial and technical capability of Mindanao electric cooperatives and provide necessary assistance to prepare for IMEM implementation. (e) **All industry participants**: Full cooperation required. **Section 4. Regulatory Support.** DOE and ERC shall closely coordinate to expedite any applications filed in relation to IMEM. **Section 5. Policy Support.** DOE to issue supporting policies and conduct IEC activities. **Section 6. No Amendment or Repeal of Existing Laws.** Circular does not amend, supplant, or repeal any existing mechanisms, institutions, or responsibilities under any law, rule, or contract. **Section 7. Effectivity.** Immediately effective; remains in effect until revoked by DOE.