Department
Circular No. 2004-07-008
WHEREAS,
Republic Act No.
9136, otherwise known as the “Electric Power Industry Privatization Act of 2001”
(the “Act”), which became effective on 26 June 2001, provides for the framework
for the restructuring of the electric power industry to bring about a free and
fair competition on the pricing of electricity;
WHEREAS,
the
Act
mandates the establishment of a
wholesale
electricity spot market (the “WESM”) where the trading of electricity can
be made;
WHEREAS, the
Act
enjoined the
Department of Energy (the
“DOE”) to establish the
WESM and to jointly
formulate with the electric power industry participants the detailed rules
thereof, within one (1) year from the effectivity thereof, provided, that the
price determination methodology shall be subject to the approval of the
Energy Regulatory Commission (the “ERC”);
WHEREAS, in accordance with and in compliance
with the
Act, the
DOE
promulgated the
WESM Rules under
Department Circular No. 2002-06-003 dated 28 June
2002;
WHEREAS,
in compliance with
the
Act, the pertinent application for approval of the
Price Determination Methodology (the “PDM”) for the
WESM was submitted to the
ERC for approval;
WHEREAS, the
ERC,
through its Order dated 15 March 2004 in ERC Case No. 2003-356 required
compliance with certain directives before the said price determination
methodology may be approved, which directives requires, in turn, the amendment
of the
WESM Rules;
WHEREAS,
in compliance with
the
ERC directives, the
DOE jointly with the electric industry
participants through the
Philippine
Electricity Market Corporation and its technical working group and
sub-committees, and in accordance with the provisions of the
WESM Rules on Rules Change, formulated the pertinent
amendments to the
WESM Rules;
NOW
THEREFORE, pursuant
to its mandate under the Act and in accordance with the
WESM Rules, the
DOE
hereby issues, adopts and promulgates the following amendments to the WESM
Rules:
A. Amendments to the
WESM
Rules
1. Rule 3.2.2 is amended to insert Rule
3.2.2.3(A) before Rule 3.2.2.4
“Nodal
Prices at Market Trading Nodes shall be used for the settlement of energy for
both generators and customers.”
2. Rule 3.2.3.1 is amended to read as follows –
“Customer
nodes may be grouped into customer pricing zones in accordance with the
procedures to be developed by the Market Operator and subject to the approval
of the PEM Board.
The Market Operator shall maintain and publish the customer pricing
zones to be used for the settlement of energy for customers.”
3. Rule 3.2.3.2 is amended to read as follows –
“All
customers within a customer pricing zone shall face the same price for
electricity consumed.”
4. Rule 3.5.4.1 is amended to read:
“Each
Customer may submit a forecast in respect of each trading interval for each of
its registered load facilities for each trading day of week in accordance with
the timetable. The forecast submitted by
the Customer shall be used by the Market Operator in the preparation of Net
Load Forecast.
“If
the Customer fails to submit a forecast of his load facilities in accordance
with the timetable, the forecast prepared by the Market Operator at the node
where the customer is located shall be used.”
5. Rule 3.13.1.1 (b) is amended to read –
“(b)
Identify the counter party to the bilateral contract and the party that will
pay the line rental trading amount associated with the bilateral contract
quantity submitted; and”
6. Rule 3.13.15 is hereby deleted.
7. Rule 3.13.16.2 is amended to read –
“The
net settlement surplus:
“(a)
May be retained by the Market Operator to fund deficit as a result of
transactions required in clauses 3.13.14, or may be flowed back to the Market
Participants in accordance with the procedures to be developed under clause
3.13.16.3, or, may be used by the Market Operator to establish and support the
market for Financial
Transmission Rights subject to the approval of the PEM Board; and,
“(b)
Shall be clearly accounted for and taken into account when setting the
allowable charges under any regulatory instruments applying to the Market
Operator.”
