AR2017 Brighter Upload 1

This year’s theme of our Annual Report, Brighter, sheds light on how supply.
upply. As the designated Central Registration Body, PEMC has

WESM ignited reforms in the power industry for the period 26 June been at the forefront of implementing retail competition by facilitating
2015 to 25 June 2016. The Annual Report 2017 covers the market enrolment of supply contracts and handling information exchange
performance and the level of competitiveness in the WESM. Updates among participants.
from several PEMC units on various undertakings, projects and financial
statements are also included. WESM has been a frontier for nascent developments such as feasibility
study of creating electricity-related financial markets in support of its
After a decade of commercial operations, WESM illuminated the lives design. The integration of Mindanao grid into WESM has been an
of Filipino consumers by providing distribution utilities and directly- arduous process cognizant of the peculiar market features that need to
connected customers an alternative source of procurement of their be in place (see page 44 for the full write-up).
electricity requirements.
With this report, PEMC aspires to be a beacon of transparency in the
The switch has been on for customers that have met the contestability provision of market information and data that can be used by policy-
threshold to exercise their freedom of choice in securing their power makers, investors, market players, consumers, and the academe.
Advisory Panel Editorial Team
Melinda L. Ocampo Phillip C. Adviento

Criselda S. Martin - Funelas Eric Niño U. Louis
Robinson P. Descanzo Rhlee B. Amojilar
Christian Karla A. Rica
Contributors
Ana Fe Monica C. Aguila Clares Loren C. Jalocon

Rachel Angela P. Anosan Shalom Grace T. Llamzon
Rheinhart O. Banogon Raymond Joseph A. Marqueses
Julius Eleazar A. Bunyi Bienvenido C. Mendoza, Jr.
Divine Gayle C. Cruz Edward I. Olmedo
Hiyasminh Aleia D. Dagum Maricel A. Portillo
Kathleen R. Estigoy Geraldine A. Rodriguez
Elaine D. Gonzales Camille C. Soliven
© Copyright 2017 WESM WORKS
All rights reserved. No part of this publication may be reproduced, distributed or transmitted in any form or by any means, including photocopying,
scanning or other electronic or mechanical methods, without the prior written permission of the publisher.
The information contained in this publication 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 or 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.
At the outset, let me congratulate the Officers and Employees of the Philippine Electricity Market Corporation
(PEMC) for your commitment to public service as echoed in this annual report with the theme “Brighter”.
The power industry has grown more responsive through the joint initiatives of the Department of Energy (DOE),
PEMC and other relevant energy institutions to reform the power market by looking at it from the consumer’s
perspective.
We commend PEMC for continuously promoting transparency through availability of market information and
observing good corporate governance.
As the steward of the DOE family, I recognize the triumphs made by PEMC during the previous year. Most striking
of all is the establishment of transparent competitive power market in Mindanao.
With the help of all the energy stakeholders, the DOE and PEMC have finally commenced the Mindanao Wholesale
Electricity Spot Market (WESM), which gives Mindanaoans more sources of electricity to choose from, thereby
increasing their chances of lower-priced energy.
The DOE and PEMC will have more challenges to hurdle as we implement sound policies and plans in the years
to come.
Let us further strengthen our coordination with each other, especially, as we prepare for the establishment of the
Renewable Energy Market, the Reserve Market and the grid integration of Luzon, Visayas and Mindanao, in which
PEMC will have an essential role to play.
Finally, the DOE takes this opportunity to thank you for all your contributions in the energy sector, particularly, in
raising the competitiveness and maintaining the dynamism of the Philippine power market.
Thank you and Mabuhay!
Alfonso G. Cusi
Secretary
“WESM: Shining Brighter in Transparency”
Over the years, challenges and impossibilities were triumphantly
overcome by players in the electric power industry. Each has its
own contribution in making the electric power industry the kind of
industry that it has become and in taking the same to where it is
now.
Inasmuch as there is still a handful to be achieved in the industry,

