Wesm Annual Report

SNAPSHOT
GENERATION MIX
EFFECTIVE SETTLEMENT SPOT PRICE
COAL 46.5%
PHP 5,018/MWh
NATURAL GAS 28.5%

GEOTHERMAL 14.6%
WESM MEMBERSHIP
HYDRO 6.6%
REGISTERED TOTAL
(Luzon and Visayas)
Generation Companies
68
Customers
171
Private Distribution Utilities & Local

Government Utilities
14
Electric Cooperatives
71
Bulk Users
79
Wholesale Aggregators
OIL-BASED 2.9%
WIND 0.65%
BIO-DIESEL 0.21%
SOLAR 0.08%
MARKET SHARE BY REGISTERED CAPACITY

San Miguel Corporation
Aboitiz Power Corporation ABOITIZ
* WESM Registration Summary as of June 25, 2015
Retail Electricity Suppliers
RES
16
Local Retail Electricity Suppliers
LRES
12
RMSP
24
CC
364
DCCC
SLR
Contestable Customers
Directly Connected Contestable Customers
Power Sector Assets and Liabilities PSALM

Management Corporation
13.7%
SUPPLY-DEMAND PROFILE
Total Market Participants
428
* RCOA Registration Summary as of June 25, 2015
Offer
PEN
Non-Congestion
Congestion-Related
System
Luzon
Visayas
Min
4,644
3,368
939
Ave
9,097
7,678
1,419
Max
10,866
9,290
1,614
Min
4,644
3,368
939
Ave
9,097
7,678
1,419
Max
10,866
9,290
1,614
REGISTERED CAPACITIES
Total Registered Capacity (Pmax) Luzon
PRICING CONDITIONS (PEN, MRR, PSM)

Luzon
16.0%
14.9%
Demand
Suppliers of Last Resort
19.0%
FIRST
GEN
First Gen Corporation
RCOA REGISTRATION
Retail Metering Service Providers
SMC
Visayas
RTD
RTX
RTD
RTX
4,391
537
1,402
690
3,418
362
584
392
973
175
818
298
13,448.47
Total Registered Capacity (Pmax) Visayas
2,213.11
TOTAL REGISTERED CAPACITY (Pmax) SYSTEM
15,661.58
BCQ AND SPOT TRANSACTION LEVELS

TOTAL TRANSACTIONS 60,734 GWh
Total BCQ Transactions 56,159 GWh
Total Spot Transactions 4,574 GWh (7.5%)
WESM Annual Report 2014
WESM Annual Report Magazine 2014
ADVISORY PANEL
EDITORIAL TEAM
Melinda L. Ocampo
Robinson P. Descanzo
Criselda S. Martin-Funelas
Phillip C. Adviento
Cerise M. Cabactulan
Josephine C. Cabillo-Corpuz
Eric Nio U. Louis
PEMBOARD
38
CONTRIBUTORS
Vol. 2 June 2014 - June 2015

WESM Works is the combined Annual Market Report of the Wholesale
Spot Electricity Market (WESM) and the Annual Corporate Report of the
Philippine Electricity Market Corporation (PEMC) in a stylized, magazine
format.
Opinions, beliefs and viewpoints expressed by the various contributing
writers do not necessarily reflect those of the advisory panel or the editorial
staff of the PEMC.
The information contained in the magazine are based on the electricity spot
market data that are subject to continuous verification by PEMC. The same
information is subject to change as updated figures are made available. As such,
PEMC does not make any representations or warranties as to the completeness
of this information. PEMC, likewise, accepts no responsibility or liability
whatsoever for any loss or costs incurred by a reader arising from, or in relation
to, any conclusions or assumptions derived from the information found herein.
Reproduction, transmission and distribution of this report for reference
purposes only are authorized provided that such reproduction, transmission
and reproduction are in view of the complete report. This report shall not
be reproduced, transmitted, or distributed in parts. Full acknowledgement of
PEMC as the source of information found in this report must be given at all
times. 2015. All rights reserved.
ABOUT THE COVER
Ana Fe Monica C. Aguila

Rheinhart O. Banogon
Julius Eleazar A. Bunyi
Sherwin T. Casidsid
Mary Grace B. Ciruelos
Carlito C. Claudio
Hiyasminh Aleia D. Dagum
Michelle Mabelle E. Dones
Ma. Hazel M. Gubaton-Lopez

Arnesh Y. Inosto
Clares Loren C. Jalocon
Bienvenido C. Mendoza, Jr.
Edward I. Olmedo
Geraldine A. Rodriguez
Mary Anne T. Santiago
Mabelle R. Tolentino
PEMC may be contacted at the following business locations:

Manila
9th, 11th, and 18th Floors
Robinsons Equitable Tower
ADB Avenue, Ortigas Center
Pasig City
1600 Metro Manila
Philippines
Tel: +63.2.631.8734
Fax: +63.2.636.0802
Email: info@wesm.ph
Cebu
6th Floor Skyrise I Building
Asiatown IT Park, Apas
6000 Cebu City
Philippines
CAVEN STUDIOS, INC.

Unit 809 Prestige Tower
F. Ortigas Jr., Road
Ortigas Center
1650 Pasig City
Philippines
Progress demands hard work, efficiency, and commitment. The

people behind the workings of the WESM, working together
with all the stakeholders, serve as the transformative force that
empowers and energizes the growth and evolution of the entire
power industry.
Interpreted in a retro art and stylized manner, the artist uses the
metaphor of a powerful future-retro clockwork engine for WESM.
PEMCs and each stakeholders effort and expertise serve as a gear
to the grand machine that fuels the city, lighting the way forward.
On its 9th year of commercial operations, the WESM proves to
be a consummate body of work that sets the condition to reform
the industry, expand our economy and advance the welfare of every
Filipino. Indeed, a WESM that works, powers progress.
Tel: +63.2.942.3099
Email: info@cavenstudios.com
www.cavenstudios.com
Creative Directors
Alan T. Parma
Joseph V. Frago
PROGRESS
UP CLOSE
Top 9 Events of the Year

41
From the Desk of MLO

6
MAIN STORY
International Linkages: APEx
17
International Linkages: EISG
MARKET BITES
CSR Activities
Powering Progress
21
42
43
44
MARKET ASSESSMENT
Cover and Interior Artwork by

Jerwin R. Villanueva
Principal Photography by
Hubert G. Pacheco
Additional Photographs
Provided by
Carlito C. Claudio
Hiyasminh Aleia D. Dagum
Wilfred D. de Vera
Arnesh Y. Inostro
Motion Graphics Artists

and Video Editors
Alan T. Parma
Finance Head

Jerwin R. Villanueva
Angela C. Parma
Emil L. Alegada
Project Manager and Producer Red R. Matias
Joseph V. Frago
Production Assistant
Richel Sumalpong
Lead Copywriter
Michael Estipona
Art Director and Lead Designer
Ares B. Tolentino
THE YEAR IN REVIEW
Tel: +63.32.415.5145
Fax: +63.32.415.5142
Email: visayas@wesm.ph
WESM Works is a custom publication produced by CAVEN

STUDIOS for the PHILIPPINE ELECTRICITY MARKET
CORPORATION
SNAPSHOT
POSTSCRIPT
25
UPDATES
RCOA
29
WESM
101
WESM 101
8
REM
30
Governance Committee
Accomplishments
30
FUTURE DIRECTIONS
46
Enforcement and Compliance

34
Policies and Regulations
35
IMS
36
PEMBoard Accomplishments
37
WESM MAP
14
#PEMSELFIES
48
INDEPENDENT AUDITORS
REPORT
54
Progress Up Close
Postscript
From the Desk of MLO
aking the second edition of the

WESM Works: Annual Report
Magazine is an interesting
exercise in putting things in their proper
perspective. Every new year is a reason to
be grateful, both in terms of what has been
accomplished and what can yet be done.
Nine years into its work as a force
of change in the Philippine electricity
industry, the Philippine Electricity Market
Corporation (PEMC) has responded to
its mandate by establishing the Wholesale
Electricity Spot Market (WESM) in
Luzon and the Visayas, and more recently,
the interim market for Mindanao. None
of this would have been possible without
much inter-agency coordination and
engagement from stakeholders.
This year, our second year in magazine
format, allows us to find a new way to
present the best of the work that we
do in order for it to be understood and
appreciated by more who are truly part of
our mission to power progress. This edition
touches upon some truly vital pieces of
information, as follows:
WESM 101 looks to bring the
workings of the power industry down
to earth, introducing WESM and its
work, and explaining the trading process.
Indeed, in pursuit of greater clarity and
straightforwardness, articles have been
put together specifically with briefer
discussion, more accessible language and
greater emphasis on explanatory visuals.
Our Main Story, Powering Progress,
takes a look at the role WESM plays in the
Philippine power industry and how it helps
build the way toward lasting energy reform.
Market Performance and Market
Assessment form the core of the Annual
Report, presenting the quantitative results
of the work we have done for the period
covering 26 June 2014 to 25 June 2015.
Updates brings forward more qualitative
results of work done in various aspects, from
the Retail Competition and Open Access
(RCOA) to the Renewable Energy Market
to new developments in Governance,
Policies and Regulations and Enforcement
and Compliance. This is followed by the
Year in Review, a broader look at the
accomplishments for the year, and Future
Directions, a brief discussion of plans for
the eventful year to come. In tandem with
It is not without a touch of irony that in

looking forward to things, we sometimes
find ourselves looking back.
the compact but accurate article content,

handy QR codes at the end of some articles
can be scanned to take readers to full, more
detailed versions of the reports online.
The issue is rounded out by a Whos Who
of the Philippine Electricity Market Board of
Directors (PEM Board) and Staff of PEMC,
which seeks to make readers more acquainted
with the people in their neighborhood who
help facilitate the journey along the straight
path of the modern Philippine power
industry. Here and all throughout the rest of
the magazine, a visual theme of motion can
be seen running through the photographs,
where the conspicuous absence of posed still
pictures reflects an emphasis on the activity
and movement that characterize the way
we work.
We look forward to building on our

achievements and ensuring that all our
efforts for the past year bear fruit that
will lead us into the next WESMs 10th
Year. Furthermore, we also look forward
to sharing our perspective and plans with
you, dear readers and stakeholders, as we
recommit ourselves to powering progress.
Melinda L. Ocampo
President, PEMC
hat is there to look back upon?

The Philippine energy industry
has
weathered
immense
challenges in the past, just as the nation
itself has, thanks to the enduring strength
of spirit of the Filipino. I have had the
honor of being the Secretary of the
Department of Energy for a challenging
but fulfilling term, and through all this
time I have had the privilege of witnessing
the truly unique meshing of black-andwhite market forces with the full-color
reality of human experience.
The DOE has always faced the challenge
of continuing to push for a reliable energy
sector, sustained by its collaboration with
related agencies and institutions who share
the same goal. The Wholesale Electricity
Spot Market is a wonderful example of a
measure of reform that has continued to
bring people together to be a collective
force that powers progress.
The strengthened partnership between
the System Operator, the National Grid
Corporation of the Philippines, and the
Market Operator, the Philippine Energy
Market Corporation, has shown that this
collaborative working nature begins at
the core of WESM. With the expansion

of the market thanks to the introduction
of RCOA and its eventual expansion of
coverage, even more entities have been
given the opportunity to contribute.
What is there to look forward to? There
is much that can still be achieved. Our drive
toward a stronger integration of Renewable
Energy is gaining momentum, and this
wiser and more environmentally sensible
response to the modern context deserves
our continued attention and effort. We
have made great strides toward fulfilling
the promise of the Renewable Energy Act,
and there is much to place stock in when it
comes to building a more sustainable future
for the energy industry.
WESMs role as an early template for
wholesale electricity markets in the region
places it in a unique position to demonstrate
how the interplay between well-designed
policy, healthy market competition, and
stakeholder interests can result in a system
that truly powers progress.
WESM is poised to continue being an
instrument of reform in the energy industry,
as per the vision of EPIRA. I would like
to express my gratitude for having been
able to work with such professionals in the

PEM Board, the PEMC management
and staff, and all the WESM Participants.
It has been a privilege to have a hand in
building and maintaining the reform
that we all feel our nation deserves, and
I commend all of you and thank you for
your support in keeping the tuwid na
daan well-lit and well-powered.
Carlos Jericho L. Petilla

