Power bourse to start operations June 23

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Posted: 1:16 AM | Jun. 16, 2006

Inquirer

THE wholesale electricity spot market (WESM) will begin full operations on June 23, ahead of the July 6 schedule, following approval of the Energy Regulatory Commission (ERC) of the electricity bourse's regulatory filings, the government announced Thursday.

President Gloria Macapagal-Arroyo, at a power plant turnover to a unit of the government's oil company, announced the early start of operation of the WESM.

Energy Secretary Raphael Lotilla told reporters: "The ERC chairman informed us that they have approved all of the requirements necessary for the commercial operation of the WESM, which include the price determination methodology, the administered price and the market fees. The President indicated that since we are now ready, then we should go for June 23. We need not wait for a later date."

Lotilla said the operation of the WESM would not only pave the way for a more transparent mechanism for buying and selling power but also allow refinancing of so-called stranded costs over a longer period, which would effectively result in lower costs to consumers.

The ERC, Department of Energy and WESM operator Philippine Electricity Market Corp. have set up a tripartite committee that will set ceilings on price offers on the WESM to safeguard consumers against extreme price volatilities that could occur in the first few months of WESM operations.

"This tripartite committee will address market price contingencies that may arise during the initial operations of the WESM, when institutional mechanisms to address these contingencies are still untested," Lotilla said.

"These contingencies, though remote, may include excessive increases in market prices," he said. "The committee is, therefore, expected to apply preemptive measures as needed during the early stages of the WESM."

Philippine Electricity Market president Lasse Holopainen said, "While we do not expect extreme pricing volatility in the first year of market operations, it is prudent to be cautious." Abigail L. Ho, With INQ7.net