there have been various improvements to count. The Philippine
Electricity Market Corporation (PEMC) has contributed greatly to
the development of the electric power industry.
For the past year, the WESM has stepped up to a higher level
of efficiency. PEMC, as the Market Operator (MO), has made
sure that the past year had become a gateway for ceaseless
improvements, not only in market operations and assessment, but
also in governance and corporate excellence. In this report, the
snapshot and market reports sections stage a transparent WESM
that illuminates what transpired in the market during the previous
year until the first half of the current year. In a more efficient
and easy-to-understand manner, we will bring to you data and
graphs, as well as market information that will significantly help the
government and the market players to continue planning soundly
and decisively.
Not only do we ensure that the WESM remains transparent, PEMC

has prepared valuable articles to give you the latest updates in the
market from the reports on Retail Competition and Open Access
(RCOA) to the preparation for the establishment of the WESM in
Mindanao. The people behind the success of the past year have
made sure that the readers will be updated on the accomplishments
of the PEM Board to the WESM Governance Committees, as well
as the brief report on PEMC’s established Integrated Management
System (IMS) that helps it maintain an exceptional level of
excellence in information security and quality service.
Amidst numerous changes and the constant evolution of the electric

power industry, PEMC has remained strong by being exceptionally
dynamic to the every need of the industry. The past year was
marked by comprehensive market studies, enhancements in
market systems, as well as various trainings for the market
players. As a dynamic market operator, we assure you that we will
not only provide you with an analysis of the year in review – the
accomplishments, linkages, and corporate social responsibility,
but we will extend the report to the future directions of the WESM
as paths ahead shine brighter.
It is with much pride that I present to you the Annual Report of the
Philippine Electricity Market Corporation for the second half of year
2016 to the first half of the current year 2017. As you flip through
each page, allow us to take you to a journey that will prove that the
WESM shines brighter in transparency and that it has continued to
be dynamic amidst changes.
For a brighter tomorrow,
Melinda L. Ocampo
President
Market
Report
10
Market Performance
Continuous Growth in Demand
Supply Levels
Central Scheduling of Energy and Reserves
02
Market Prices
Market Outcomes
Market Transactions
Dossier
(Market Events)
04
Snapshot
13
Market Assessment
Market Share
Herfindahl-Hirschman Index
Residual Supply Index
Price-Setting Frequency Index
Pivotal Supplier Frequency Index
PSI vs. PSFI
20
Feature on Significant
24
WESM Governance Committees
Market Events The Rules Change Committee
The Technical Committee
The PEM Audit Committee
The Dispute Resolution Administrator
06
The Market Surveillance Committee
WESM: Brighter at 11 32
Enforcement and
Compliance Updates
38
Policy and Regulatory Updates
Policy Issuances
Regulatory Issuances
Case Updates
40
Corporate
Report
1st Sustainability
Highlights Report
44
Feature on
52
WESM Mindanao PEM Board
Accomplishments
53
48
Sustaining the Gains:
RE-Certification of Quality
Management System and
Retail Competition Information Securit Management
Implementation Highlights System
54
The Year in Review:
50
Bighter Lives
Special Feature on
Competitive Selection Process
56
International
Linkages
57 60
Ex-Post
Independent Auditor’s
Report
62
Behind the Curtain:
Working Towards a
Brighter Market
2 WESM Works 2016 - 2017 Brighter
WESM Works 2016 - 2017 Brighter 3
Snapshot
WHOLESALE MEMBERSHIP
June 2017 (Luzon and Visayas)
REGISTERED
CATEGORY DIRECT INDIRECT
TOTAL
LUZ VIS LUZ/VIS LUZ VIS LUZ/VIS
Generation Companies 108 71 34 4 0 0 0
CUSTOMERS
Private distribution utilities &
16 8 3 0 5 0 0
Local government utilities
Electric cooperatives 71 28 28 0 15 0 0
Directly Connected Customers 60 10 6 2 36 10 4
Wholesale aggregators 5 0 0 5 0 0 0
Total Customer Trading
152 46 37 7 56 10 4
Participants
TOTAL PARTICIPANTS 260 117 71 11 56 10 4
RETAIL MEMBERSHIP
(as of 25 June 2017)
Participants Registered
Retail Electricity Supplier 27
Local Retail Electricity Supplier 12
Retail Metering Service Provider 44
Contestable Customer 814
Supplier of Last Resort 21
Directly Connected Contestable Customer 28
Total 946
REGISTERED CAPACITY LIST

