Wholesale Electricity Spot Market
(WESM)
General Overview
Presentation Outline:
• The WESM Rules
• Regulatory Filings
• The Philippine WESM
The WESM Rules
• EPIRA mandate
• Section 30
WESM Rules - establishes the basic rules,
requirements and procedures that govern
the operation of the Philippine electricity
market.
A consolidated set of rules covering:
» operation of pool
» metering and settlement
» scheduling/dispatch
» dispute resolution
» rule change process
Chapter 1 – Introduction
• Regulatory framework
• Governance
–
–
–
–
PEM Board
Composition of PEM Board
Functions
Working Committees
Spot Market
Division
Chapter 2 – Registration of Members
and Fees
• “WESM Members”:
– Persons who must be authorized by the ERC to
operate in the restructured industry - Network
Service Provider, Ancillary Service Provider,
Suppliers, Generators and Meter Service
Providers
– Others who intend to participate in the industry
Spot Market
Division
Chapter 2 – Registration of Members
and Fees
Market Fees
– Level and structure for ERC approval
– Components of market fees
•
•
•
•
•
Registration fees
Metering fees
Billing and settlement fees
Administration fees
Other costs incurred by PEM Board and working
groups
Chapter 3 - The Market
Chapter 4 - Metering
Chapter 5 – Market Information
and Confidentiality
Chapter 6 –Intervention and
Market Suspension
Spot Market
Division
Chapter 7 - Enforcement and
Disputes
Chapter 8 - Rule Change
Chapter 9 - Interpretation
Chapter 10 – Transitory Provisions
Spot Market
Division
Regulatory Approvals
• Price Determination Methodology
• Market Fees
• Administered Price Determination
Methodology
Regulatory Approvals
Price Determination Methodology (PDM):
The PDM determines the price of
electricity not covered by bilateral
contracts
between
sellers
and
purchasers of electricity users using the
Market Dispatch Optimization Model
(MDOM).
Regulatory Approvals
Administered Price Determination
Methodology (APDM):
Administered Price - is the price that will
be used by the Market Operator of the
Philippine WESM in the settlements of
energy transactions during periods when
ERC suspends the market or in cases
when System Operator/Market Operator
intervenes in the market.
Regulatory Approvals
APDM:
The price and schedule for a given price
schedule shall be equivalent to the load
weighted average ex-post energy price of
the corresponding trading interval of the
four (4) preceding same days, that have
not been administered.
Regulatory Approvals
The market fees are categorized into:
1. Market Registration Fees – to cover the
expenses for registering WESM members,
which are not included in the calculation of the
total Market Transaction Fees requirement of
PEMC.
2. Market Transaction Fees - the total budgeted
revenue requirements of PEMC in operating
and governing the market.
How will the WESM be governed?
• Department of Energy (DOE) – supervises the restructuring
of the electricity industry.
The Act, mandates DOE,
together with industry participants, to formulate the
detailed rules for the WESM.
• Energy Regulatory Commission (ERC) – approves the Price
Determination Methodology and the Market Fees. It also
sets the criteria for eligibility for membership in the WESM
market and performance standards through the Grid Code.
• Philippine Electricity Market Corporation (PEMC) – the
governing body of the WESM, enforcing and modifying
rules to safeguard the WESM mechanism and its
participants. It manages the system to ensure it meets
standards and targets, registers participants and resolves
their disputes.
Key Players in the WESM
Market Operator (MO)
• Dispatch Scheduler
• Operates the WESM
System Operator
Network Service
Provider
Customers
Metering Service
Provider
Generators
Trading Participants
Ancillary Service
Provider
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GOVERNANCE AND REGULATORY
STRUCTURE FOR THE WESM
DOE
•Policy making
•Planning
ERC
•Enforcement
•Pricing
•Market Monitoring
Governance
PEM
Auditor
PEM Board
TRANSCO
(SO)
Rule Change
Committee
Disputes
Resolution
Administrator
Market Operator
Market
Surveillance
Committee
Market Participants
Generators
Distributors
Suppliers/
Aggregators
End-Users
Technical
Management
Committee
Administers the operation of the
WESM in accordance with the
WESM Rules
Operate the WESM on a nonprofit basis
Determines the dispatch
schedule of all facilities
Monitor daily the trading
activities in the market
Operate the power system in accordance
with the WESM Rules, Grid Code or any
instruction from the MO or the ERC to ensure
security and reliability of the power system.
Provide central dispatch to all generating
facilities and loads in accordance with the
dispatch schedule submitted by the Market
Operator.
The Philippine WESM