Secretary, Department of Energy and
PEM Board Chairman
WESM 101
WESM 101
THE SCIENCE
WESM
101
hen you have consumers and providers

for something as vital to modern life as
electricity, it is all the more important
to have a structured, transparent, and properlyrun venue for this exchange to happen. A place
where generation companies can deal with largescale customers on equal footing, allowing market
forces of supply and demand to determine prices
for goods delivered.
Granted, were not totally there yet. Due to
the huge capital investment needed to start such
ventures, there are still too few players in the
power generation and related services sectors at
the moment. And because of how fundamental
electricity is to modern society, safeguards must
still be put into place, otherwise, electricity prices
will go crazy given there is a constant high demand
for such a limited resource.
It is a high-tension wire balancing act, but as
awareness and appreciation for the Wholesale
Electricity Spot Market (WESM) grow year
on year, we at the Philippine Electricity Market
Corporation (PEMC) continue to educate
stakeholders and consumers to understand it and
the role it plays in the modern Philippine power
industry.
THE GOVERNANCE
Basic science tells us that electricity is generated
when turbines are spun. There are many ways
to power this process: from burning coal, oil, to
harnessing wind power, the motion of the waves,
nuclear reactions, solar, and geothermal energy.
No matter how it is produced, storing large-scale
amounts of electricity is not a practical reality at
this time. Once generated, electricity must be
consumed and transmitted almost at the same time,
or else it is lost.
THE ECONOMICS
In a similar manner, trading electricity as

a commodity cannot be done too far ahead in
advance yet, like in a futures market. Trading must
be done in real time, with spot prices reflecting
the market conditions at that particular time.
At the Philippine WESM, trading is done
every hour, on an hour-ahead basis. Wholesale
consumers (distributors, major factories directly
connected to the grid and electric cooperatives)
submit their power requirements, and power plants
make price offers based on their available electricity
supply at that time. WESM matches the said offers
and power requirements, and schedules the power
plants for dispatch.
Currently, a lot of electricity deals are still made
through bilateral contracts: long-term agreements
between generators and large-scale customers that
set a fixed price for a fixed amount of electricity to
be provided.
Since all transactions are centrally-coordinated,
scheduled and dispatched to meet the electricity
demand in real time, WESM is also the venue
where excess energy capacities that are not covered
by contracts are bought and sold.
As the market grows and matures, more
trading options become available to both buyers
and sellers, allowing them to make more advanced
economic strategies.
The WESM was established as one of

many industry-wide reforms by the Electric
Power Industry Reform Act of 2001 (EPIRA),
a landmark law that sought to break the
monopolies of the industry at the time, and
usher in a competitive, efficient, transparent and
reliable era.
Governing the market is the PEM Board,
a 15-member body headed by the Secretary of
Energy, which consists of members equitably
representing sectors in the power industry
and independent members. As intended by
EPIRA, the stakeholder board will be eventually
transitioned into a fully independent board.
THE FUTURE
WESM has evolved, and is still evolving since

commercial operations began nine years ago.
The Luzon and Visayas grids have already been
interconnected. Studies and preparation have
already started to connect Mindanao in the next
several years, if not sooner.
With the Renewable Energy Act signed and
in-effect, there has been a surge of interest and
development in solar, wind, ocean and biomass
power generating facilities.
Integration of the retail market to the
wholesale market has already been implemented.
New categories of participants have been
created as a result suppliers, aggregators, and
contestable customers. As the energy requirement
to participate in the markets slowly lowers, we can
expect to have retail competition at the household
level in the foreseeable future.
WESM 101
In its role of providing a competitive,

efficient, transparent and reliable venue for
the trading of electricity as a commodity,
WESM is guided by a number of objectives:
1. Ensure a level playing field for all
participants,
2. Facilitate the trading of electricity among
WESM participants via the spot market,
3. Grant third parties access to the power
system in accordance with EPIRA,
4. Allow commercial and market forces to
govern trading prices, as practicable as
possible, and
5. Encourage efficiency.
IS WESM SUPPOSED
TO BRING DOWN
ELECTRICITY PRICES?
The simple answer is no... not directly.
WESM is a platform, a marketplace. It
provides a secure, efficient and transparent
place to trade, and makes the dispatch
schedule of power plants, and facilitates

the transparent, reliable and optimal
pricing of electricity. It doesnt dictate or
influence prices.
Having a properly-run WESM, though,
is a strong point in encouraging more
investment and the entry of new players to
the energy sector. The true competition that
this brings should lead to more reasonable
prices and better value than they would have
been under the monopoly system.
In the long run, the market system is
expected to improve industry efficiencies,
ideally keeping both contract and spot
market prices stable and economical because
of continued healthy market competition as
well as efficient and sustainable to encourage
new capacity-building investments.
conditions and security requirements

taken into consideration) in order to reach
a security-constrained economic dispatch.
2. Self-Commitment Principle WESM
expects participants to assume full
responsibility for how and when their
plants are operated and maintained.
3. Locational, Full Nodal Pricing Because
costs are associated with transmitting
the electricity from generation source
to consumption node, WESM is able to
properly account for the economic impact
of losses and constraints that result from
the operation of the electricity network.
This allows them to provide the correct
economic signals to market participants.
This mechanism reveals, at different
points in the system, the cost incurred
in ensuring that sufficient power flows to
meet all loads in all locations.
WHAT ARE THE

PRINCIPLES THAT
WESM FOLLOWS?
Here are some key operating principles
WESM adopted to perform its job.
1. Gross Pool Concept Under this system,
each power generator submits offers
for price and quantity and customers
submit demand bids (not yet in place).
In the market, the offers are matched
with demand requirements (with system
4. Ex-ante pricing and ex-post pricing

Using these pricing schemes allows
WESM to account for differences
between hour-ahead forecasted load
and dispatch (ex-ante prices are forecast
based on hour-ahead projections) and
actual metered generation/load (ex-post)
WHAT IS PEMC AND

HOW IS IT RELATED
TO WESM?
The Philippine Electricity Market
Corporation (PEMC) is a non-stock,
non-profit private corporation that was
incorporated in November 2003 and has
two main functions to be WESMs
Market Operator and its governance arm.
As Market Operator, PEMCs Trading
Operations Department (TOD) is in
charge of the day-to-day, real-time 24/7
trading activities, as well maintaining a
competitive, transparent, efficient and
reliable market.
On the governance front, PEMCs
Market Assessment Group (MAG) and
Enforcement and Compliance Office
(ECO) each have specific assignments:
10
10
to implement the monitoring and

assessment of market performance and
to investigate breach, respectively.
PEMC is also the Central Registration
Body (CRB) of Retail Competition
and Open Access (RCOA). This puts
them in charge of managing the system
that handles customer switching and
plants, the ERC approved the Feed-In

Tariff Allowance (FIT-All). This will
be collected from consumers and will
be reflected in their electricity bills, as
mandated by the RE Act.
FIT is an incentive for developers
of renewable energy facilities as an
additional revenue stream for the
renewable electricity they generate.
information exchange among retail

participants, as well as settlement of
transactions. PEMC has also been put
in charge of the Interim Mindanao
Electricity Market (IMEM) by the
Energy Regulatory Commission (ERC).
WHAT IS RCOA AND

HOW DOES IT WORK?
WHAT IS RE
AND REM?
Retail Competition and Open Access

(RCOA) introduces retail competition
to the power industry. This opens up the
market place to new players its no
longer about direct buyers and sellers
anymore. Now, resellers and other third
parties can join in, operating on the idea
that healthy retail competition will end up
benefitting the consumer.
Electricity consumers are also further
subdivided into Contestable (entities
with certification from the ERC that they
have an average monthly peak demand of
1 MW for at least one year) and Captive
(status quo).
New players called Suppliers, if licensed
by the ERC, now have the choice to
either negotiate prices directly with
generators or buy from WESM. Suppliers
also have access to the transmission and
distribution systems of the distribution
utilities (DUs). Suppliers can then prepare
various electricity package deals to the
Contestable Customers.
Electricity deals can take the form of
different bundling of services or valueadded items that the consumer might
be interested in. In turn, Contestable
Customers now have the choice of how
and who provides their power on a
monthly basis.
The Renewable Energy Act of 2008

promotes the development, utilization and
commercialization of Renewable Energy
Resources. The RE Act also establishes the
Renewable Energy Market (REM) and
directs its operation under WESM. The
RE Market trades RE Certificates, which
are equivalent to the amount of power
generated from RE resources.
PEMC is designated as the Renewable
Energy Registrar, in charge of the issuance,
keeping and verification of RE Certificates
for eligible RE facilities.
2001
MILESTONES
WHAT DOES WESM

SEEK TO ACCOMPLISH?
WESM 101
Republic Act 9136, EPIRA

is signed into law on June 8.
WHAT OTHER
INCENTIVES ARE
THERE FOR POWER
PRODUCERS TO
OFFER RE?
Among others, incentives to develop RE
in the Philippines include a seven-year
income tax holiday, lowered real estate
tax rates, duty-free imports and priority
access to grid connections.
WHAT IS FIT-ALL
AND WHY IS IT IN MY
ELECTRIC BILL?
To
encourage
investment
and
development in renewable energy power
2002
The WESM Rules, the bible
of all-things WESM, is
promulgated.
2003
PEMC is incorporated as
a non-stock, non-profit
corporation.
2004
The WESM Project
commences in March.
PEMC is designated the
Autonomous Group Market
Operator (AGMO) for
WESM in August.
11
11
WESM 101
WESM 101
THE BASICS OF
HOW ELECTR CITY GETS
TO YOUR HOME
2
1
Power Generation Companies

(GenCos) use their facilities to
generate electricity.
Following the dispatch schedule generated by the

Market Operator (MO), the System Operator (SO)
does the actual dispatch of the electricity, which is
carried through high-voltage wires of the national
transmission grid.
3
4
2004
The Market Management
System is completed.
12
12
2005
Trial operations for WESM
Luzon begins.
Directly-Connected Consumers
(bulk consumers), get their
power straight from the grid.
DUs step down the voltage

and deliver the electricity via
distribution wires to Customers.
2006
Commercial operations for
the Luzon grid begins.
NOW WITH
THE BASICS OF HOW TRADING

IN THE WESM WORKS
G ive n that the market is still too young
to have a robust demand-side bidding
system, the Market Operator uses
historical electricity demand data and
weather forecasts to determine the total
demand for any given interval.
Trading takes place when WESMs
Market Management System (MMS)
electronically matches this total demand
forecast to hourly supply offers (quantities
and price) from GenCos. The Market
RCOA!
Clearing Price (MCP), the standard

price paid to all power plants for that
interval, is determined and a dispatch
schedule is automatically generated.
Those with bilateral contracts, whether
GenCos, Suppliers, DUs or Contestable
Customers, declare their total contracted
amounts to WESM so that actual traded
amounts can be netted out and settled
every month.
WESMS
STRUCTURE
Grid Code. It promotes competition and

ensures consumer protection by enforcing
rules and regulations and penalizing abuse
of market power.
serves as the primary support unit of

the various WESM Committees. The
Enforcement and Compliance Office
(ECO) conducts investigations for breach.
GOVERNANCE
WESM MEMBERS
OVERSIGHT REGULATION
WESM is governed by the Philippine

Electricity Market Board of Directors
(PEM Board), which is currently chaired by
the Secretary of Energy and is composed of
various stakeholders representing sectors in
the power industry and independent members.
The PEM Board is supported by a PEM
Auditor, Dispute Resolution Administrator,
and the Rules Change, Market Surveillance,
and Technical Committees.
PEMC is the Market Operator and the
governance arm of the WESM. The Market
Assessment Group (MAG) implements
market monitoring and assessment and
The WESM Members include:

Trading Participants (GenCos, Suppliers,
Wholesale Aggregators, DUs, DirectlyConnected Users, Contestable Customers)
Service Providers for Ancillary Services,
Metering Services and Network Services
System Operator
The Department of Energy (DOE)

formulates, enforces and updates the
countrys overall energy policy. It supervises
the restructuring of the electricity industry.
Together with industry participants, the
DOE formulated the WESM Rules.
The ERC is a quasi-judicial body
created by EPIRA that approves the Price
Determination Methodology and Market
Fees. It sets the criteria for eligibility for
membership and participation in the market
and performance standards through the
2007
2008
2009
2010
2012
Trial operations for WESM

Visayas starts.
Republic Act 9513,

known as the
Renewable Energy Act
of 2008, is passed.
The Renewable Energy Act takes

effect. The DOE awards 87 Renewable
Energy contracts to 18 companies for the
development of biomass, hydropower, ocean,
wind, geothermal and solar energy resources.
Commercial operations
for the Visayas grid
begin. Integrated into
WESM on December 26.
RCOA is given the

green light by the ERC.
PEMC starts crafting the
appropriate framework for
dispatch of RE resources.
13
13
WESM 101
WESM 101
WESM MAP
18F
This floor houses the executive offices and some

support service groups. Also located on this floor
is the PEMC Boardroom where important policy and
management decisions are made. The Market Assessment
Group, who is responsible for the over-all conduct of market
monitoring and assessment also holds office here.
LEGEND
OFFICE OF THE PRESIDENT
OFFICE OF THE CORPORATE SECRETARY
16F
PEMCs commitment to educate and empower

its members on all market-related matters and
information led to the building of the PEMC Training
Center. Lectures and training are conducted here.
MARKET ASSESSMENT GROUP
LEGAL DEPARTMENT
11F
The Billing, Settlement & Metering Division

occupies a space on this floor.
CORPORATE SERVICES DEPARTMENT
FINANCE
9F
With market operators and IT support running

24/7, the Operations/Trading floor can be
considered the heart of WESM. The Corporate Planning
and Communications Department, Information Systems
& Technology Department, and Trading Operations
Department are all located on this floor. The Enforcement &
Compliance Office, which conducts investigations of possible
breaches of WESM Rules, also holds office on this floor.
HUMAN RESOURCES AND

ADMINISTRATIVE SERVICES
BILLING, SETTLEMENT & METERING
CORPORATE PLANNING
AND COMMUNICATIONS DEPARTMENT
TRADING OPERATIONS DEPARTMENT
2013
14
14
PEMC and NGCP agree to

coordinate operations.
2014
WESM implements the
secondary price cap.
2015
PEMC and TransCo agree
on crafting procedures on
the remittance of WESM
proceeds to the FITAllowance fund.
MILESTONES
Commercial operations for

RCOA begin.
2013
INFORMATION SYSTEMS AND

TECHNOLOGY DEPARTMENT
ENFORCEMENT AND
COMPLIANCE OFFICE
15
15
Main Story
WESM 101
WESM 101
GenCos Generator Companies. Entities authorized by the ERC
to operate electricity generating facilities. Operates fossil fuel or
renewable energy source power plants.
POWER PLAYERS:
THE WESM
STAKEHOLDERS
Customers Entities engaged in the purchasing of electricity

supplied through the transmission or distribution system, which
includes Bulk or Directly Connected Customers, DUs, Aggregators,
and Contestable Customers.
PEMC Market Operator and governance arm of the WESM.

