WESM-IEMOP to ink deal with PEMC, banks

The newly institutionalized Independent Electricity Market Operator of the Philippines (IEMOP) will need to enter into an agreement with the Philippine Electricity Market Corporation (PEMC) and relevant banks on the transfer as well as management of security deposits of trading participants at the Wholesale Electricity Spot Market (WESM).

With predecessor-firm PEMC in particular, which has also been restructured to become the WESM’s governing body, IEMOP President Francis Saturnino Juan noted that the handling of the market security deposits would be part of the Operating Agreement (OA) that the two companies will be firming up and signing soon.

“On security deposits, for the existing that have been posted in favor of PEMC, we’re thinking of letting them remain until expiration – subject to agreement with PEMC and the banks,” he said.

As explained, before a power generator could officially trade its capacity; and for a distribution utility to procure supply from the spot market, they are required to remit prescribed amount of security deposit through the market operator.

That security deposit will then be the ‘financial cover’ that the market operator can lean on if the power generator or the DU defaults on payments for or settlements of WESM-transacted capacities.

Aside from security deposit, Juan indicated that the OA with PEMC shall also sort out concerns such as market fee collections and filing with the Energy Regulatory Commission (ERC); treatment of the liabilities that have been there prior to the creation of the IEMOP; as well as delineation of functions following its segregation from the sanctioned governing body, among others.

“Once the IEMOP assumes market operation functions, it will start collecting market fees. Portion of the proceeds will be remitted to PEMC to defray its cost of operations,” Juan said, contending that “this will be provided in the Operating Agreement.”