A centralized venue for sellers and buyers to trade
electricity as a commodity.

Wholesale

Spot
market - it is open to generators,
distribution utilities, directly connected customers, large
customers and eventually supply aggregators with at
least one (1) Mega-Watt (MW) of electricity requirement.
market - electricity is traded in real time
because it cannot be stored for future use. Electricity is
difficult to store.
WESM

As envisioned, the WESM will provide an efficient
and transparent venue for trade and investment in
the power industry

The WESM is aimed to:

Provide cost-efficient dispatch of power plants
through an economic merit order;

Create reliable price signals to assist participants in
weighing investment options;

Provide a fair and level playing field for sellers and
buyers of electricity as prices are driven by market
forces.
The WESM and its Basic Concepts

Market
place
for
trading
electricity as a commodity that
reflects the market based value of
electricity

Prices not subject to regulation
but governed by market forces.
• The heart of the
industry structure
 Uses the concept of a “gross pool”
where
all
electricity
output
including those not covered by
bilateral contracts, are centrally
coordinated
while
allowing
generators/consumers to compete
to be scheduled and dispatched to
meet the electricity demand in real
time.
21
Locational Marginal Pricing
Cost of supplying next MW of load at a
specific location, considers generation
marginal cost, cost of losses and
transmission congestion cost.
LMP
=
Generation
+
Losses
+
Congestion
22
LMP
23
LMP
24
In sum,
Unconstrained system – the market price is set by one
marginal plant. The price is adjusted for each node to
consider transmission losses, and the resulting value
is the LMP.
Where the system is constrained – the relevant flows of
electricity are affected as the line limitations arising
from the constraint may impede the supply of cheaper
electricity from one area to another.
Economic Dispatch; Supply & Demand
Supply Side
Demand Side
Offer of Genco A
Q = 100 MW
P = P500/MWh
P/MWh
Offer of Genco B
Q = 250 MW
P = P 800/MWh
Offer of Genco C
Q = 500 MW
P = P 1,500/MWh
Offer of Genco D
Q = 500 MW
P = P 1,800/MWh
400
Industry Demand:
400 MW
1,500
500
Genco B
G
e
n
c
o
C
Genco A
Offer of Genco E
Q = 300 MW
P = P 9,500/MWh
100
Market Clearing
Price is set at
P 1,500/MWH.
250
50
MW
26
Ex ante and Ex post Pricing
ExAnte
ExPost
Dispatch
Target
MW →
100
150
0
EX-ANTE
QTY (MW)
EX-ANTE
PRICE
(P/MWh)
EX-POST
QTY. (MW)
EX-POST
PRICE
(P/MWh)
100
50.00
150
60.00
SETTLEMENT
EAETA = 100 X 50 = 5,000
EPETA = (150-100) X 60 = 3,000
TOTAL
SETTLEMENT
EAETA + EPETA = 5,000.00 + 3,000.00 = 8,000.00
Hourly Demand Forecast
1 HOUR Trading Interval →
1
EX-ANTE – Initial loading level at the beginning of the hour
EX-POST – Actual Metered Dispatch
EAETA = Ex-Ante Energy Trading Amount
EPETA = Ex-Post Energy Trading Amount
27