Central Registration Body for RCOA. Renewable Energy
Registrar of the REM.
DOE Architect of the countrys energy policies. Supervises power
industry restructuring.
Suppliers Third party entities licensed by the ERC to act as

brokers between GenCos and Customers. Can be involved in
bundling, packaging value-added services and items to electricity
deals in-order to market to Contestable Customers. Come in Retail
Electricity Suppliers (RES), Local RES, and Suppliers of Last
Resort (SOLR) flavors.
POWERING
PROGRESS:
THE WESM AS AN INSTRUMENT OF REFORM
AND AGENT OF PROGRESS, NINE YEARS ON
ERC Independent quasi-judicial regulatory body. Promulgates

and enforces rules and regulations, resolves cases, prevents anticompetitive behavior.
NGCP National Grid Corporation of the Philippines. Private
corporation. Registered as the System Operator, Network Service
Provider and Metering Services Provider in the WESM. Operates
and maintains the Philippine Transmission System.
DOE
WESM
Suppliers
NGCP
PEMC
Customers
ERC
GenCos
Is there a relevant topic not included in this section? Email us at helpdesk@wesm.ph so that we can include it in our
next issue. For more detailed information visit us at http://www.wesm.ph/inner.php/about_us/faqs
16
16
17
Main Story
Main Story
PROGRESS
POWERED
PROGRESS
PRESENT
rogress is an abstract concept with

many
concrete
manifestations.
While arguably easy to define on
an individual, personal level, it becomes
considerably more complex on a national
level. The seemingly infinite variables that
characterize such an expanded scope often
necessitate a more critical look at the
otherwise straightforward term. Of note is
the fact that ours is a developing country
that has undergone considerable political
and economic transformation over the
last several decades. Here, progress is not
only a term that is slippery to define it
is also something that is occasionally at
risk, thanks to unseemly manipulation and
misinformation at many levels.
This is where reform becomes the partner
of progress, and indeed when applied at
the right time it becomes the spark for
considerable change. Reform is a point of
focus for the present administration, whose
principles of a straight path and inclusive
growth have been the impetus for ongoing
efforts to improve governance.
These moves are partly responsible for
the acceleration of foreign direct investment
(FDI) in business process outsourcing, as
the well as the renewed vigor of foreign
investments in the manufacturing sector.
The industrial sector grew 7.5% in 2014,
not outpacing its 9.3% leap in 2013,
but continuing a positive trend for the
sector seen with renewed strength in
the 2010s. On the whole, the countrys
growth in economic freedom has also been
18
recognized by the Heritage Foundation,

whose rankings saw the Philippines rise
from 115th (2011) to 76th (2014). Major
credit rating agencies like Moodys and
Standard & Poors have also taken notice of
the Philippines economic improvements,
upgrading the country to Baa2 and BBB

ratings, respectively. All told, the country
experienced a 6.3% average growth rate in
the first half of the 2010s, beating out many
Asian neighbors (Indonesia at 6%, Malaysia
and Vietnam at 5.8% and Thailand at 3.6%).
he very principle of reform has also

informed the way that the current
progress has taken shape: in 2001, an
instrument of reform was first set up to make
the continued powering of progress possible.
In 2001, the Electric Power Industry
Reform Act (EPIRA) was passed, marking
a renewed commitment to reforming the
Philippine power industry and establishing
a tighter framework for the future. Seven
years in the making, the EPIRA sought
to empower consumers, maintain industry
accountability, and foster competition in
the power industry.
This last had the additional goal of
chipping away and eventually dismantling
the apparently monolithic monopoly that
had come to characterize the power industry.
This would be replaced with a spot market,
where the commodity of electricity would
be traded in a competitive environment that
would go on to result in benefits for the
end consumers. Operated by the Philippine
Electricity Market Corporation (PEMC),
the Wholesale Electricity Spot Market
(WESM) has spent the intervening years
expanding commercial operations to the
Luzon and Visayas grids and making forays
into Mindanao.
How has WESM operated as a driving
force that powers progress?
The gains from WESMs integration into
the landscape of the Philippine power
industry have been characterized as more
long-term than short-term more in
the vein of developing a system where
energy prices are reasonable than magically
reducing prices overnight. Nevertheless, the
very existence of a market that behaves like a
market as opposed to a nebulous, apparent
power monopoly allows electricity to
properly be treated as a market commodity.
Indeed, the presence of a market where
demand and supply can be laid out cleanly
and clearly has allowed the Philippine power
industry to enter a new and better phase.
But beyond that is the way the market is
run: WESM consistently works to ensure
a level playing field, allowing market forces
to be all that dictates the flow of trade. Just
as importantly, the real-time availability
and visibility of market prices reflects a
commitment to promoting transparency
19
MARKET BITES: MARKET PERFORMANCE
Main Story
20
June 2014 - June 2015
10000
8000
6000
4000
2000
15
n1
Ju
ay
15
r1
Ap
ar
M
b1
GENERATION OFFERS
Fe
n1
c1
Ja
De
v1
No
t1
p1
Se
PEAK DEMAND, MW
Oc
12-month period from July 2014 to June 2015. The system

demand reached a new high of 10,342 MW at 1400H of
May 21, 2015, and it was largely driven by the Luzon demand
of 8,842 MW. Moreover, Luzon reached an even higher level of
demand of 8,867 MW (also an all-time high) at 1400H of
June 3, 2015. Demand seemed to have recovered in the Visayas
region as it posted a high of 1,550 MW at 1800H of
November 17, 2015, which almost reached the all-time high of
1,572 MW that was recorded in 2013 (pre-Yolanda).
SYSTEM SUPPLY AND DEMAND, MW

12000
g1
1. Demand continued its upward trend over the course of the
requirement in the summer season, particularly during the

period from March 15, 2015 until April 15, 2015, when the
Malampaya onshore natural gas complex would be unavailable.
And truthfully so, those generating units, particularly the coalfired plants, came online just in time to support the high demand
requirement and the loss of Malampaya. As Malampaya went
back to normal operations, supply margins became wider again,
but only up until the end of May 2015 as some generating units
were again placed on forced or maintenance outage. At the same
time, demand started to creep down again with the rainy season
beginning to set in.
l1
spot market such as the Wholesale Electricity

Spot Market (WESM) is at its most effective
when understood closely, with an eye for the
movement of market forces. Indeed, while the seeming
complexity of trading in a wholesale spot market may
seem daunting, seeing the markets performance over
the course of a year reveals that the basics are still very
much in play. This report hopefully does just that, laying
out the facts and drawing sensible conclusions to help
consumers and other stakeholders keep their finger on
the pulse of the WESM as it works.
Au
A steady annual
rise in generation
capacity from
2007 to 2014
with over 4,000
MW added to the
grid since 2006.
MARKET PERFORMANCE
Ju
ike progress, reform is best and most

beneficial when it is sustained and
targeted toward the greater good.
WESM has managed to stay the course
its mandate has charted for it, remaining
stable with a consistent direction that has
weathered numerous external changes.
Internally, however, it has managed to
evolve, with RCOA and a reinvigorated
drive toward renewable energy adding new
layers to the principles that were established
at its inception.
As such, WESM continues to grow in
its role of providing a means of reform for
the Philippine power industry. This way,
it both strengthens the nations capability
to produce and grow in turn, and the
confidence of investors in a developing
country that continues to progress.
DEMAND
12000
10000
3. The outcome of spot prices in the WESM is still largely driven
8000
6000
4000
2000
0
Ja
n1
Fe 4
b1
M 4
ar
14
Ap
r1
M 4
ay
1
Ju 4
n1
4
Ju
l1
Au 4
g1
Se 4
p1
4
Oc
t1
4
No
v1
De 4
c1
Ja 4
n1
5
Fe
b1
M 5
ar
1
Ap 5
r1
M 5
ay
1
Ju 5
n1
5
additional sources of capacity in excess

of their contracted requirements. If these
high-use customers had no such alternative
means of securing capacities, blackouts
would be the likely result. This role played
by the spot market becomes particularly
instrumental in terms of literally powering
the way these customers contribute to
progress, and has in fact, increased over the
last few years. Greenlit two years ago, Retail
Competition and Open Access (RCOA)
takes the market concept and pushes the
envelope. This by offering qualified endusers the power of choice, letting them
secure capacities from qualified and certified
Suppliers. Aside from giving Suppliers an
additional means to earn, this increases the
level of competition a shift that stands to
benefit the customers.
To bring it full circle, one can revisit
the image of the Wholesale Electricity
Spot Market as a level playing field and
then look beyond that to see what effect
such a playing field has on its players.
WESM espouses accountability, and holds
all market players to this, as well as spelled
out both in the overall WESM Rules and
the relevant Market Manuals. Consistent
implementation of this over WESMs run
has helped create and maintain a culture
of discipline among industry participants,
who are aware that they are held to
particular standards.
MARKET BITES:
in market conduct. The accountability that

this fosters helps shape the proper conduct
of the spot market.
Further, the presence of a competitive
spot market encourages growth in generation
capacity. This is undeniable when faced with
the figures that show a steady annual rise
in generation capacity from 2007 to 2014,
with over 4,000 MW capacities added to
the grid since 2006. The presence of a spot
market offers another venue, beyond bilateral
contracts, for the selling of electricity
one where demand and supply can more
effectively meet in the middle.
This venue, for that matter, is also one
that has become more responsive to the
times. Renewable energy has enjoyed a
surge in productivity, giving the Renewable
Energy Act of 2008 a continued string of
good results. Wind power has climbed to
taking up 2.2% of the overall registered
capacity mix in 2014, from 0.6% in 2006
as a matter of fact, the 2013-2014 jump
in generation capacity is attributed to the
entry of three Luzon wind power plants.
Geothermal power has also increased its
share in the registered capacity mix, from
7.73% in 2006 to 11.6% in 2014. It has been
argued that continued growth in renewable
energy could potentially lead to lower prices
overall for consumers, especially if there is
enough growth to eventually supplant the
more costly diesel power.
In relation to this, WESM has also
served to provide grid-connected customers
PROGRESS
PROCEEDING
LUZON-VISAYAS
LUZON
VISAYAS
2. Supply availability was still generally affected by the planned or
forced outages of generating units. In fact, the natural gas supply

restriction from Malampaya, and the unavailability of many coalfired plants, were the most notable events affecting the supply
conditions at the start of this 12-month period. Supply levels
improved starting August 2014 until December 2014 as several
generating units came online. However, the supply levels dipped
again in January 2015 as several generating units were on either
forced or maintenance outages again, mostly in preparation for
having sufficient supply to support the expected high demand
by the interaction of supply and demand. To further attest to

this, the following highlights are noted for the 12-month period
of July 2014 to June 2015.
July 2014 reflected high prices due to varying events such as
the planned and forced outages of major generating units,
impact of typhoon Glenda, and the Malampaya gas restriction.
Price spikes continued to persist in August 2014 given the
planned and forced outages of major generating units.
Low prices persisted from mid-September until December
2014 because of higher levels of supply and lower demand
requirements (rainy season and/or colder weather).
Spot prices were higher from January to February 2015
because of the planned and forced outages of major generating
units, mostly to prepare for the summer season.
Low prices were observed from March 2015 until mid-May
2015 given a higher level of supply since a lot of generating
units came back online to offset the unavailability of
Malampaya amidst the higher demand requirement.
Higher prices were again observed from mid-May 2015 until
June 2015 as several generating units were either on forced
or planned outage.
21
4. Transmission constraints, security requirements, seasonal behavior, and weather conditions also continued to affect market price outcomes.
MARKET PRICES, PESOS PER MWh (Luzon)