Total Registered Capacity (Pmax) - Luzon 14,708.1

Total Registered Capacity (Pmax) - Visayas 3,040.2
TOTAL REGISTERED CAPACITY (Pmax) - SYSTEM 17,748.3
GENERATION MIX
COAL 47.8%
NATURAL GAS 25.5%
GEOTHERMAL 12.8%
HYDRO 7.7%
DIESEL/OIL 2.4%
WIND 1.48%
BIOMASS 0.97%
SOLAR 1.40%

MARKET SHARE
Market Share (%) by Registered Capacity

As of 25
Major Participant Group
June 2017
San Miguel Corporation 19.8 San Carlos Solar Energy, Inc. 0.6
First Gen Corporation 16.1 Anda Power Corporation 0.5
Aboitiz Power Corporation 14.4 Alternergy Wind One Corporation 0.3
Power Sector Assets and Liabilities Management 12.1 Asia Pacific Energy Corporation 0.3
Semirara Mining and Power Corporation 5.3 Solar Philippines Power Project Holdings, Inc. 0.3
Global Business Power Corporation 4.8 First Toledo Solar Energy Corporation 0.3
Masinloc Power Partners Corporation 3.6 PetroSolar Corporation 0.3
GNPower Mariveles Coal Plant Ltd. Co. 3.6 Sulu Electric Power and Light (Philippines) Corp 0.3
Trans-Asia Oil and Energy Development Corp 3.2 Universal Robina Corporation 0.2
Millennium Energy, Inc. 3.0 PetroWind Energy Inc. 0.2
Quezon Power Partners Limited Corporation 2.6 Victorias Milling Company, Inc. 0.2
Salcon Power Corporation 1.9 Majestics Energy Corporation 0.2
Other Independent Power Producers 1.7 Phil. Solar Farm - Leyte, Inc. 0.1
Vivant Energy Corporation 1.6 RASLAG Corporation 0.1
Palm Concepcion Power Corporation 0.8 Silay Solar Power Inc. 0.1
Ayala Corporation 0.7 Green Future Innovations, Inc. 0.1
Gregorio Araneta Inc 0.7
ESSP GRAPH
(from 2010 - June 2017)
10000 9180
8000 7422
7127
ESSP, PhP/MWh
6000 5679
5120
4438
4000 3217 3305
2000
0
2010 2011 2012 2013 2014 2015 2016 2017
ESSP AVERAGE
(26 June 2016 - 25 June 2017)
PHP 3,074/MWh

As the wholesale electricity spot market (WESM) marked fortify transparency and raise the competition in the electric
eleven years of its commercial operations, the Philippine power industry. The company also affirmed its commitment in
Electricity Market Corporation (PEMC) highlights notable capacitating its people to be responsive to the evolving needs
market reforms and developments that ushered in transparency of the industry and the high standards expected for carrying out
and competition in the electric power industry. The WESM is its mandate under the EPIRA and relevant laws.
envisioned to be a platform for electricity trading that provided
the mechanism for the scheduling of generation and pricing of “The WESM has been an aid to the economic growth of the
electricity. This reform ignited transformation in the Philippine country and developments in the electric power industry.
electricity industry as transparency kicked in and changed the More than the competition, supply augmentation, investment
landscape that cultivated accountabilities to all industry players. simulation, and advancements that the WESM has contributed
in nation-building, the WESM boasts years of integrity through
Aside from enhancing the provision of its services as the Market transparency,” said PEMC President Melinda L. Ocampo.
Operator of the WESM, PEMC is exploring new possibilities to

