DOE Set to Launch WESM Mindanao’s Commercial Operations on 26 January 2023

On 23 December 2022, the Department of Energy (“DOE”) issued Department Circular No. DC2022-12-0039 (“Circular”), declaring 26 January 2023 as the Commercial Operation Date (“COD”) of the Wholesale Electricity Spot Market (“WESM”) in Mindanao. 

Compliance with WESM Registration Requirements

The DOE, through the Circular, required all Mindanao Electric Power Industry Participants and entities mandated to become WESM Members to complete their registration no later than 15 January 2023. To effect registration, all Mindanao Electric Power Industry Participants and entities mandated to become WESM Members must, depending on the type of WESM membership, install main meters and submit a (i) Metering Installation Registration Form, and (ii) Single Line Diagram, and/or submit a Direct WESM Member Counterparty Confirmation. Upon failure to register, the Market Operator (“MO”) is authorized to initiate the process of disconnection of all such Mindanao Electric Power Industry participants and entities mandated to register in the WESM. Those with pending requirements aside from compliance with the requirement to install main meters and submission of supporting documents, as well as the submission of Direct WESM Member Counterpart Confirmation, are deemed registered, provided they fully comply not later than 25 April 2023. Otherwise, the process of suspension, disconnection or cessation under WESM Rules, market manuals and amendments thereto, shall be followed. 

The commercial operation of WESM Mindanao is expected to allow the efficient transfer and settlement of electricity exchanges through the Mindanao-Visayas Interconnection, a project of the DOE under the Transition Development Plan expected to be completed by March 2023.

Guidelines on Compliance with Real-time Monitoring

The DOE also mandated Generators lacking requirements specific to Real-time Monitoring to submit their compliance plans to the MO and System Operator (“SO”), furnishing copies to the DOE and Energy Regulatory Commission, within 2 weeks from the effectivity of the Circular. Meanwhile, the timeline in the compliance plan for completion of the Real-time Monitoring requirements must not be more than 3 months from the actual COD. If a Generator (a) fails to submit the compliance plan within the stated deadline, or (b) is unable to complete the requirements within the timeline set in the compliance plan, the SO shall initiate the disconnection of the concerned Generator and inform the MO of such disconnection. Thereafter, the MO shall initiate the process for suspension or cessation in accordance with the WESM Rules, market manuals and amendments. 

Relaxation of Prudential Requirements and Dispatch of Conformance Standards

For ease of transition to commercial operations of WESM Mindanao, the DOE also relaxed the rules on the posting of Prudential Requirements (“PR”) and compliance with the Dispatch of Conformance Standards (“DCS”).

Mindanao WESM Trading Participants shall be allowed to post the required PR within the first 3 billing months following COD or not later than 25 April 2023. The Mindanao WESM Trading Participants under Direct WESM Membership which are unable to post the required PR within the 3-billing months relaxation period shall update their registration status to Indirect WESM Membership not later than 15 days prior to 26 April 2023. Otherwise, applicable sanctions and/or penalties shall be imposed in accordance with the WESM Rules and Market Manuals. 

With regard to compliance with DCS, the WESM Trading Participants in Mindanao shall be exempted from sanctions and penalties in case of breach of DCS provided under the WESM Dispatch Protocol during the said first 3-billing months. Nevertheless, the Trading Participants’ observance of the DCS shall continue to be monitored for the purpose of evaluation of the initial commercial operation of the WESM in Mindanao. 
The full text of DOE Department Circular No. 2022-12-0039 can be accessed here:   https://www.doe.gov.ph/sites/default/files/pdf/issuances/dc2022-12-0039.pdf