25000
20000
EQUIPMENT
TYPE
BASE CASE
N-1 RELATED
TOTAL
ZAPOTE
LOCAL
3816
3817
AMADEO-CALACA LINE 1
NETWORK
--
374
374
BAUANG-BPPC LINE
NETWORK
11
261
272
STA. ROSA-CALACA LINE 1
NETWORK
--
195
195
QUEZON
LOCAL
--
154
154
14000
600
12000
500
10000
400
8000
300
6000
200
4000
100
2000
CUSTOMER ESSP, PESOS PER MWh
NUMBER OF INTERVALS AFFECTED (JULY 2014 - JUNE 2015)
ENERGY TRANSACTIONS, GWh
Minimal price separations were observed in the grid, with most congestions mitigated by either the issuance of Pricing Error Notices
(PEN) or the imposition of the Price Substitution Methodology (PSM) for Congestion.
SUMMARY OF MARKET TRANSACTIONS

700
Jun 15
Ju
n1
5
M
ay
15
Ap
r1
5
15
M
ar
Fe
Ja
b1
5
n1
5
c1
4
De
No
v1
4
t1
4
Oc
Se
Au
g1
4
p1
4
Ju
l1
4
coal and natural gas power plants still accounted for almost
three-fourths of the monthly generation mix. Coal power
reflected its highest share in the WESM generation mix in April
2015, accounting for more than half of the generation produced
across the Luzon and Visayas grids. The contribution of natural
gas plants dipped at times as a result of the restrictions at
Malampaya. Geothermal power plants continued to contribute
around 14%, while hydro-electric power plants contribution
varied from 3% to 10% of the total generation mix. Oil-based
power plants, on the other hand, largely saw dispatch during
periods of tight supply conditions. It should be noted that there
has been a substantial increase in the contribution of renewable
energy in the WESM generation mix, particularly from wind
power plants.
For their spot market transactions, the WESM customers

transacted at an Effective Spot Settlement Price ranging from
PHP 2,314/MWh in December 2014 to PHP 7,971/MWh in
July 2014.
Apr 15
7000
May 15
2000
Mar 15
14000
Feb 15
21000
4000
Jan 15
6000
Dec 14
28000
Oct 14
8000
Nov 14
35000
Sep 14
10000
to June 2015 amounted to 60,734 GWh, which is higher than

last years 58,190 GWh ( July 2013 to June 2014). 7.5% of
this quantity was transacted in the spot market, while the rest
were netted out of the market settlements as bilateral contract
quantities. The total spot market customer trading amount for
the same period amounted to PHP 31,734 Million, which is
lower than PHP 60,989 Million that was obtained from the
same period last year ( July 2013 to June 2014).
Jul 14
42000
SYSTEM LWAP, PESOS PER MWh
SYSTEM SUPPLY AND DEMAND, MW
SUPPLY, DEMAND, AND PRICES

12000
5. Total transactions for the 12-month period from July 2014 6. Although the capacity mix registered in the WESM is varied,
Aug 14
During the same 12-month period, the secondary price cap was only applied from July to September 2014, therefore dampening
the high prices during the said period.
COAL 46.5%
NATURAL GAS 28.5%
GEOTHERMAL 14.6%
HYDRO 6.6%
OIL-BASED 2.9%
WIND 0.65%
BIO-DIESEL 0.21%
SOLAR 0.08%
BILATERAL CONTRACT TRANSCATIONS
15000
CUSTOMER ESSP (W/O NSS-SPOT)
SPOT TRANSACTIONS
10000
5000
5
n1
ay
M
Ju
15
Ap
ar
r1
15
5
b1
Fe
5
n1
4
c1
Ja
No
De
4
v1
4
t1
Oc
4
p1
Se
4
Au
g1
4
l1
Ju
However in the Visayas, extreme nodal price separations were frequently observed because of congestions at the radial submarine cable
connecting the islands of Negros and Panay.
NUMBER OF INTERVALS AFFECTED (JULY 2014 - JUNE 2015)
EQUIPMENT
MARKET PRICES, PESOS PER MWh (Visayas)

25000
20000
BASE CASE
N-1 RELATED
TOTAL
NEGROS-PANAY SUB-CABLE NETWORK
TYPE
700
--
700
NEW NAGA-TOLEDO LINE
NETWORK
225
--
225
LEYTE-CEBU SUB-CABLE
NETWORK
190
--
190
TONGONAN
LOCAL
102
--
102
STA. BARBARA
LOCAL
77
--
77
MARKET HIGHLIGHTS
2007
2008
2009
2010
2011
2012
2013
2014
2015 Jan-Jun
SYSTEM
--
--
--
--
8,849
9,303
9,735
10,145
10,342
LUZON
6,590
6,681
6,932
7,643
7,530
7,898
8,237
8,671
8,867
VISAYAS
--
--
--
--
1,447
1,486
1,572
1,550
1,537
TOTAL ENERGY VOLUME, GWH
40,052
41,153
42,168
46,228
53,006*
55,822
57,901
59,474
30,572
SPOT MARKET VOLUME, GWH
5,960
5,451
6,180
6,150
4,274
4,425
5,804
4,186
2,439
AVERAGE SPOT VOLUME, %
15%
14%
15%
14%
8%
8%
10%
7%
8%
PEAK
DEMAND
15000
10000
5000
22
5
n1
Ju
15
M
ay
5
r1
Ap
15
ar
M
5
Fe
b1
5
Ja
n1
14
De
c
4
v1
No
4
t1
Oc
4
p1
Se
4
g1
Au
Ju
l1
23
MARKET ASSESSMENT
MARKET ASSESSMENT
DOUBLY SURE:
A LOOK BACK AT THE
IMPLEMENTATION OF THE
SECONDARY PRICE CAP
Monitoring Indices
IMPOSITION OF SECONDARY PRICE CAP

20.000
DOMINOS OF OIL: THE EFFECT OF OIL PRICES

ON GENERATORS OFFER PATTERNS
18.000
16.000
The WESM Tripartite Committee (which consists of

the Department of Energy (DOE), the Energy Regulatory
Commission (ERC), and the Philippine Electricity Market
Corporation (PEMC)) implemented an offer price cap of
PHP 32/kWh (revised from PHP 62/kWh) starting January
2014, in an effort to dampen the significantly high prices in the
spot market after the events of November to December 2013.
14.000
However, this primary price cap could not capture

incidents of sustained clearing of high spot prices. As a result,
a secondary price cap was deemed necessary. It was adopted as
a pre-emptive measure to help limit continually high prices in
the spot market.
4.000
How does it work? Initially, when the 72-hour rolling

average of the hourly GWAP hits or surpasses the agreedupon Cumulative Price Threshold of PHP 8.168/kWh, the
succeeding hours spot price is capped at a ceiling of PHP
6.245/ kWh. Oil-based plants are entitled to recover additional
compensation, should the imposition of the secondary price
cap be insufficient to cover their operational costs.
Since its implementation on May 11, 2014, the secondary
price cap affected a number of intervals until September 2014,
by which point it had dampened the monthly average spot
prices at a range from 3.6% to 14.8%. Prices hovered below
PHP 10/kWh 92% of the time for this period, where without
the secondary price cap, this would only have happened 89%
of the time.
12.000
10.000
8.000
6.000
4
Dec 1
Nov 1
Oct 1
4
Sep 1
4
Aug 1
Jun 1
May 1
Jul 14
2.000
While this interim mechanism was extended to December

2014 by the ERC, it was not imposed from October to
November 2014 since supply conditions were generally
sufficient during the said period. Having served its purpose
admirably, the ERC decided to institutionalize this mechanism,
albeit with some revisions on this methodology: a price cap of
PHP 6.245/kWh is imposed should the new Cumulative Price
Threshold of PHP 9/kWh be breached over a 168-hour rolling
average. As of June 2015, the new Cumulative Price Threshold
has yet to be breached.
What were the findings?
SPOT PRICE DISTRIBUTION, MAY - DECEMBER 2014

No. of
Intervals
Affected
LOCAL
50%
No Cap
With Cap
% Change
38
6.729
6.205
-7.8%
Jun 2014
55
6.767
5.766
-14.8%
Jul 2014
55
8,030
7,102
-11.6%
Aug 2014
18
5,518
5,317
-3.6%
30%
Sep 2014
34
4,601
4,000
-13.1%
25%
Oct 2014
3,268
3,268
Nov 2014
3,348
3,348
Dec 2014
2,209
2,209
40%
PERCENT OF TIME
LWAP
May 2014
45%
35%
20%
15%
10%
05%
0%
24
0 AND NEGATIVE
0 TO 2
2 TO 5
5 TO 10
10 TO 15
WESM performance assessment involves looking at

price outcomes and what factors affected these market
prices. Similarly, looking at such price-affecting drivers
requires a careful understanding of the variables that affect
the drivers in turn. For instance, the impact of oil prices
on generators offer patterns can be examined using the
peculiar patterns of oil prices in the world market.
Oil prices have plunged, of late from $111 per
barrel in June of 2014 to as low as $42 a barrel in January
2015, or around a 60% drop after about five years of
price stability. Recovery started in January 2015 and is
still ongoing, after the $42 low point. Many factors can
be pointed to in order to account for this plunge. Low
prices are typically due to low demand and the latter
can be linked to weak economic activity, increased fuel
efficiency leading to lower need for more oil, and the
growing momentum in switching to other fuel sources.
How do we check to see if there is a correlation
between this downward global price trend and local
offer price patterns? Four forms of offer price (Generator
Weighted Offer Price (GWOP), After Bilateral
Contract Quantity (BCQ) Offer, Minimum Offer and
Maximum Offer) were considered in order to generate
the most accurate view of price. These were aggregated
and averaged on a daily basis. Furthermore, time lag was
considered in case the match between global price trend
and local offer price patterns manifested on a delayed
basis which could happen if, for example, it took
plants some time to burn through their stored oil before
buying more at the global market prices.
15 TO 20
20 TO 25
GREATER THAN 25
Majority of the oil-based plants followed a similar

decreasing trend in price. Twelve of twenty three have
offer prices positively correlated with Organization
of the Petroleum Exporting Countries (OPEC)
Basket Price.
Correlations did take place after a significant lag,
usually seen on the 28th and 35th day. This supports
the hypothesis that price movements might not
be felt for some time because of plants significant
storage capacity.
Some oil-based plants actually went in the opposite
direction with higher prices, while others showed no
correlation.
Coal-based plants showed similar results but with
significantly less time lag.
Geothermal and natural gas plants seemed unaffected
by the global price trends.
MARKET SHARE
Major Groups
Shares
Long Name
SMC
19.0%
San Miguel Corporation
Aboitiz
16.0%
Aboitiz Power Corporation
First Gen
14.9%
First Gen Corporation
PSALM
13.7%
Power Sector Assets and Liabilities Management

Corporation
SCPC
4.2%
SEM-Calaca Power Corporation
MEI
4.1%
Millennium Energy, Inc.
MPPC
4.0%
Masinloc Power Partners Co. Ltd.
GBPC
3.9%
Global Business Power Corporation
GMCP
3.9%
GNPower Mariveles Coal Plant Ltd. Co.
QPPL
2.9%
Quezon Power (Philippines) Ltd. Co.
SPC
2.1%
SPC Power Corporation
SLPGC
1.9%
Southwest Luzon Power Generation Corporation
VEC
1.8%
Vivant Energy Corporation
TRANS-ASIA
1.7%
Trans-Asia Oil and Energy Development Corporation
AHC
1.4%
Angat Hydropower Corporation
UMRC
0.7%
Udenna Management Resource Corporation
APC
0.5%
Anda Power Corporation
NLREC
0.5%
North Luzon Renewable Energy Corporation
NPC
0.4%
National Power Corporation
APEC
0.3%
Asia Pacific Energy Corporation
NWPDC
0.3%
North Wind Power Development Corporation
URC
0.3%
Universal Robina Corporation
PWEI
0.2%
PetroWind Energy Inc.
MEC
0.2%
Majestic Energy Corporation
PHSOL
0.2%
Phil. Solar Farm - Leyte, Inc.
GFII
0.1%
Green Future Innovations, Inc.
SCSEI
0.1%
San Carlos Solar Energy, Inc.
Other IPPs
0.6%
WHAT THIS INDEX MEASURES:

The Market Share Index measures the percentage of capacity
that a participant controls in the market.
RESULTS:
The market remained dominated by four major players San
Miguel, Aboitiz, First Gen and PSALM, accounting for 64% of the
total WESM registered capacity.
Compared to last year, we observed a marginal decline in the
percentage of registered capacities controlled by the major players.
This is due to the entry of additional capacities owned by new
market participants, namely: MEI, SLTEC under TRANS-ASIA,
SLPGC, APC, NLREC, URC, PWEI, MEC, PHSOL.
25
MARKET ASSESSMENT
MARKET ASSESSMENT
HERFINDAHL-HIRSCHMAN INDEX (HHI)

