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Monday, February 20, 2017

DOE Consultations Show Wide Support For WESM Mindanao Establishment


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Given the excess in power generation capacity in Mindanao, preparatory activities for the launch of the Wholesale Electricity Spot Market (WESM) in Mindanao are being undertaken by the Department of Energy (DOE). This is in coordination with the Philippine Electricity Market Corporation (PEMC) and the National Grid Corporation of the Philippines (NGCP).

The DOE has already completed two public consultations this month in Cagayan de Oro and in Zamboanga City. It focused on a draft circular that will govern the operation of WESM Mindanao in fulfilment of the DOE's mandate to ensure the security, reliability and availability of transparent and reasonably-priced electricity in the country.

The above-mentioned mandate of the DOE, under the stewardship of Energy Secretary Alfonso G. Cusi, is underlined in Republic Act 9136 or the Electric Power Industry Reform Act of 2001.

The two public consultations on the draft circular “Declaring the Launch of the Wholesale Electricity Spot Market in Mindanao and Providing for Transition Arrangements" gathered together energy experts and power industry participants, as well as investors, consumers, members of the academe and other stakeholders.

The consultation participants were united in expressing confidence that with a stable and competitively-priced energy source, Mindanao can experience and sustain an economic boom under the Duterte Administration's 10-point socio-economic program.

The establishment of WESM in Mindanao is a high priority agenda of Cusi targeting its commercial operation by June 26, 2017. The DOE is set to conduct three more public consultations in Davao City on Feb. 21, Butuan City on the 28th, and General Santos City on March 7.

For decades, Mindanao has lagged behind Luzon and the Visayas in economic development under the past Administrations with their Manila centrist policies which the Duterte Administration has seen as one of the root causes of poverty and strife in Mindanao.

The objective of the public consultations is to solicit the views of all stakeholders on how to improve the circular which will lay down the policies for the establishment of WESM Mindanao.

To be able to reach more participants, the DOE forged a partnership with the Mindanao Development Authority which, together with the PEMC and NGCP, will undertake an intensive and massive Information, Education and Communication (IEC) drive.

The information drive will help more Mindanaoans better understand WESM and to appreciate the benefits it will bring about in sustaining investments in Mindanao, which needs a robust power sector to support a booming economy.

In 2016, Mindanao had an additional generating capacity of 782 megawatts (MW) and is expecting the commercial operations of additional 1,208 MW this year.

Despite the additional supply, there remains power interruptions in Mindanao especially in the franchise areas of distribution utilities which do not have sufficient power supply agreements to cover their increasing demand for electricity.

In the absence of such contracts, power generation companies are hesitant to operate their plants without an approved supply contract or any compensation mechanism duly approved by the Energy Regulatory Commission.

Thus, the establishment of the WESM will serve as the mechanism to efficiently tap the excess capacities in the area to avoid rotating brownouts and ensure 24-hours continuous electricity service.

From the two consultations, the DOE recognized that most of the concerns were operational in nature rendering the need to move forward with the IEC drive.

Through the IEC, the DOE hopes to address also occasional opposing views which can be attributed to the lack of deeper understanding of the WESM.

The draft circular was posted at the DOE and PEMC website last 24 January. Comments and suggestions will be processed until 14 March 2017.

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