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Laying the foundation for a stronger electricity market in 2022

The Independent Electricity Market Operator of the Philippines (IEMOP), with persistent efforts of stakeholders and trading participants, accomplished a number of significant milestones this year. These milestones are all aimed in making the electricity market better for the Filipino consumers.

On Feb. 26, 2021, the Energy Regulatory Commission (ERC) lowered the threshold for the Retail Competition and Open Access (RCOA) to 500kW-749kW level. Upon its declaration, IEMOP, as the Central Registration Body for RCOA, immediately took actions to prepare for the increased volume of new contestable customers. Moreover, IEMOP also enhanced its processes to shorten the timeline for RCOA switching as mandated by the Department of Energy (DoE). As such, IEMOP commenced its new seven-day switching timeline on July 25 of this year.

In a pioneering step to make the Wholesale Electricity Spot Market (WESM) more accurate and efficient, the Enhanced WESM Design and Operations (EWDO) project or the 5-minute Market was launched on June 26, 2021. With almost six months in to the EWDO, the industry has observed efficiency gains and improvements in market operations such as better forecasting, lesser intra-hour dispatch deviations, simpler settlement mechanisms, among others.

In addition, to fully implement the Renewable Energy Act of 2008, IEMOP, with the policies and rules promulgated by DoE and ERC, launched the Green Energy Option Program (GEOP) last Dec. 3, 2021. This program provides consumers an option to source their electricity supply from renewable energy resources, such as biomass, solar, wind, geothermal, ocean energy, and hydropower.

This year, IEMOP also finally obtained a Ruling from the Bureau of Internal Revenue (BIR) on the proper tax treatment of WESM transactions as well as the tax regime applicable to the Market Operator. These have been deemed as unresolved issues since the inception of the WESM in 2006. Since 2020, IEMOP has been constantly coordinating with the stakeholders, DoE, BIR, and Department of Finance (DoF) for the promulgation of the Ruling. Upon receipt of the BIR Ruling on September this year, IEMOP immediately initiated stakeholder engagements and briefings with all affected sectors of the industry through their representative organizations to prepare its systems and processes for the full implementation of the Ruling.

In the coming year, IEMOP is determined to sustain its momentum in implementing innovative market solutions. IEMOP is now inching ever closer to the full integration of WESM in Mindanao, which is expected to commence upon the energization of the Mindanao-Visayas Interconnection. Meanwhile, IEMOP is set to carry out the Revised Central Scheduling guidelines for Mindanao issued by the DoE this December.

IEMOP is also cognizant that WESM is primarily designed as a co-optimized market for energy and reserves. Reserves or Ancillary services are commodities which are necessary to maintain a safe and reliable delivery of power from generators to customers. In this context, IEMOP launched its Mock Operations Program (MOP) as a crucial preparatory activity for the Reserve Market. Moreover, the requisite rules changes have already been drafted and filed for the eventual approval of the DoE. In parallel, IEMOP is polishing its systems and processes for the full integration of reserves in the WESM which is expected to commence in 2022.

There are other equally relevant market developments IEMOP is currently preparing and studying. However, IEMOP recognizes that these endeavors would not be possible without the support of the DoE, ERC, and the trading participants. Thus, IEMOP makes serious efforts to be proactive in engaging with government entities and its key stakeholders to fully understand their directives, intent, and needs.

In concluding 2021, IEMOP reiterates its commitment to its stakeholders — to ensure a competitive, efficient, reliable, and transparent electricity market in service to the Filipino people. — Andrea May T. Caguete

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