HHI by Major Participant Group
June 26, 2014 to June 25, 2015
CONCENTRATED (C): If the HHI is greater than 1,800 but

less than 2,500
3,500
HC
2,500
C
1,800
MC
1,000
NC
0
Based on
Registered
Capacity
Based on
Registered
Capacity (Net
of Outage)
Based on
Actual
Generation
Based on
Offered
Capacity
MODERATELY CONCENTRATED (MC): If the HHI is

between 1,000 and 1,800
Based on Spot
Transaction
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun

The HHI measures the degree of market concentration that
takes into account the relative size and distribution of participants
in the market. It is defined as the sum of squares of the participants
market share.
HOW TO READ THIS INDEX:
The HHI approaches zero when the market has a very large number
of participants, with each having a relatively small market share.
The HHI increases as the number of participants in the market
decreases, and the disparity in the market shares among the
participants increases.
The following are the widely-used HHI screening numbers:
NOT CONCENTRATED (NC): If the HHI is less than 1,000
HIGHLY CONCENTRATED (HC): If the HHI is greater

than 2,500
If the HHI is HIGHLY CONCENTRATED, it signals that
there is a lack of competition in the market.
RESULTS:
With only four major players controlling the majority of the
market share, the market remained moderately concentrated over
the 12-month period as measured by the HHI calculated at major
participant level using registered capacity. It is noteworthy, however,
that the HHI values based on registered capacity showed a decreasing
trend with the entry of additional capacities from new players in the
market.
The HHI was also calculated based on offered capacity, available
capacity, metered quantity and spot transaction. The result points to a
moderately concentrated market.
RESIDUAL SUPPLY INDEX (RSI)

The RSI measures ratio of the available capacity, excluding the
capacity of a particular generator to the total demand. Each generator
has an RSI, and the lowest RSI is considered the Market RSI.
RESULTS:
The Market RSI fell below the 100% mark majority of the time
in July 2014 as well as during the hot summer months of May and
June 2015, indicating the presence of pivotal generators majority of
the time.
Tight supply conditions were noted in the July 2014 billing
month because of the outages of major coal and natural gas plants.
The Market RSI exceeded 100% most frequently in December
2014 and January 2014, which is attributed to improved demand
and supply conditions. This also indicated the absence of pivotal
generators most of the time during those periods.
Market RSI Based on Offered Capacity of Generators

Hourly, July 2014 June 2015
200%
180%
PRICE-SETTING FREQUENCY INDEX (PSFI)

The number of times in a given period that a generator qualified
as a price setter.
A generator is considered a price setter if the last accepted offer
price is within 95% to 100% of the nodal price.
RESULTS:
The table shows the generating plants that qualified as price
setters as well as how many times they became such during the
covered period. The PSFI are determined for several price ranges.
For Luzon, coal plants Sual, Masinloc, Pagbilao, and Mariveles
were the top four price setters in the PHP 5,000/MWh and below
range. In the Visayas, coal plants KSPC and PEDC, as well as
geothermal plant Leyte A topped the frequent price setters.
For the above PHP 5,000/MWh to PHP 10,000/MWh range,
the oil-based plants Therma Mobile, Bauang, and Subic Power
Corp were the top and consistent price setters in Luzon. In the
Visayas, the most frequent price setters include coal plant PEDC
and oil-based EAUC and CPPC.
For the above PHP 10,000/MWh range, the most frequent price
setters in Luzon were oil-based plants Bauang and Limay. In the
Visayas, they are fellow oil-based plants Avon Nabas DPP, TPC
(Carmen), and Panay DPP III.
PSFI at Various Price Ranges Total, July 2014 June 2015
Total Frequency (July 2014 - June 2015)
Plant Name
Below PHP
5,000/MWh
PHP 5,000/MWh PHP 10,000/MWh
Above PHP
10,000.MWh
AMBUKLAO HEP
535
123
23
ANGAT HEP
151
63
APEC
353
BACMAN GPP
79
BAKUN HEP
32
BATANGAS CFTPP
12
BAUANG DPP
62
255
157
BINGA HEP
52
18
BOTOCAN HEP
CALIRAYA HEP
CBK (KPSPP)
45
CE CASECNAN
36
CIP
13
127
21
27
127
44
LUZON
GF II
131
160%
HEDCOR
69
140%
KEPCO ILIJAN
991
120%
MAGAT HEP
295
100%
MAKBAN GPP
82
MARIVELES CFTPP
1346
80%
60%
40% Thu Sat Mon Wed Fri Sun Tue Sat Wed Sun
Fri
Wed Sun Tue Wed Fri Fri Fri Fri Fri Fri Sun Tue
6-26 7-12 7-28 8-13 8-29 9-14 9-30 10-18 11-5 11-23 12-12 12-31 1-18 2-3 2-18 3-6 3-20 4-3 4-17 5-1 5-15 5-31 6-16
26
MASINLOC CFTPP
1989
MASIWAY HEP
59
PAGBILAO CFTPP
1564
PANTABANGAN HEP
24
PETRON SFFPP
Total Frequency (July 2014 - June 2015)

Plant Name
Below PHP
5,000/MWh
PHP 5,000/MWh PHP 10,000/MWh
Above PHP
10,000.MWh
QUEZON POWER
338
SAN LORENZO FGPP
621
SAN ROQUE POWER
33
SLTEC CFTPP
STA RITA FGPP
841
75
SUAL CFTPP
2926
SUBIC POWER CORP
97
256
50
THERMA MOBILE
115
559
63
TIWI GPP
80
TRANS-ASIA
69
197
49
75
VISAYAS
CEBU DPP I
CEBU CFTPP
714
80
CPPC DPP
156
13
EAUC DPP
153
395
KSPC CFTPP
1871
LEYTE A
1492
NASULO GPP
93
PALINPINON GPP I
217
PALINPINON GPP II
114
PANAY DPP III
67
126
PEDC CFTPP
1533
443
15
TONGONAN GPP
133
TPC (CARMEN)
11
139
167
TPC (SANGI)
618
1
7
PIVOTAL AND PRICE-SETTING

GENERATORS
121
1
3

The Pivotal Supply Index measures how critical a particular
generator is in meeting the total demand at a particular time. Pivotal
Generators have greater opportunities to influence the market
price by exercising their market power either through capacity
withholding or offering prices above their usual price offers.
Pivotal Generators can offer any price and because they are
pivotal, their offered quantities will still be dispatched.
The higher the system demand, the greater the tendency to
have pivotal suppliers. If a large plant is on outage, scheduled or
otherwise, the probability of other plants qualifying as pivotal
suppliers is also higher.
RESULTS:
Shown in the succeeding table is the list of pivotal generators that
likewise qualified as price setters in the same trading interval, as well as
the total number of trading intervals for a particular billing month that
they became such.
Among these plants, coal plant Sual, natural gas plant Ilijan, and
oil-based plants Bauang and Limay showed the most number of
frequency.
27
MARKET ASSESSMENT
UPDATES
Pivotal and Price Setting Generators July 2014 to June 2015

Plant Name
Jul 14
Aug 14
Sep 14
Oct 14
Nov 14
Dec 14
Jan 15
Feb 15
Mar 15
Apr 15
May 15
Jun 15
Biofuel
GFII
2
Coal
APEC
CEBU TPP 1
12
CEBU TPP 2
CEDC CFTPP
KSPC CFTPP
MARIVELES CFTPP
2
4
14
7
1
MASINLOC CFTPP
PAGBILAO CFTPP
PEDC CFTPP
31
QUEZON POWER
16
29
TPC (SANGI)
27
50
45
62
57
42
82
39
19
Geothermal
BACMAN GPP
LEYTE A
MAKBAN GPP
TONGONAN GPP
AMBUKLAO HEP
10
24
19
Hydro
1
ANGAT HEP
Much was done in 2014, with each cluster of cogs performing its
assigned function, contributing to the bigger whole, keeping this
engine of progress running as best as it can.
Customer Switching was

allowed beginning
December 26, 2013. It caught
on pretty fast, as 11 have
switched by August 2014.
As of May 2015,
18 customers have
changed suppliers.
RCOA MARKET SHARE 2014
THE POWER OF CHOICE:
(No. of Contestable Customers)
RCOA UPDATES
R
etail
Competition
and
Open Access (RCOA) was
greenlit in 2012 with the goal of
heightening competition in the
modern Philippine power industry.
While this mainly presents clear
benefits for qualified Contestable

Customers who choose to exercise
the newly-available power of
choice, it is heartening to see that
market participants have leapt at
the opportunity to participate.
Manila
Electric
Company
Local RES
Aboitiz
Energy
Solutions Inc.
Direct
Power
14% 9%
55%
(MPower)
Services Inc.
BINGA HEP
CBK (KPSPP)
14
MAGAT HEP
38
KEPCO ILIJAN
32
50
SAN LORENZO FGPP
12
STA RITA FGPP
21
58
27
7
1
1
4
GROWTH
The numbers have increased encouragingly over the last two years since launch.
Natural Gas
13
39
36
1
8
10
34
48
6
21
17
12
28
2
22
15
Oil-Based
AVON (NABAS) DPP
18
BAUANG DPP
65
11
BOHOL DPP
CEBU DPP I
CEBU DPP II
CIP
26
CPPC DPP
15
EAUC DPP
50
1
4
LA FARGE DPP
LIMAY CCGT
22
PANAY DPP I
PANAY DPP III
33
PB 101
PB 102
17
SUBIC POWER CORP
26
12
THERMA MOBILE
27
17
TPC (CARMEN)
24
TRANS-ASIA
27
28
CUSTOMER
SWITCHING
SUAL CFTPP
WESM AT WORK 2014:

UPDATES
13
12
12
28
1
8
1
As of Launch
June 26,
2013
By June 2015
Change
% Change
Market Participants
MP
275
428
150
55%
Retail Electricity
Suppliers
RES
15
16
7%
Local Retail Electricity

Suppliers
LRES
12
300%
Retail Metering
Service Providers
RMSP
19
24
26%
240
364
124
52%
DCCC
700%
Suppliers of Last
Resort
SLR
500%
Contestable Customer
Participation
CCP
23%
35%
Contestable
Customers
Directly-Connected
Contestable
Customers
CC
12%
PHASE II
Philippine Electricity Market

Corporation (PEMC) is currently
preparing operations to accommodate
new participants as RCOA looks to
move onto Phase II. This new phase
makes RCOA participation available to
more Contestable Customers by lowering
the threshold for qualifying.
During Phase I, a Contestable
Customer must have an average monthly
peak demand of at least 1 MW.
Phase II lowers this threshold to
an average monthly peak demand of at
least 750 kW. Aggregation of demand
will also be allowed, potentially making
qualification available to subdivisions and
other similar contiguous-area consumers.
29
UPDATES
UPDATES
THE CLEAN PATH: RENEWABLE

ENERGY MARKET UPDATES
APPROVED PROPOSALS
Based on Audit Recommendations and ERC Directives:

Updated the Net Settlement Surplus Allocation Formula to
1 more accurately reflect current practice and clearly specified
that the Market Operator (MO) is allowed to retain 10% of

the total Net Surplus Settlement amount for the previous three
months preceding the current WESM billing or invoice cycle.
Thanks to compelling incentives and eager participation, 2014 saw three major steps toward improving growth in the RE market.
THREE BIG MOVES: RE IN 2014

Intermittent Renewable Energy Integration
Changes to the WESM Rules were drafted to allow
the implementation of Must-Dispatch and Priority
Dispatch for renewable energy sources.
The Interim Protocol which implements this
preferential dispatch for renewable energy sources was
submitted to the DOE.
FiT System Implementation

A formal agreement was signed with the National
Transmission Corporation (TransCo) on the
implementation of the Feed-in Tariff Implementation.
As part of this implementation, revisions were made

to internal business processes on registration,
settlements and accounts management, in order to
implement the Actual Cost Recovery remittance to
TransCo.
Routine alterations to the Market Network Model are
2 now immediately implemented following the ICT Change
Management Process and the approval of PEMC President.

PEM Board approval is reserved for major changes.
RE Certificates Market Establishment

Upon completion of the draft of the RE Market Rules
and Manuals, and the preparation of functional
specifications for the RE Market system, PEMC got
authorization to enter into a co-financing agreement for
the Development for Renewable Energy Applications
Mainstreaming and Market Sustainability (DREAMS)
Project. This will establish the RE Certificates Market.
GOVERNANCE COMMITTEES UPDATES

RULES CHANGE COMMITTEE
What do we do?
We assist the PEM Board and the Department of Energy

(DOE) in formulating and amending the WESM Rules and
Market Manuals to improve market processes, operations and
market architecture.
Included all obligations under the WESM Rules and made

general improvements regarding compliance, context, process
and accountability to the Manual on Billing and Settlements.
Clearly stated the accountabilities of the Market Operator
4 and showed all process improvements relative to context and
governance mechanisms in the Manual on the Guidelines for

Significant Variations In and Between Trading Intervals.
Incorporated the procedures for the calculation of the

Generation Price Index (GPI) in the Management of Must
Run and Must Stop Units (MRU-MSU) Manual.
Based on DOE Directives:

WESM Rules and Manual on the Management of Must
1 Run and Must Stop Units
Revised to include the following: new criteria for selection

of MRUs; regional allocation of compensation in each
grid, either Luzon or Visayas, for all MRUs; and new
compensation mechanism for Displaced Generators.
Dispatch Protocol Manual
2 Included MRUs, MSUs, and Displaced Generators as part
of the Post-Dispatch Report of the System Operator (SO).

