Philippine Electricity Market Corp. said it will elect on Monday a new 15-man board of directors as a key step for the turnover of the Wholesale Electricity Spot Market to an independent market operator.
PEMC chief operating officer and member of the transition committee Francis Saturnino Juan said the election would be held on Monday. The new board, composed of 11 sectoral and four independent directors, will be revealed on the same day.
“It is another milestone in our transition to having an independent market operator for WESM as required in Epira [Electric Power Industry Reform Act of 2001],” Juan said.
WESM acts as the country’s trading floor of electricity while PEMC operates the spot market.
Juan said the turnover date of PEMC’s market operations to the IMO was not yet set. The Independent Electricity Market Operator of the Philippines was formed to assume the functions of the market operator.
“We’re still firming up timelines for discussion with the board,” he said.
The Energy Department directed PEMC to enter into an operating agreement with the IMO by June 30.
The timeline is contained in the recently released draft circular for the efficient transition of the WESM to the IMO regime.
The draft department circular on IMO governance arrangements primarily stipulates additional guidance and operational safeguards for the WESM under the IMO to ensure transparency, competitiveness, the protection of public interest, and integrity of the WESM.
“Since the DOE, through the Energy Secretary, would no longer sit as chair of the PEM Board, the DOE must ensure that the correct policies are in place, and are consistent with the Epira, which remains above all existing rules, articles of incorporation, by-laws and any transition plan. The draft department circular also seeks to prevent any conflict of interest in the functions of the market operator,” Energy Undersecretary Felix William Fuentebella said.
Fuentebella said department wanted to ensure the integrity of the WESM as its creation paved the way for investments.
“It should remain to be an avenue for industry participants to sell and buy their commodity. The WESM, taken as a whole, is created for the benefit of the consumers; hence, the DOE should ensure that the WESM will be governed and operated by a highly credible and independent entity, as reiterated by the Epira and its IRR [implementing rules and regulations],” he said.
The circular states that the governance of the WESM during the transition to the IMO would continue to be governed by the DOE together with the industry participants.
The department also said the governance of the WESM by the IMO should not result in higher market fees.
The department will also provide arm’s length oversight to the WESM, and in the performance of such function, it will continue to have access to all data or information that are generated by the WESM for the purpose of policy formulation and issuance.
The circular further stated that no power industry participants and their relatives up to the fourth degree should hold interest directly or indirectly in the IMO.
The IMO will be constituted by the department following a selection process.
The circular also stated that the PEMC board will continue to have authority over the WESM rules change, market surveillance, audit processes, including conduct of technical studies and market governance administration.