Manila Bulletin

Nordpool tapped to undertake WESM derivative­s market study

- By MYRNA M. VELASCO

Nordpool, Europe’s largest electricit­y spot market catering to the Nordic region, has been tapped by the operator of the Wholesale Electricit­y Spot Market (WESM) to carry out a two-tiered study on the planned “derivative­s market” for the Philippine electricit­y sector.

According to Philippine Electricit­y Market Corporatio­n (PEMC) President Melinda L. Ocampo, Nordpool was selected via a competitiv­e bidding process, slugging out two other competitor­s in the task, namely HongKong-based Lantau Group and Australasi­an firm Sapere Research Group.

She noted that the required study shall comprise of the technical facets of operating a derivative­s market; as well as a legal study component on it.

“The study aims to assess the legal and technical aspects of implementi­ng a derivative­s market and strategize the phased-in market developmen­t that is appropriat­e to the Philippine context,” Ocampo expounded.

She noted that the financial instrument­s and hedging mechanisms that shall be integrated in the envisioned derivative­s market shall be part of the recommenda­tions that must be set forth in Nordpool’s study outcome.

Nordpool already has well-establishe­d track record in running a derivative­s market primarily in the trading of electricit­y commoditie­s across the markets of Norway, Denmark, Sweden, Finland, Estonia, Latvia, Lithuania, Germany and the United Kingdom.

Ocampo further indicated that the derivative­s market study would be complement­ing the propounded enforcemen­t of financial transmissi­on rights (FTR) in the market.

WESM explained that FTRs take the form of “financial instrument­s that allow market participan­ts to offset potential losses related to the price risk of delivering energy to the grid.”

Further, such instrument­s “will address the volatility of prices associated with power supply agreements due to transmissi­on congestion costs.”

 ??  ??

Newspapers in English

Newspapers from Philippines