Emphasized crucial points on Dispatch Instructions,
outage schedule submissions, and linear ramp-up and
and ramp-down of generators.
on the Management Procedure for Excess

3 Manual
Generation
Made changes in the responsibilities of the MO and the

SO regarding the mitigation of excess generation in the
power system.
Manual on Administered Price Determination
4 Methodology
Included revisions to the conditions for market

intervention.
Added a new section on the application of market
intervention during grid islanding.
30
Involving the Operationalization of the Reserve Market:

Dispatch Protocol Manual and Constraint Violation
1 Coefficient (CVC) Manual
Amended relevant sections in consideration of the

integration of the reserve market into WESMs
commercial operations
Revised the values in the CVC priority table
For Enhanced Operational Efficiency, and

Transparency in the Market:
WESM Rules and Manual on the Procedures for Changes
1 to the WESM Rules
Clarified the PEM Board approval process and the approval

process for proposals relating to price determination.
Identified accountabilities and timelines.
Improved process documentation by establishing the
procedure framework that specifies the standard
documentation of market manuals.
Administered Price Determination Methodology Manual
2 Added a section to address the problem of zero
values in the calculation of prices.

Added terms to the formula calculating the customer
administered settlement amounts.
Made changes that ensure appropriate settlement in trading
intervals when regional administered pricing is applied.
Made changes to sections on the integration of costs
attributable to bilateral contract quantities.
WESM Rules and WESM Registration Manual
3 Leveled the playing field and minimized the adverse
impact of limited ramp rate capability especially to the

supply margin in the WESM.
Improved the integrity of market schedules.
Enhanced the accuracy of market offers.
WESM Rules and Manual on Metering Standards
4 and Procedures:
Aligned provisions to the Philippine Grid Code and the

Philippine Electrical Code.
Revised provisions and diagrams on instrument
transformers.
Revised relevant section provisions on Site Specific
Loss Adjustment.
DISAPPROVED
Redefinition of Offer Price Cap and the Formulation of a
1 new Market Manual on Offer Price Caps (Customer Price

Dampeners)
Changes to the Dispatch Protocol Manual, regarding
2 Dispatch Tolerance
31
UPDATES
UPDATES
PEM AUDIT
COMMITTEE
The Metering Arrangements Review

is conducted to assess the adequacy of
metering standards, security systems
and processes in the WESM as
well as to confirm that the metering
arrangements and installations comply
with the WESM Rules, Retail
Rules, associated Market Manuals,
the Philippine Grid Code and the
Philippine Distribution Code.
What do we do?
We conduct the audit of the operation

of the spot market and the Market
Operator. We also oversee the Metering
Arrangements Review in the WESM and
in the Retail Market.
ACCOMPLISHMENTS
1
Second Metering Arrangements Review

Successfully concluded the
competitive bidding for the
engagement of an External
Auditor, with Intelligent Energy
System (IES) Pty Ltd of Australia,
in partnership with Alliance of
Power & Energy XPonents &
Navarro Amper (Deloitte Phil)
as winning bidder.
Supervised the conduct of the
Review spearheaded by IES.
Participated in the conduct of
metering field inspections as part
of the Review.
DISPUTE
RESOLUTION
ADMINISTRATOR
Fifth Market Operations Audit

Successfully conducted the
bidding for the engagement of the
External Auditor for the Market
Operator Audit with RSM Bird
Cameron in partnership with
Reyes, Tacandong & Company as
winning bidder.
TECHNICAL COMMITTEE
The Market Operations Audit is

conducted to reinforce the Trading
Participants confidence in the
transparency and adequacy of the
operation of the WESM.
We monitor and review technical matters under the WESM

Rules, the Grid Code, and the Distribution Code as they relate to
the operation of the spot market.
System Operator Audit
3 Coordinated with the Energy
Regulatory Commission on the

possible conduct of a System
Operator Audit.
What do we do?
ACCOMPLISHMENTS
Submitted its proposal for the amendment of the WESM Rules
1 and the Manual on Metering Standards and Procedures.
Submitted its observations and comments on the Pmin test
2 of Ilijan Power Station.
Assisted the PEM Audit Committee in the conduct of the
3 2nd Metering Arrangements Review.
Conducted a study on the impact of N-1 Contingency
4 imposed on Transmission Lines and Substation Transformers.
What do I do?
2 Dispute Management Protocol
Focal Persons
Called on WESM and Retail
Market participants to identify
their Dispute Management
Protocol Focal Persons, who are the
first point of contact for notifications
on WESM-related disputes.
I facilitate the resolution of disputes between

or among WESM members to ensure the
cost-effective administration and resolution
or settlement of WESM-related disputes.
ACCOMPLISHMENTS
1 Handbook
Developed a comprehensive
handbook on the procedures

for Negotiation, Mediation and
Arbitration in the WESM dispute
resolution process.
Coordinated with the Philippine
Institute of Arbitrators for the
review of the Handbook.
32
Supervised the conduct of

the Audit undertaken through the
External Auditor.
Training
With assistance from the PEMC
Training and Communications
Division, arranged for further
training for WESM Mediators
and Arbitrators about RCOA,
Reserve Market and IMEM.
Inquiries
Looked into the possibility of
engaging the Philippine Dispute
Resolution Center, Inc. as a regular
or ad hoc basis service provider.
Coordinated with the Institute of
Electrical and Electronics Engineers
regarding the possibility of
nominating technical experts to
the pool of WESM Mediators and
Arbitrators.
MARKET SURVEILLANCE
COMMITTEE
What do we do?
We monitor and assess trading activity in the WESM to ensure

market efficiency and fair competition.
ACCOMPLISHMENTS
Submitted Monthly and Special Reports to the PEM Board
1 and the ERC, and elevated market issues, as necessary.
Filed Requests for Investigation (RFIs) on alleged breaches
2 of the WESM Rules for the billing months of May to

December 2014 and January to April 2015.
Submitted to the PEM Board its review of 48 ECO
3 Investigation Reports on the possible breach of the Must-
Offer Rule and RTD Schedule/Instructions from the billing

periods of November 2013 to Mark 2014, together with the
MSCs recommendations.
Formulated a Catalogue of Retail Market Data and Indices
4 after undergoing a series of stakeholder consultations.
33
UPDATES
UPDATES
THE GROWING RULEBOOK:
POLICY AND
REGULATORY
UPDATES
EC
ON THE LOOKOUT:
ECO UPDATES
Number of Plants Covered by RFI (MOR and RTD)

For the Billing Months January 2014 - April 2015
What do we do?
Market Network Model Rules
1 Changes shall be made by the Market Operator (MO)
45
15
0
M J
Luzon-MOR & RTD
Luzon-MOR & RTD
Management of MRUs
2 Removed the imposition of constraints on the demand of
Completed investigations for 103 of these cases and endorsed
No. of Plants
39%
90,000
29%
60,000
20%
30,000
10%
F M
A M J
F M
0%
No. of Possible Intervals for Investigation

Intervals with RFI (MOR)
Percentage of Intervals with RFI

vs Actual No. Investigated (MOR)
Billing Months January 2014 - April 2015
120,000
12%
90,000
9%
60,000
6%
30,000
3%
2 them to the Market Surveillance Committee for review before
being submitted to the PEM Board for final action. Of these, 34

cases have been acted upon by the PEM Board and closed.
F M
A M J
F M

Intervals with RFI (MOR)
Percentage of Intervals with RFI
0%
Percentage (%)
starting from December 2013: 817 MOR cases and

741 RTD cases.
The significant rise in investigations starting CY 2014
came from the requests for investigation (RFIs) that were
submitted monthly.
From January to March 2014, only scheduled generating
units in Luzon were investigated because the Visayas grid
was under market suspension until March 2014.
Investigations of scheduled generating units in the Visayas
covered periods starting April 2014.
The MOR cases endorsed for investigation covered an
average of 35% of the total possible intervals for the covered
billing months of December 2013 to June 2015, while RTD
cases covered an average of 10% of the total possible intervals
for the same periods. Total possible intervals refers to the
total intervals for the month multiplied by the number of
scheduled generation companies that are subject of the
investigations.
No. of Plants
As of June 2015, a total of 1,613 investigations have been
120,000
a specific facility.
Introduced additional responsibilities of the SO: the
dispatch of Constrain-On and Constrain-Off Generators
and MRUs, the incorporation of the MRUs in its
Ancillary Service Procurement Plan, and their inclusion
in the advisories issued by the MO.
Required the MO or SO to report a generators failure to
comply with the linear ramping at any trading interval to
the Market Surveillance Committee.
Introduced a compensation mechanism, to be developed
by the MO, as a sanction for failure to comply with the
dispatch schedule or linear ramping.
Introduced an additional provision and sub-clause on the
management of excess generation caused by failure to
follow a dispatch schedule or observe a linear ramp rate.
Instructed the MO to develop and implement a pricing
and settlement methodology for MRUs.
Included even a portion of the grid in establishing the
declaration for intervention.
Included failure to produce market schedules due to erroneous
real-time status input data as an event of force majeure.
Updated the Glossary.
Percentage (%)

vs Actual No. Investigated (MOR)
Billing Months January 2014 - April 2015
ACCOMPLISHMENTS
34
in-coordination with the System Operator (SO).

Alterations shall be implemented according to the MOs
Information and Communications Technology (ICT)
Change Management Procedure.
The PEM Board shall be regularly informed.
30
Enforcement activities in the WESM are currently targeted towards

two types of non-compliance, namely, non-compliance with the must
offer rule (MOR cases) and with the real-time dispatch schedules
(RTD cases) by scheduled generation companies.
1 conducted by the ECO covering possible non-compliances
he rules and policies that govern the run of the WESM are
continually updated. This allows for the market to continue to
run fairly and efficiently despite developments that could otherwise
present complications.
Under the Electric Power Industry Reform Act (EPIRA), the
Department of Energy (DOE) and Energy Regulatory Commission
(ERC) are in charge of formulating the detailed rules and enforcing
the rules and regulations, respectively.
POLICY UPDATES:
60
No. of Plants
The primary function of the Enforcement and Compliance Office

(ECO) is to serve as the primary technical and investigative unit in
the WESM, particularly for the investigation of possible breach of the
WESM Rules and market manuals by WESM members. It also assists
in promoting compliance amongst WESM members.
Interim Offer Price Cap

The WESM Tripartite Committee further extends the
Interim WESM Offer Price Cap until September 30,
2015, pending the determination of a new WESM Offer
Price Cap.
Retail Market Manuals
4 Retail Manual on Metering Standards and Procedures
now states that the Enforcement and Compliance Officer

shall investigate any infraction by a Retail Metering
Service Provider of a Contestable Customer.
The WESM Dispute Resolution Market Manual is now
included in the enumeration of references in the Retail
Manual on Registration Criteria and Procedures and in
the Retail Manual on Market Transactions Procedures.
WESM Reserve Market
5 Approved and adopted the WESM Market Manual on
the Protocol for the Central Scheduling and Dispatch of

Energy and Contracted Reserves.
REGULATORY UPDATES:
Rules for Issuance of COCs
1 Qualified End-users and Entities with Self-Generation

Facilities are now required to secure Certificates of
Compliance (COC).
Included provisions for Renewable Energy Generation
Facilities and their eligibility under the Feed-in Tariff
System.
Suspending the Issuance of RES Licenses
2 Evaluation and issuance of Retail Electricity Suppliers

(RES) license applications have been suspended.
REPA and RESA Templates
3 Approved and adopted the Renewable Energy Payment

Agreement (REPA) and the Renewable Energy Supply
Agreement (RESA) Templates.
Pre-emptive Mitigation Measure in WESM
4 Imposed a secondary price cap of PHP 6,245.00/MWh
in the event of a breach of the cumulative price threshold.
N-1 Contingency Criterion
5 Included the N-1 Criterion in the enumeration of
technical criteria for transmission network, definitions,

and minimum grid performance.
35
UPDATES
UPDATES
Supplemental Rules for Issuance of CA
6 Introduced definitions for Prescribed Standards,
Revalidation, and Specimen and added conditions

in the issuance of Certificates of Approval (CA) and
Revalidation of approved types of metered products for
use in Revenue Metering.
Joint Filing for PSAs
7 Directed Distribution Utilities and Generation
Companies to jointly file their applications for approval

of their Power Supply Agreements (PSAs), pending the
completion of the PSA Rules.
Installed Generating Capacity and Market Share
8 Limitation for 2015
Set limitations on installed generating capacity and

market share, per Grid and National Grid.
Reporting by GenCos
9 Set procedures on the reports to be submitted by
Generation Companies (GenCos) on outage events

concerning their generating facilities.
ILP Rules
10 Expanded the scope of the Interruptible Load Program

(ILP) by enabling the participation of the following:
the National Grid Corporation of the Philippines
(NGCP) to their directly-connected customers,
Philippine Economic Zone Authority (PEZA),
ecozone utility enterprises and other Distribution
Utilities (DUs).
DUs to their captive customers within their
franchise area.
DUs to their RES or local RES and its contestable
customers.
11
Solar FIT Rate

Approved and adopted the Solar Feed-in Tariff Rate of
PHP 8.69/kWh.
IMS UPDATES
What do we do?
PEM Board Updates

U
nder their watch, and working together with the Governance

Committees and industry stakeholders, the PEM Board
issued 42 resolutions this year. The following are the highlights of
their accomplishments:
The IMS Organization oversees the implementation

and improvement of PEMCs Integrated Management
System (IMS).
Approved the recommendations of the Review Panel in #4
ACCOMPLISHMENTS
5 on the review for reconsideration imposing, among others,
financial penalties upon generators found to have violated the

Must Offer Rule during the November and December 2013
billing periods.
Quality Management System Pre-Certification
1 Assessment: PASSED.
Transition of Information Security
2 Management System from ISO27001:2005
Denied the request to defer the collection of penalties by
6 Therma Mobile, Inc. (TMO), and affirmed that Rules be
version to ISO27001:2013 version.
Quality Management System Pre-Certification

Audit by TUVSUD: Stage 1 PASSED.
ISMS Pre-Certification Assessment: PASSED.

