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DOE Releases Further Amendments to the Wholesale Electricity Spot Market Rules and Market Manuals for the Implementation of Reserve Market

On 7 November 2022, the Department of Energy (“DOE”) released Department Circular No. DC2022-11-0032 or ‘Adopting Further Amendments to the Wholesale Electricity Spot Market (WESM) Rules and Market Manuals for the Implementation of Reserve Marker’ (“DC2022-11-0032”).  

Under DC2022-11-0032, provisions of the Wholesale Electricity Spot Market (“WESM”) Rules on the Implementation of the Reserve Market, the Market Manual on Price Determination Methodology, the Market Manual on Registration, Suspension and De-Registration Criteria and Procedures, the Market Manual on Billing and Settlement, and the Market Manual on Dispatch Protocol were amended. Sections 21 and 22 of the Market Manual on Dispatch Protocol were also amended.

Amendments to the WESM Rules on the Implementation of the Reserve Market include updates and minor amendments to the responsibilities of the System Operator, changes to the process of registration of Ancillary Services Providers, and amendments to the determination of reserve price, reserve trading amount, and reserve cost recovery amount. Additional rules related to the reserve market were also added to the Market Manual on Price Determination Methodology. Specifically, Section 6.5 on Price Substitution Methodology for Reserve Prices and Section 7.4 on Reserve Administrative Price are now included in the rules. Section 8.2.2 was also amended to refer to Reserve Trading Amount as compared to the previous Aggregate Trading Amount.

Meanwhile, the significant amendments to the Market Manual on Registration include changes to the requirements and qualifications for registration of Direct WESM Members and Trading Participants and Ancillary Services Providers. In relation to who are qualified to register as Customer under Registration of Direct WESM Members and Trading Participants, the following are now included: (i) Distribution Utilities, (ii) Retail Electricity Suppliers, (iii) Renewable Energy Suppliers, (iv) Bulk Users or End Users, and (v) System Operator. For the Registration of Ancillary Services Providers, persons or entities wishing to register as WESM member must now also be: (i) registered as a Generation Company or a Customer, (ii) in compliance with the technical requirements for Ancillary Service Providers set forth in the Philippine Grid Code and other relevant documents that will be promulgated by the Energy Regulatory Commission (“ERC”) and the DOE on the provision of Ancillary Services, and (iii) for generation companies, only scheduled generating units, battery energy storage systems, and pumped-storage units can be registered as a reserve facility. A portion regarding registration of a Generation Company and Customers with load facilities as Ancillary Services Provider was also added. Under the new rules, the application for registration of a Generation Company must specify the following information for each of its reserve facility:

  1. Reserve category or categories which said generating unit intends to trade in the WESM;
  2. Maximum reserve capability as determined in the Ancillary Services capability tests conducted by the System Operator or the third-party testing entity accredited by the ERC; and 
  3. Validity period for providing Ancillary Service for each reserve category. 

Meanwhile, Customers with load facilities which intend to register in the WESM as Ancillary Services Provider will be accredited and must comply with the requirements set out in relevant procedures for accreditation promulgated by the ERC. They must also submit the following information:

  1. Projected Maximum Energy Load Requirement;
  2. Reserve category or categories which said load facility intends to trade in the WESM;
  3. Maximum reserve capability as determined in the Ancillary Services capability tests conducted by System Operator or the third-party testing entity accredited by the ERC; and
  4. Validity period for providing Ancillary Service for each reserve category.

Finally, for the amendments to the Market Manual on Dispatch Protocol, certain provisions were amended to include Trading Participants. These sections include Section 1.1 – Overview of WESM Operations, Section 3.1.1 on the Responsibilities of the Market Operator, certain provisions of Section 5 on Market Infrastructure and Section 6 on Bids, Offers and Data Submission and Processing, among others. Section 21 now discusses monitoring the effective provision of ancillary services.