More competitive prices and increased customer sourcing
With mitigating measures in place that will address price spikes such as lowering of offer price cap from PhP 62,000.00/MWh
to PhP 32,000.00/MWh and the imposition of secondary price cap mechanism, effective settlement spot prices (ESSP) reached
its lowest in January 2017 at PhP 1.90/kWh since January 2011. Effective settlement spot prices refer to average prices paid by
wholesale customers for energy procured in the WESM.
The resulting prices resulted in customer confidence thereby augmenting the supply sourced from the WESM wherein wholesale
customers sourced 23% of their requirements from the electricity bourse for the January 2017 billing period. Such exposure of the
customers is the highest since December 2006.
Preferential dispatch for emerging renewable energy resources

As mandated by the Renewable Energy Act of 2008, PEMC complied with its task in changing the market rules to reflect the
preferential dispatch status for emerging renewable energy resources. The preference in the dispatch of emerging renewable
energy resources has been implemented with solar, wind and run-of river hydro resources classified as must dispatch generating
units while FIT-entitled biomass are accorded priority dispatch generating units.
The acknowledgment of preferential dispatch generating units in market rules is recognized as a pioneering effort in Asia.
Registered capacity of preferential dispatch resources in the WESM totals to 1277.2 MW as of 26 June 2017.

Fostering customers’ power of choice
As the designated Central Registration Body (CRB) by the Department of Energy and Energy Regulatory Commission, PEMC
has been performing customer switching from one Supplier to another. The CRB also handles information exchange and the
establishment of a business to business system for enrollment if supply contracts and switching requirements in the market.
In the pipeline are changes to Retail Rules and Retail Market Manuals that will accommodate the lowering of contestability
threshold and retail aggregation.
As of 25 June 2017, 842 customers have exercised their option to source their electricity requirements from registered Suppliers.
Enhanced market design and deployment of new market system

Changes to the WESM design such as shortening of dispatch interval, economic scheduling of Pmin and adoption of ex-ante
pricing only among others are already given green light by the Department of Energy and are reflected in the configuration of
the new Market Management System. These enhancements aim to address market operational audit findings and introduce new
features and functionalities such as simplified compliance reporting process and demand side bidding.
Streamlined approval process in market membership

At the forefront of PEMC’s initiatives is the streamlined processes in the approval of market membership. Processing time of
market membership upon completion of requirements has been reduced from fifteen (15) days to five (5) days contributing to the
ease of doing business in the Philippine power industry. From the initial WESM Membership of six (6) participants in June 2006,
wholesale market participation now stands at 260.
Integrated quality management process

As confirmed by TUVSUD, PEMC has been certified compliant with ISO 9001: 2015 standard and ISO 27001: 2013 standard that
affirm the organization’s culture of continual improvements encouraging efficiency through observance of systematic processes.
PEMC is the first organization administering an electricity market that has been certified compliant with the ISO 27001: 2013
standard.
Improved stakeholder engagement

PEMC has been embarking on information drives and other external communications activities geared toward better comprehension
of the market by making non-confidential market data accessible and useful. In line with this, we have several initiatives in
establishing meaningful engagement with our stakeholders such as publication of annual reports and special publications and
deployment of a WESM Info mobile application for IOS and Android users that contain real time data on market prices, demand
and generation mix.
Soon to be launched is a trading simulation mobile application that is targeted for general public that will encourage enjoyable
and easier learning of the basics of WESM trading process. Complementing these activities are periodic participants’ trainings,
lectures and meetings.