Certification Audit for Information
5 Security Management System and Quality

Management System: Stage 2 PASSED.
imposed uniformly to all participants involved.
Approved the changes in Registration Capacities:
7 Cebu Diesel Power Plant (Pmax and Max Ramp Rate)
Approved changes to three WESM Rules and seven Market
1 Manuals on the issues of:
Management of Net Settlement Surplus

Alterations to the Market Network Model
Integration of the Reserve Market into WESMs
commercial operations
Harmonizing the Management of Procedure for Excess
Generation, the Administered Price Determination
Methodology, and the proposed changes to the
Management of MRUs.
Improving the efficiency of implementing and
documenting proposed changes to the WESM Rules and
Market Manuals.
Improving compliance, context, process and accountability
to Billings and Settlement.
Improving process documentation and clarifying
MO responsibilities.
Incorporating the procedures for the compensation
mechanism of MRUs.
Awarded ISO Certificates on March 9, 2015.

Conducted the first full simulation of PEMCs
7 Business Continuity Management System

(BCMS) on March 11-12, 2015.
Market Fees for Calendar Years 2014 to 2015
12 The ERC has approved the amount of PHP
702,984,728.00 as Market Fee to be collected by PEMC.

For calendar year 2015, PEMC applied for the amount
of PHP 896,410,000.00. The ERC has ordered to
continue imposing the approved Market Fee for calendar
year 2014, pending the final resolution.
MMS Migration Refund
the authority of the PEMC President to

2 Approved
negotiate with the Winning Bidder for the 2nd Metering
13 The Court of Appeals has affirmed the ERC Order directing

PEMC to refund the total amount budget collected for
the Market Management System (MMS) migration,
inclusive of carrying costs.
The CA modified the imposed interest rate to 6%.
A Motion for Reconsideration has been filed in relation
to the Decision of the Court of Appeals.
Arrangement Review.
Want more? Scan this QR Code to read some of the full reports.
Approved the bidding results for the External Auditor for the
5th Market Operations Audit.
Approved the Market Surveillance Committees (MSC)
4 review of 34 Enforcement and Compliance Office (ECO)

investigations which resulted in a finding of breach of the
WESM Rules for submission to the ERC.
36
Bohol Diesel Power Plant (Pmax)

Bachman Geothermal Power Plant (Pmax)
EDC-Nasulo Geothermal Power Plant (Pmax and Pmin)
Northland Power Development Corporation (Pmax)
Bac-Man Geothermal, Inc. (Pmax)
SPC Island Power Corporations Panay Diesel Power
Plant 3 (Pmax)
SN Aboitiz Power - Benguet, Inc. (SNAP-Benguet)s
Binga HEPP Units (Pmax)
Ratified the Authority of the PEMC President to Sign
8 the Multilateral Agreement Among WESM Participants

to support and implement the ERC issuance on WESM
Regulated Price.
Approved the authority of the PEMC President to enter
9 into a Memorandum of Agreement (MOA) with TransCo to

implement ERC Order on Feed-in Tariff (FIT) mandating
PEMC to remit WESM Proceeds of FIT Eligible
Generation Plants to TransCo.
Made changes to Market Operator Performance Standards
10 and Corporate Performance Measure to improve the scoring

system imposing stricter measures to make it more efficient
and effective.
Approved the Authority of the PEMC President to File
11 an Application with ERC, pursuant to DOE Department
Circular directing PEMC to develop a mechanism for the

Settlement of Displaced Generators.
Approved the results of the bid evaluation for the acquisition
12 of the New Market Management System (NMMS) and the

authority of the PEMC President to enter into negotiation
and award the contracts to the winning bidder.
37
Hon. Carlos Jericho L. Petilla

Department of Energy (DOE)
PEM Board Chairman
Joseph Ferdinand M. Dechavez

System Operator
August 25, 2010 to March 10, 2015
Melinda L. Ocampo
Market Operator
Luis Miguel Aboitiz

Generation
Ronald Dylan P. Concepcion

System Operator
March 26, 2015 - Present
Ma. Lourdes S. Alzona Generation
Victor Emmanuel B. Santos

Generation
Emmanuel R. Ledesma Jr.

Generation
Maria Rosario Campio-Avestruz

Distribution
Ma. Gladys Cruz-Sta. Rita

Generation
BOARD OF DIRECTORS June 26, 2014 to June 25, 2015

Deon James
Distribution
Gerardo P. Verzosa
Distribution
Nixon G. Hao
Distribution
Jesus L. Arranza
Independent
Peter G. Nepomuceno
Supply
Antonio Agbayani Ver

Independent
June 17, 2009 - June 15, 2015
Mylene C. Capongcol
Department of Energy (DOE)
Rolando T. Bacani
National Transmission
Corporation (TransCo)
Alvin B. Culaba
Independent
June 18, 2015 - Present
Edita S. Bueno
National Electrification
Administration (NEA)
ADVISORY BOARD
THE YEAR IN REVIEW
THE YEAR IN REVIEW
TOP EVENTS
OF JUNE 2014-2015
Interim Mindanao Electricity Market (IMEM)
As the WESM makes further forays into connecting Mindanao
to the overall grid, various developments have taken place to help
shape the future of this portion of the energy sector.
Settlement for January to March of 2014 was completed, and
the adjustment bill for December 2013 were based on rectified
metered quantities and reconciled contract allocations.
As directed by the Department of Energy, new functionalities
in the IMEM Management System to support the new IMEM
market features were developed and completed.
93.54% mandatory participants were registered, as well as 8 new
generators; additional capacity is estimated to be around 80 MW.
Contract data an d metered quantities were continuously
processed, as per Department of Energy protocol for participant
notification on energy withdrawal of Mindanao customers.
GEARS IN
MOTION
MARKET GOVERNANCE
The investigation of 33 cases was completed. These cases had
to do with possible non-compliance with the Must-Offer Rule.
Furthermore, an Investigation Report on the November to
December 2013 Must-Offer Rule case was submitted to the
Energy Regulatory Commission, pursuant to their directives.
Monitoring for approved market triggers commenced, and the
Secondary Price Cap Program was implemented.
THE YEAR IN REVIEW
hen we set about to work on a

significant task, it can feel like were
everywhere at once. Oftentimes,
we might even find that days and places run
together in our minds eye because of the sheer
amount of work undertaken. Even a figurative
machine on the scale of a Wholesale Electricity
Spot Market can be difficult to spot but only
because its hard to nail down just one thing
the people of WESM were working on.
2014 was the latest in a long line of challenging
but rewarding years, with much development
on various fronts. In some respects, the year
saw the culmination of a lot of work done
in previous years. In others, there were new
developments that proved encouraging for
future years.
40
INTEGRATED MANAGEMENT SYSTEM

The Certification Audit of the program was met with sufficient
preparation, including trainings and awareness seminars, and
documentation and coordination meetings. Enterprise Risk
Management was fully established, the Information Security
Management System (ISMS) and Quality Management System
(QMS) both obtained certification with minimal findings, and
the audit was overall a success.
COMMUNICATIONS POLICY
RCOA
Retail Competition and Open Access continued to generate
promising results in terms of participation and growth.
Clear expected energy requirements and continuous facilitation
of the newly-opened customer switching allowed for 55%
Voluntary Contestable Customers.
Development of the Central Registration and Settlement System
(CRSS) external interfaces was completed, and preparations for
the conduct of the Trial Operations were under way.
The Performance Standards to be used by the Central Registration
Body (CRB) were then completed, and were incorporated into
the existing MOPS or Market Operator Performance Standards.
The Communications Policy was established and implemented

for various PEMC activities (including CSR, press release
issuance, and press conferences). This newly-established policy
covers PEMCs Communication Plan, Media Relations
Protocol, Corporate Social Responsibility Policy, and Social
Media Use and Management Policy.
MARKET MANAGEMENT SYSTEM

The tender process for the new Market Management System
was completed. This concluded a lengthy process of continued
study and progress including participating in various interested
vendors technical demonstrations and product presentations,
forming technical and commercial evaluation teams to
administer the process, and contracting technical assistance to
help prepare the bid documents.
41
THE YEAR IN REVIEW
THE YEAR IN REVIEW
INTERNATIONAL
LINKAGES
2014 ANNUAL INTERNATIONAL ASSOCIATION

OF POWER EXCHANGES (APEx) CONFERENCE
Along with attendees representing exchanges from North and
South America, Korea, Australia, New Zealand and Europe, the
Philippine Electricity Market Corporation (PEMC) attended the
APEx conference held from October 26 to 28, 2014 in Krakow,
Poland. Hosted by the Polish Power Exchange the only licensed
power exchange in Poland the Conference covered six major topics,
five of which were particularly relevant to PEMCs operations and
governance of market systems.
Innovation & New Technology enabled through Markets
Randy Berrys talk asserted that developing markets have
similarly arguably exponentially developing requirements;
technology should be able to support these needs. The insights
shared on managing such emergent complexities were of great
import to PEMCs operations.
Market Disturbances
Dr. Cecilia Maya Ochoa shared a fascinating insight on how
Colombias power industry has had to adjust to El Nio weather
conditions. In the face of these weather shifts, Colombias
heavy reliance on hydroelectric power has resulted in high
spot market prices triggered by generation capacity shortages.
The similarity to our situation of industry action against such
market phenomena is clear, as is the relevance of the regulatory
intervention their industry had to undertake.
Evolution of Capacity Markets
Presenter Mike Thomas cited the Philippine WESM as an
illustrative example of how Asia-Pacific markets are handling
capacity requirements. Thomas further underscored how energy
markets remain vulnerable to fuel supply issues and government
intervention to generation scarcity; these issues were identified
as complex enough to persist even with the establishment of a
capacity market.
42
PEMC delegates (left to right): Isidro E. Cacho, Jr., Medardo

T. Nuez, Robinson P. Descanzo, Criselda S. Martin-Funelas,
Salvador D. Subaran, and Carlito C. Claudio
Emerging Markets
As different countries power industries begin to address
the impact of climate change, renewables become a force to
be reckoned with in terms of generation share. The speaker
highlighted the need to set up support incentive schemes for
renewable technologies outside of energy markets to avoid
the distortion of spot market price signals and competition
worthwhile insight for PEMC as it gears up to continue building
the Philippine RE market.
Operationalising Demand Side Response (DSR)
The panel undertook a discussion on the benefits of DSR, which
include system reliability, greater flexibility and cost reduction.
These were some of the targeted benefits of the recently stalled
launch of ancillary services and reserves market. Related to this,
interruptible load is a form of demand response being considered
in the Philippine energy market.
29TH and 30TH ENERGY INTERMARKET SURVEILLANCE

GROUP (EISG) SEMI-ANNUAL MEETING
Along with its participation in the APEx Conference, PEMC
attended the 29th and 30th EISG Semi-Annual meetings,
from October 26 to 28, 2014 in Washington, D.C. and from
May 10 to 12, 2015 in Toronto, respectively. This continues
PEMCs 2006-onward participation in EISG meetings and the
accompanying presentations and open discussions on market
developments and governance.
The EISG is a gathering of independent market monitors from
the different parts of the world responsible for the surveillance of
the competitiveness of wholesale electricity markets. The semiannual meetings offer a forum for the private discussion of ideas
about issues, techniques, procedures and other matters relating to
surveillance of the competitiveness of wholesale electricity markets.
Through this interaction, participants are also able to develop
common ideas with respect to information requirements, market
performance indicators and the types of conduct that should be
subject to mitigation or sanction.
The PEMC- Market Assessment Group (MAG) participated in
the 29th and 30th Semi-Annual meetings as resource speakers, and
presented the Philippine experience on: (i) Administered Pricing
during Market Intervention and Market Suspension in the WESM;
(ii) the role of PEMC-MAG in policy-making, regulatory, and rules
change process; and (iii) the allocation of payments associated with
Out-of-Merit Dispatch (Must-Run Units) for reliability.
PEMC participants join the rest of the delegates in the closing

activity of the EISG meeting in Washington D.C.
PEMC representatives with other participants during the EISG

meeting in Toronto
Representatives from the various APEx members across the globe
43
THE YEAR IN REVIEW
THE YEAR IN REVIEW
CORPORATE SOCIAL
RESPONSIBILITY
Students and teachers at the Manaoag National High School join
the Energy Efficiency Awareness in Pangasinan
ADOPT A CHILD THIS CHRISTMAS YEAR 3

