The Energy Regulatory Commission (ERC) ordered the partial lifting of the suspension on settlement amounts in the Reserve Market to allow power generators to partially recover costs for trading transactions for the March billing month amounting to P1.7 billion.
The ERC issued an order for Case No. 2023-002 RC, promulgated on May 9, 2024 allowing the settlement of 30 percent of the amounts for payment for trading transactions made in the Wholesale Electricity Spot Market’s Reserve Market for the March 2024 billing month.
The decision was made to ensure continuous operations of power generators providing reserves in the system following the suspension order issued on March 25, 2024.
“The ERC always needs to strike a balance in performing its mandate to ensure the reliability and security of the power system through the continuous operations of the generators and protecting the consuming public,” the agency said in a statement.
The regulator said the generators can start recovering their costs starting the June billing period equivalent to an estimated P0.20 per kilowatthour to P0.60 per kWh increase.
Based on the simulation, ERC said the estimated total amount to be partially paid to generators in the Reserve Market would be P1.723 billion, subject to adjustments pending the submission of the list of non-compliant generators by the National Grid Corporation of the Philippines (NGCP), an intervenor in the case, during the subject period.
The ERC said it is still evaluating the submissions of Independent Electricity Market Operator of the Philippines Inc. (IEMOP), operator of the WESM for the review of the price determination methodology (PDM).
The ERC directed the PEMC, as the governing body of the WESM and IEMOP to suspend the implementation of Section 8 on Billing and Settlement of the PDM in the Reserve Market starting the March 2024 billing period, until the commission finalizes its evaluation of the PDM.
This developed after IEMOP reported significant price increases in reserve costs for March 2024 compared to February 2024, which would impact the total price of electricity charged to the public.
“We were initially encouraged by the fact that the Reserve Market was able to unveil reserve capacities that, for one reason or another, did not contract with or participate in the AS CSP conducted by NGCP,” ERC chairperson and chief executive Monalisa Dimalanta.
“This meant the capacities are there to cover the system’s reserve requirements. However, we cannot ignore the fact that there are issues arising from the implementation of the system as currently designed that puts to question the resulting rates. We are strictly requiring PEMC and IEMOP to submit the audit results of the software so we can identify and address these issues and immediately resume normal operations of the market,” she said.