Responsive products and services in the offing
To allow electric power industry participants to manage the price movements in the wholesale electricity spot market (WESM),
PEMC completed the feasibility study on electricity derivatives market. The study aims to assess the legal and technical aspects
of implementing a derivatives market and strategize the phased-in market development that is appropriate to the Philippine
context. PEMC engaged NordPool Consulting in the finalization of a report that will be submitted to DOE, ERC and Securities and
Exchange Commission in the eventual transition to a financial market.
Complementing the study is PEMC’s continuing efforts to implement the financial transmission rights (FTRs) in the market. FTRs
are financial instruments that allow market participants to offset potential losses related to the price risk of delivering energy to
the grid. These instruments will address the volatility of prices associated with power supply agreements due to transmission
congestion costs.
In addition to PEMC’s mandate in the integration of emerging renewables in the WESM is the operationalization of the Renewable
Energy Certificates Market. The RE Certificates Market is poised as a complementary mechanism for the Renewables Portfolio
Standards as venue for the trading of RE Certificates corresponding to renewable electricity generated.
Integration of Mindanao in the WESM

Preparations for the imminent implementation of WESM in Mindanao are also underway with a series of public consultations
conducted during the first quarter of 2017. Ocampo reiterated that PEMC has given its full support the government’s plan to launch
WESM in Mindanao that will address the supply concern and clamor from the generation sector in setting up a mechanism that
will foster transparency and rationale pricing of electricity in the region.
The launch of the integration of Mindanao in the WESM was successfully held last 28 June 2017 in SMX Davao City. With the
launch, trial operations program kicked-off on 26 June 2017 that contains a set of preparatory activities that aim to familiarize all
Mindanao participants in the implementation of the WESM via the market systems and procedures to be deployed. Mindanao
participants are expected to be involved in the conduct of end-to-end testing of all interfaces and systems that will involve
simulations of all processes such as registration, bid submission, pricing and scheduling, and settlement.
Moving Forward: Raising Competition

As PEMC accelerates the gears for an enhanced WESM design, this will stimulate real time pricing and robust competition.
Raising the bar of competition will be the lowering of contestability threshold that will accord more end-users to choose their
suppliers of electricity.
Over the course of eleven years, PEMC’s reliable performance as the administrator of the country’s sole electricity spot market
has steered the power industry into greater efficiency and transparency radiating a brighter tomorrow.

MARKET
REPORT
MARKET PERFORMANCE
CONTINUOUS GROWTH IN DEMAND

Demand levels continued to increase in the past 12000 DAILY PEAK DEMAND
year of WESM Operations from July 2016 until
June 2017. This period witnessed a new all-time 11000
high for the system demand (aggregate of Luzon
and Visayas), which was recorded at 11,833 MW 10000
on 19 May 2017. Unlike last year’s significant
MEGAWATT
jump of 10.6%, this year’s peak demand only saw

9000
an increase of 3.5% based from last year’s peak
demand of 11,434 MW.
8000
Demand levels in Luzon and Visayas also reached

all-time highs of 10,022 MW (09 May 2017) and 7000
1,894 MW (01 June 2017).

6000
Figure 1. Luzon-Visayas (System) Peak Demand (July 2016 – June 2017)
SUPPLY LEVELS
Similar to the trend of last year, supply levels were 14000 SUPPLY LEVELS
low on July 2016 with a lot of generating units being DAILY MOVING AVERAGE
13000
on either forced or maintenance outage after being
largely available during the summer season of 12000
2016 due to its typically high demand levels. The

11000
forced outage of some generating units that started
MEGAWATT
in August 2016 further aggravated the already low 10000
supply levels from July 2016. 9000
It was only during the middle of September 2016 8000
where supply margins eased up a bit with generating 7000

units coming on-line, while demand levels started to
6000
drop due to the rainy and colder weather conditions.
5000
Mostly, this trend of ample supply margins continued

until June 2017 with the exception of the following Figure 2. Luzon-Visayas (System) Supply (July 2016 – June 2017)
periods that felt a significant drop in supply levels:
a. Between February and March 2017 due to maintenance outages

b. On April 10, 2017 where Red Alert was issued due to generation deficiency, which can be attributed to a lot of
generating units on outage amidst the higher demand requirement