(December 16, 2014)
PEMC continues its partnership with Kythe Foundation to bring

joy to young cancer patients during Christmas. At the December
2014 activity, PEMC employees were given the opportunity to
share their blessings and fulfill the wishes of the Kythe kids.
Perhaps one of the wisest

elements of modern corporate
work is Corporate Social
Responsibility (CSR), as it
continually reminds companies
to never lose touch with their
humanity. More than this,
CSR drives a company to
give back to the community,
finding new avenues to serve
outside of its original capacity.
PEMC undertook numerous
CSR projects from June 2014
to June 2015, putting beliefs
in responsible energy use and
responsible communityhood
into action.
ENERGY SAVING
AWARENESS RAISING
START SCHOOL RIGHT
The best strategy for sustainable energy

development is to conserve its use. As an
electricity market, we realize that it is our
responsibility to educate the public, through
our partner utilities and municipalities, on
proper demand side management and energy
saving schemes. We believe that sound and
sustainable power economics does not solely
rely on supply-and-demand interaction, but
also on effective conservation that starts at
the grassroots level.
Nagpayong Elementary School (May 20, 2015)
The vicious cycle of generational poverty acts as a development

trap in our economy. Progress cannot be attained if most Filipinos
are ill-equipped to help in nation-building. What can break the
cruel and perpetual cycle is the enrichment of our intellectual
capital through education. As a socially responsible corporation, the
PEMC is committed to take part in breaking this pattern through
its CSR efforts. The minor refurbishments that were made to the
kindergarten classrooms will hopefully result in a more conducive
learning environment, and the donation of computers for the
schools laboratory is hoped to help strengthen the active learning
of students at Nagpayong Elementary School. This CSR activity
serves as PEMCs simple but lasting contribution for the children
in its immediate community, offering them a hand in building a
future for themselves.
BLOOD DONATION DRIVES
(September 26, 2014, April 30, 2015)
Computers donated to the Nagpayong

Elementary School Computer Laboratory
44
PEMC employees and Kythe Foundation kids at the Adopt-a-Child

Christmas Outreach
AKELCO, Kalibo, Aklan ( June 18, 2014)

Manaoag, Pangasinan (September 29, 2014)
Blood donation is one of the most

altruistic acts that a person can do for his
fellow. PEMC has included the blood
donation activity in its CSR program
since 2010. This years drives represent
a continued commitment to promoting
health awareness among its employees, as
well as contributing aid to those in need of
blood transfusions.
Refurbishment of kindergarten classrooms at the Nagpayong

Elementary School
45
FUTURE DIRECTIONS
FUTURE DIRECTIONS
DIRECTIONS
ON THE VERGE:
LOOKING AHEAD TO THE
LANDMARK TENTH YEAR
46
To prepare the reserve market for the full market

implementation, the central scheduling and dispatch of energy
and reserves will be ushered in. Trainings and system trials will
be done in parallel with the registration of the ancillary services
providers that will participate in the market. Upon procurement of
the new Market Management System (MMS), additional market
features pursuant to the directives of the ERC will be integrated
to the reserve market.
In the coming year, PEMC will prepare for the commercial
operations of the RE market in the Philippines. The Renewable
Energy Act gives PEMC the mandate to establish the Renewable
Energy Market (REM), under the guidance of the DOE. The
activities will include the design and development of the system
to support RE Market operations, detailing of business processes
and protocols, capacity-building for the market participants and
the Market Operator. The market structure development activities
will be synchronized with the finalization and promulgation of
the policy.
Now that the tender activities for the new MMS are completed,
its development will kick off with the targeted deployment of the
new system in 2017. The new market system will have features
to accommodate the ERC directives for the reserve market, the
results of the WESM design study and the implementation of
preferential dispatch for renewable energy resources. The design,
development, testing and deployment will be collaboratively done
by PEMC, the NGCP as the System Operator and the winning
system vendor.
As part of PEMCs efforts in promoting industry growth and
mitigating price volatility in the market, research and development
activities will be continued for the market design and structure of
the derivatives market for electricity.
Lastly, after becoming ISO certified for both Information
Security Management System (ISMS) and Quality Management
System (QMS) for this year, the two management systems will be
harmonized with the Enterprise Risk Management Program. The
objective of the harmonization is to ensure a cohesive framework
in addressing risks and uncertainties confronting both the market
and the corporation.
In an effort to match
the coming shifts and
changes under the
DOEs policy guidance
and the ERCs regulatory
oversight, PEMC has set
the following goals: to
extend the scope of retail
competition, to integrate
the Mindanao grid to the
WESM, and to operate
the RE Market and the
RE Registry as well as
the reserve market.
FUTURE
ver the years, the Philippine Electricity Market

Corporation (PEMC) has joined the power industry
both in utilizing innovations and weathering challenges.
Even now, looking ahead to the Wholesale Electricity Spot
Markets (WESM) momentous tenth year of commercial
operations, it is clear that the continued evolution of the market
and the power industry is inevitable. In an effort to match the
coming shifts and changes under the Department of Energys
(DOE) policy guidance and the Energy Regulatory Commissions
(ERC) regulatory oversight, PEMC has set the following goals: to
extend the scope of retail competition, to integrate the Mindanao
grid into the WESM, and to operate the RE Market and the RE
Registry as well as the reserve market.
The implementation of Retail Competition and Open Access
is already in full swing, with PEMC facilitating switching for
customers with demand of 1 MW or more as part of the Central
Registration Body (CRB) functions. Currently, PEMC is
enhancing its infrastructure through the Central Registration and
Settlement System (CRSS) to fully accommodate the growth in
transactional volume with the provision of customer choice to
750 kW end-users.
In anticipation of the stabilization of supply in the Mindanao
grid, PEMC will undergo preparations for the integration of the
Mindanao grid into the WESM. The establishment of the WESM
will facilitate the optimal dispatch of all resources, including
the contracted capacities, and provide more price signals to the
investors to reinforce the existing supply in the region.
47
#PEMSelfie
WESM works and it works like a machine
with hundreds of moving parts. Overcoming
various sources of stress to function well together,
these gears are all integral to its success.
LEGEND
OFFICE OF THE PRESIDENT
OFFICE OF THE CORPORATE SECRETARY
MARKET ASSESSMENT GROUP
LEGAL DEPARTMENT
CORPORATE SERVICES DEPARTMENT
Noted American industrialist Henry

Ford once said that Coming together is a
beginning. Keeping together is progress.
Working together is success.
CORPORATE PLANNING
AND COMMUNICATIONS DEPARTMENT
TRADING OPERATIONS DEPARTMENT

Ford knows whereof he speaks
the pioneer of the modern automobile
knows all about how important it is to get
all the parts of an engine to work together
well. Ford also pioneered the modern
assembly line, but the way we work together
here is so much more than that.
INFORMATION SYSTEMS AND

TECHNOLOGY DEPARTMENT
ENFORCEMENT AND
COMPLIANCE OFFICE
48
49
All too often, corporations and institutions that have

worked for quite some time start to take on the look of a
faceless monolith. This is why it becomes very important to
acknowledge and recognize the individuals that comprise the
team. Its easy to think about dismissing those who work in
a corporation as drones, but in this case nothing could be
further from the truth.
50
51
Its true that these individuals prove themselves valuable by

aligning their own personal goals ambitions with the larger
goals of the institution. Their individual areas of expertise,
put together, allow each department to function smoothly,
driving the organization at large. However, they never stop
being who they are as these photos readily attest and
this harmonious meshing of various different personalities is
what we can be truly proud of.
52
53
AUDITORS REPORT
AUDITORS REPORT
SyCip Gorres Velayo & Co.

6760 Ayala Avenue
1226 Makati City
Philippines
Tel: (632) 891 0307

Fax: (632) 819 0872
ey.com/ph
BOA/PRC Reg. No. 0001,

December 28, 2012, valid until December 31, 2015
SEC Accreditation No. 0012-FR-3 (Group A),
November 15, 2012, valid until November 16, 2015
-2-
INDEPENDENT AUDITORS REPORT
Opinion
The Board of Directors

Philippine Electricity Market Corporation
In our opinion, the financial statements present fairly, in all material respects, the assets, liabilities and
fund balance of Philippine Electricity Market Corporation as at December 31, 2014 and 2013, and its
financial performance and its cash flows for the years then ended in accordance with Philippine
Financial Reporting Standards.
Report on the Supplementary Information Required Under Revenue Regulations 15-2010
Report on the Financial Statements

We have audited the accompanying financial statements of Philippine Electricity Market Corporation
(a nonstock, nonprofit corporation), which comprise the statements of assets, liabilities and fund
balance as at December 31, 2014 and 2013, and the statements of comprehensive income, statements
of changes in fund balance and statements of cash flows for the years then ended, and a summary of
significant accounting policies and other explanatory information.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with Philippine Financial Reporting Standards, and for such internal controls as
management determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with Philippine Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditors judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entitys
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entitys internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements
taken as a whole. The supplementary information required under Revenue Regulations 15-2010 in
Note 22 to the financial statements, respectively, is presented for purposes of filing with the Bureau of
Internal Revenue and is not a required part of the basic financial statements. Such information is the
responsibility of the management of Philippine Electricity Market Corporation. The information has
been subjected to the auditing procedures applied in our audit of the basic financial statements. In our
opinion, the information is fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
SYCIP GORRES VELAYO & CO.
Ladislao Z. Avila, Jr.

Partner
CPA Certificate No. 69099
SEC Accreditation No. 0111-AR-3 (Group A),
January 18, 2013, valid until January 17, 2016
Tax Identification No. 109-247-891
BIR Accreditation No. 08-001998-43-2015,
February 27, 2015, valid until February 26, 2018
PTR No. 4751254, January 5, 2015, Makati City
March 26, 2015
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
*SGVFS011121*
A member firm of Ernst & Young Global Limited
54
*SGVFS011121*
A member firm of Ernst & Young Global Limited
55

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SNAPSHOT

NATURAL GAS 28.5%

Private Distribution Utilities & Local

MARKET SHARE BY REGISTERED CAPACITY

Aboitiz Power Corporation ABOITIZ

* WESM Registration Summary as of June 25, 2015

Retail Electricity Suppliers

Local Retail Electricity Suppliers

Power Sector Assets and Liabilities PSALM

Total Market Participants

* RCOA Registration Summary as of June 25, 2015

PRICING CONDITIONS (PEN, MRR, PSM)

First Gen Corporation

Retail Metering Service Providers

Total Registered Capacity (Pmax) Visayas

TOTAL REGISTERED CAPACITY (Pmax) SYSTEM

BCQ AND SPOT TRANSACTION LEVELS

WESM Annual Report 2014

WESM Annual Report Magazine 2014

Vol. 2 June 2014 - June 2015

ABOUT THE COVER

Ana Fe Monica C. Aguila

Ma. Hazel M. Gubaton-Lopez

PEMC may be contacted at the following business locations:

CAVEN STUDIOS, INC.

Progress demands hard work, efficiency, and commitment. The

WESM Annual Report Magazine 2014

Top 9 Events of the Year

From the Desk of MLO

International Linkages: APEx

International Linkages: EISG

Cover and Interior Artwork by

Motion Graphics Artists

THE YEAR IN REVIEW

WESM Works is a custom publication produced by CAVEN

Enforcement and Compliance

WESM Annual Report Magazine 2014

From the Desk of MLO

aking the second edition of the

It is not without a touch of irony that in

the compact but accurate article content,

We look forward to building on our

hat is there to look back upon?

the core of WESM. With the expansion

able to work with such professionals in the

Carlos Jericho L. Petilla

hen you have consumers and providers

WESM Annual Report Magazine 2014

In a similar manner, trading electricity as

The WESM was established as one of

WESM has evolved, and is still evolving since

WESM Annual Report Magazine 2014

In its role of providing a competitive,

schedule of power plants, and facilitates

conditions and security requirements

WHAT ARE THE

4. Ex-ante pricing and ex-post pricing

WHAT IS PEMC AND

to implement the monitoring and

plants, the ERC approved the Feed-In

information exchange among retail

WHAT IS RCOA AND

Retail Competition and Open Access

The Renewable Energy Act of 2008