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DOE defends appointment of IEMOP as new WESM operator

The Energy Department on Tuesday defended its move to transfer the operations of the Wholesale Electricity Spot Market to the Independent Electricity Market Operator of the Philippines and dismissed allegations of a “sweetheart deal.”

“No. It is not [a sweetheart deal],” the department said.

IEMOP took over the operations of the WESM, the country’s trading floor of electricity from the Philippine Electricity Market Corp., in September 2018.

The move aimed to ensure the independence of the market operator from the government. IEMOP was mandated to pursue the WESM’s objective to have a transparent, fair, competitive and reliable market for the trading of electricity throughout the Philippines.

The agency said there was no need for a competitive selection process for the selection of a new market operator replacing PEMC.

“No, because competitive bidding was required only for foreign participants as an option under the EPIRA [Electric Power Industry Reform Act] if the IMO [independent market operator] was created in 2007,” it said.

“The DOE opted to create a separate entity composed of Filipinos who have acquired the necessary expertise to operate the WESM and ensure that the market will be managed by Filipinos,” the agency said.

The department said IEMOP was selected to operate the WESM by virtue of  Department Circular 2018-01-0002  and consequently the IMO Transition Plan which were based on Section 30 of the EPIRA as approved by the agency and the electric power industry participants.

It said  IEMOP ‘s incorporation was approved by the transition team based on the plan outlined in the  department circular. 

“The system was transferred to IEMOP based on the operating agreement between PEMC and IEMOP dated Sept. 18, 2018 and people running the system were disengaged from PEMC and hired by IEMOP,” the department said.

“Hence, IEMOP was a ‘spin off’ of PEMC towards independence in market operations,” it said.

PEMC used to perform the market operations, with the Energy secretary as chair and most of the board members coming from the power industry. 

Energy Secretary Alfonso Cusi gave up the chairmanship on the condition that the market operations would be performed by an independent corporation with the necessary experience and expertise. 

Cusi also initiated a review of the operations of IEMOP. He earlier said that while PEMC and the IMO were independent of the government, the department would maintain oversight of the WESM operations.

“The DOE’s involvement with the WESM needs to be close enough for the department to understand key developments, while keeping enough distance from the market’s daily functions. The Energy Department will remain the ultimate guardian of WESM rules and manuals. Together with the ERC we will protect our consumers against industry breaches and anti-competitive behavior,” Cusi said.

IEMOP is a non-stock, non-profit corporation governed by a professional board of directors composed of individuals not affiliated with any of the electric companies that trade in the WESM.

Topics: Department of Energy , DOE , Independent Electricity Market Operator of the Philippines , IEMOP , Wholesale Electricity Spot Market , WESM
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