CENTRAL SCHEDULING OF ENERGY AND RESERVES
Last 22 December 2015, the Market Operator, in 700
RESERVE DEFICIT (REQUIREMENT - SCHEDULE)
coordination with the System Operator and Trading REGULATION CONTINGENCY DISPATCHABLE
Participants, started the implementation of the 600
“Central Scheduling and Dispatch of Energy and

Contracted Reserves”, otherwise known as “Central 500
Scheduling.”
DEFICIT, MEGAWATT
400
One of the major goals of this process is to centrally

monitor all available capacities in the system through 300
the WESM, as well as increase the accuracy of the

200
real-time prices being published.
100
As of today, reserves are only reflected in the
Luzon Grid. The Visayas Grid is projected to start 0
its Central Scheduling implementation this year.
Figure 3. Reserve Deficits per Reserve Type in the Luzon Grid (July 2016 –June 2017)
Based on the information available in the WESM
from July 2016 to June 2017, the reserve requirement is seldom met by the contracted reserve capacities scheduled by the
System Operator, specifically for contingency and dispatchable reserves.
MARKET PRICES
The outcome of spot prices in the WESM is still 14000
GENERATION OFFERS ACTUAL DEMAND SYSTEM LAP
28000
largely driven by the interaction of supply and

demand. Price spikes still manifest from time to 12000 24000
time, especially on periods affected by outages

SYSTEM SUPPLY AND DEMAND, MW
MARKET PRICE, PESOS PER MWh

such as those highlighted on August 2016 and April 10000 20000
2017.
8000 16000
Since these high prices were only momentary

6000 12000
imposition and did not persist, there was no
observation of the secondary price cap. As of this 4000 8000
date, the secondary price cap was last triggered in
September 2014. 2000 4000
0 0
Figure 4. System Generation Offers, Actual Demand, and LWAP (July 2016 – June 2017)
The trend of low spot prices that started last year 10000 JUL 2015 - JUN 2016 JUL 2016 - JUN 2017
continued until June 2017. To further highlight, only 9000

August 2016 reflected a monthly average price
beyond P4,000/MWh. 8000
PESOS PER MEGAWATT-HOUR
7000
6000
5000
4000
3000
2000
1000
0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Figure 4. System Generation Offers, Actual Demand, and LWAP (July 2016 – June 2017)
MARKET OUTCOMES
Pricing Errors LUZON PEN VISAYAS PEN
600 NON-CONGESTION NON-CONGESTION
CONGESTION-RELATED CONGESTION-RELATED
Pricing errors continue to be issued frequently in the
500
Luzon Grid because of the radial N-1 congestion at
the Zapote substation. However, there is a noticeably
NO. OF INTERVALS
400
high number of pricing error notices issued, largely

because more congestions have been triggering 300
the use of the price substitution methodology,

200
particularly at the Cebu-Negros submarine cable
where a significant amount of generation is being 100
imported to Cebu from the islands of Negros and

Panay. 0
Figure 6. Frequency of Ex-ante Pricing Error Notices (July 2016 – June 2017)
HVDC Flows 500
HVDC FLOW
VISAYAS-TO-LUZON
% OF THE TIME
70.3%
AVERAGE FLOW, MW
210
LUZON-TO-VISAYAS 25.9% 53
NO FLOW 3.8% -
Based on the interaction of supply and demand 400
across Luzon and Visayas, the resulting HVDC flow 300

between the two (2) regions has mostly been from
HVDC FLOW, MW
Visayas transferring power to Luzon at a higher rate 200
(70.3% of the time) and at also a higher average