8. Rule 3.13.16.3 is amended to read –
“The
Market Operator shall:
“(a)
publish regular summary reports on the amount of any net settlement surplus
being generated;
“(b)
within one year from spot market commencement date, and every year thereafter,
publish a review of the underlying factors giving rise to any net settlement
surplus, and attempt to identify any binding constraints which may have caused
or contributed to such net settlement surplus;
“(c)
determine, in consultation with Trading Participants and Network Service
Providers, and subject to approval by the PEM Board,
whether the net settlement surplus generated by any particular set of
constraints is of such magnitude as to justify development of a regime similar
to that implemented in the WESM Rules with respect to transmission line rentals
and transmission rights;
“(d) develop procedures on the possible uses of net settlement
surplus subject to approval by the PEM Board; and,
“(e) continuously review the procedures on possible uses of
net settlement surplus to the extent the Market Operator considers it to be
reasonably necessary to promote WESM objectives. Any changes made on the procedures shall have
approval from the PEM Board.”
9. Rule 3.13.17 shall be added and shall read as
follows –
“Rule
3.13.17 Settlement Amounts for Trading Participants with Bilateral Contracts
“3.13.17.1
For each billing period, the Market Operator shall determine the settlement
amount for each trading participant with bilateral contract as the sum of the
aggregate trading amounts for the trading intervals in that billing period,
determined in accordance with clause 3.13.17.2.
“(a)
Any amount payable by the Market Operator to that Trading Participant in
respect of that billing period and not accounted for in clause 3.13.17.2,
including payment for any ancillary services purchased on behalf of the System
Operator, less the sum of
“(b)
Any market fees which that Trading Participant is required to pay in respect of
that billing period as determined in accordance with clause 2.10; plus
“(c)
Any other amounts payable by that Trading Participant to the Market Operator in
respect of that billing period, including any ancillary services recovery
charges.
“3.13.17.2
The aggregate trading amount for a Trading Participant
for a trading interval equals the sum of:
“(a)
The ex-ante energy trading amounts for each market trading node for which the
Trading Participant is responsible calculated in accordance with clauses 3.13.7
and 3.13.8 (which will typically be positive for a Generation Company and
negative for a Customer); plus
“(b)
The ex-post energy trading amounts for each market trading node for which the
Trading Participant is responsible calculated in accordance with clauses 3.13.7
and 3.13.9 (which will typically be positive or negative for any Trading
Participant); plus
“(c)
The line rental trading amount corresponding to the quantity of bilateral
contract of that Trading Participant calculated in accordance with clause
3.13.12; plus
“(d)
The reserve trading amounts for each reserve region into which that Trading
Participant contributes reserve calculated in accordance with clause 3.13.10
(which will always be positive for both Generation Companies mid Customers);
plus
“(e)
The transmission right trading amounts for each transmission right held by the
WESM Participant calculated in accordance with clause 3.13.13 (which will
always be positive for both Generation Companies and Customers); plus
“(f)
The reserve cost recovery charge determined for that Trading Participant with
respect to any reserve cost recovery zone within which it has any facility
connected calculated in accordance with the procedures developed under clause
3.3.4 (which will be positive for any Trading Participant); and
“(g)
Any other ancillary service cost recovery charges determined for that trading
Participant in accordance with the procedures developed under clause 3.3.4.”
10. Rule 3.15.2.2 (c) is hereby deleted.
11. Rule 10.4.6.1 is amended to read as follows –
“When
Customer Pricing Zones are adopted and prior to spot market commencement date,
the Market Operator shall:”
12. The definition of Settlement Surplus found
in Chapter 11 – Glossary is amended to read as follows –
“Settlement Surplus – The settlement surplus remaining after
all market transactions have been accounted for and is assumed to be
attributable to economic rentals arising from other binding constraints.”
B. Effectivity
These
amendments shall be effective on the fifteenth (15th) day following its publication
in the Official Gazette.
VINCENT
S. PÉREZ, JR.
Secretary
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