WESM pricing reforms sought

The Energy Regulatory Commission (ERC) has ordered corrective measures to address recurring spikes in “Line Rental” charges in the Wholesale Electricity Spot Market, which have raised electricity costs for consumers in the Visayas when high-voltage direct current links connecting Luzon, Visayas and Mindanao become congested.

The order stemmed from a petition filed by the Independent Electricity Market Operator of the Philippines (IEMOP) after complaints from Visayas electric cooperatives.

The ERC found that the problem was not primarily caused by the formula for distributing the Net Settlement Surplus but by how the market dispatch model handled congestion when HVDC links reached their limits.

The ERC ordered the suspension of Line Rental Trading Amount collections or payments when HVDC constraints cause different System Marginal Prices in affected regions. IEMOP must implement the measure within 30 days.

The commission also ordered long-term reforms, including recalculating the System Marginal Price, Cost of Losses and Cost of Congestion during cross-regional price separation.

IEMOP was also directed to upgrade its systems and hire an independent auditor to recalculate surplus and deficit allocations dating to 26 June 2021.