100
rate of 210 MW.
0
-100
-200
-300
VISAYAS TO LUZON LUZON TO VISAYAS
Figure 7. Hourly HVDC Flows (July 2016 – June 2017)
MARKET TRANSACTIONS
Generation Mix 100%
3.6% 5.1% 1.5% 1.3% 0.9% 0.5% 0.6% 2.2% 2.3% 4.0% 3.5% 2.4%
5.7% 7.7% 9.8% 9.2% 4.9% 5.8%

7.0% 9.5% 9.8% 7.5% 6.1%
10.5%
Coal and natural gas power plants continue to be 80% 12.7%
12.4%
12.5% 12.4% 12.5% 13.9% 13.1% 13.1% 13.1%
11.9% 11.4%
14.4%
the most dominant power producers in the system
GENERATION MIX, %
25.8% 27.4% 27.4%

27.6% 23.1%
as they account for almost three-fourths of the 60% 23.6% 25.8% 25.4% 25.5% 24.1%
22.7%
27.5%
monthly generation mix.

40%
Coal plants, reflected its highest share in the 20%

47.8% 48.8% 49.3% 47.5% 47.4% 45.5% 46.9% 44.4% 44.9%
49.8% 49.5% 50.4%
WESM generation mix just recently in June 2017

accounting for more than half of the generation 0%
Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17
produced across the Luzon and Visayas grids. The COAL NATURAL GAS NAT GAS ON ALTERNATE FUEL GEOTHERMAL HYDRO DIESEL/OIL WIND BIOMASS SOLAR
contribution of natural gas plants has mostly been Figure 8. Monthly System-wide Generation Mix (July 2016 – June 2017)
sporadic, while geothermal plants have mostly been
consistent. Hydro-electric power plants’ contribution
varied from 4.9% to 10.5% of the total generation
mix, while oil-based power plants were largely
dispatched during periods of tight supply conditions.
The participation of renewable energy sources 7.0%
in the WESM continue to be relatively high, most 6.0%

especially from November 2016 until February
0.92% 1.09%
2017. Wind farms continue to be the major RE 5.0%
GENERATION MIX, %
1.43%
contributor in the WESM Generation Mix. 4.0% 1.42%
1.00%
1.40% 1.65%
0.93%
3.0% 1.76%
1.78%
0.95%
1.41% 1.57% 1.44%
2.0% 1.60%
1.49% 1.50%
3.30% 0.89%
2.83% 3.01%
0.66% 0.65% 0.87%
1.0% 2.16% 1.91%
0.61% 0.70% 0.74%
1.01% 1.01% 1.18%
0.85%
0.42% 0.43% 0.33%
0.0%
WIND BIOMASS SOLAR
Figure 9. Monthly System-Wide Generation Mix Share of Emerging RE (July 2016 – June 2017)
Settlement Amounts 7000 7000
6000 15.4% 6000

16.1%
Total transactions for the 12-month period from 11.4% 16.4% 15.1%
17.5% 18.7%
17.5%
ESSP, PESOS PER MWh
METERED QUANTITY, GWh
July 2016 to June 2017 amounted to 69,873 GWh,

5000 19.4% 18.6% 11.5% 5000
19.6%
which is still higher than last year’s 66,783 GWh 4000

4,161
4,008
4000
(July 2015 to June 2016). The past year saw a large 3000
3,305 3,369
3,589 3,512 3,519 3000
amount of energy quantity being transacted in the 2000

2,868
2,483 2000
2,278
spot market. In fact, 16% of the total energy quantity
2,228
1,901
1000 1000
for the entire period from July 2016 to June 2017
was settled as spot market transactions. 0
0
BILATERAL QUANTITY SPOT QUANTITY CUSTOMER ESSP
For their spot market transactions, the WESM Figure 10. Monthly System-Wide BCQ/Spot Quantities and ESSP (July 2016 – June 2017)
customers transacted at an Effective Spot

Settlement Price of P3,074/MWh for the period of
July 2016 to June 2017.

