IWAS ABUSO: ERC partners with foreign firm to watch over WESM

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Allegations of market collusion pushed the Energy Regulatory Commission (ERC) to partner with an American firm-consultant to aid them with the monitoring and surveillance at the Wholesale Electricity Spot Market (WESM).

ERC Chairperson Agnes T. Devanadera noted that it was time for stricter regulatory tools to be implemented upon the market.

Potomac Economics Ltd./PE Software Analytics is set to help ERC draft a “market analysis framework” for surveillance and monitoring activities in the WESM.

The partnership with the foreign film has been in line with “the need to continuously capacitate our technical personnel to effectively perform our mandate of monitoring the electricity market and enforce applicable rules and regulations,” Devanadera was quoted as saying in a Manila Bulletin report.

The first case of alleged “market gouging” against the trading activities at the WESM was in 2007 being the state-run Power Sector Assets and Liabilities Management Corporation (PSALM) as the alleged culprit. It was then acquitted by the ERC.

The second was in November to December 2013, with the same reports of simultaneous forced outages of power plants, which resulted in higher power rates for consumers. It had been stopped by an interim court ruling.

Devanadera noted that the help of foreign consultant “will ensure that abuse of market power or anti-competitive behavior will be adequately addressed.”

She added that “having the contract for the WESM monitoring and surveillance awarded to Potomac, the ERC will be able to cope with the unique behaviors and sophisticated bidding and supply strategies of spot market participants.”

Devanadera highlighted that the surveillance on the spot market “is also in preparation for the forthcoming commencement of the trading for ancillary services or the reserve market.”

WESM had been delayed for almost a decade, which should have been able to save the grid from rotating brownouts if there’s a supply shortage.

“With the engagement of Potomac, it is expected that the ERC’s technical staff will be able to prepare monthly, quarterly and annual state of the market reports – including but not limited to price outcomes and bidding behavior containing information drawn from the market monitoring analysis framework and monitoring tools to be developed by the consultant,” Devanadera said.

 

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