MARKET
REPORT
MARKET ASSESSMENT
26 JUNE 2016 TO 25 JUNE 2017
MARKET SHARE1
The market remained dominated by four (4) Market Share (%) by Registered Capacity
major participant groups, namely: San Miguel
As of 25 June
Corporation (SMC), First Gen Corporation (FGC), Major Participant Group
2017
Aboitiz Power (AP), and Power Sector Assets &
Ayala Corporation AC 0.7
Liabilities Management Corporation (PSALM),
with a combined market share of 62.5 percent as Aboitiz Power Corporation AP 14.4
of 25 June 2017 in terms of registered capacity. Anda Power Corporation APC 0.5
Notwithstanding, it is observed that except for SMC, Asia Pacific Energy Corporation APEC 0.3
which posted an increase in its share of the market Alternergy Wind One Corporation AWOC 0.3
at 19.8 percent from last year’s 18.8 percent, the
First Gen Corporation FGC 16.1
three (3) major groups all posted decreases in their
respective market shares. SMC’s market share First Toledo Solar Energy Corporation FTSEC 0.3
grew this year, influenced by the entry of two (2) Gregorio Araneta Inc GAI 0.7
additional 150-MW coal-fired units under the SMC Global Business Power Corporation GBPC 4.8
Consolidated Power Corporation. Green Future Innovations, Inc. GFII 0.1
GNPower Mariveles Coal Plant Ltd. Co. GMCP 3.6
Majestics Energy Corporation MEC 0.2
Millennium Energy, Inc. MEI 3.0
Masinloc Power Partners Corporation MPPC 3.6
Other Independent Power Producers Other IPPs 1.7
Palm Concepcion Power Corporation PCPC 0.8
Phil. Solar Farm - Leyte, Inc. PHSOL 0.1
Power Sector Assets and Liabilities Management PSALM 12.1
PetroSolar Corporation PSC 0.3
PetroWind Energy Inc. PWEI 0.2
Quezon Power Partners Limited Corporation QPPL 2.6
RASLAG Corporation RC 0.1
San Carlos Solar Energy, Inc. SCSEI 0.6
Sulu Electric Power and Light (Philippines) Corp SEPLPI 0.3
San Miguel Corporation SMC 19.8
Semirara Mining and Power Corporation SMPC 5.3
Salcon Power Corporation SPC 1.9
Solar Philippines Power Project Holdings, Inc. SPPPHI 0.3
Silay Solar Power Inc. SSPI 0.1
Trans-Asia Oil and Energy Development Corp TAOEDC 3.2
Universal Robina Corporation URC 0.2
Vivant Energy Corporation VEC 1.6
Victorias Milling Company, Inc. VMC 0.2
__________________________
1 The market share index measures the percentage of capacity that a major participant group
controls in the market

HERFINDAHL-HIRSCHMAN INDEX (HHI)2
HHI calculated by major participants’ grouping indicated a moderately concentrated market over the twelve-month period. HHI
calculations based on offered capacity, actual generation and spot transaction were higher compared with HHI results based on
registered capacity and registered capacity net of outage, influenced by the varying conditions of supply throughout the year.
RESIDUAL SUPPLY INDEX (RSI)3

Supply was sufficient in meeting the demand for about 69.7 percent of the trading intervals during the covered period. This was
demonstrated by the resulting RSI of more than or equal to 100%, which is an indication of the absence of pivotal suppliers during
those intervals.
However, the resulting RSI below the 100% mark increased considerably in August, following the events of increasing unscheduled
outages of several major plants in Luzon during the month. This prompted the National Grid Corporation of the Philippines-System
Operator (NGCP-SO) to place the region under yellow alert and red alert status, which affected a total of 40 and 13 trading
intervals, respectively. RSI levels were likewise noticeably low from 8-12 April 2017, on account of the simultaneous outages of
major plants related to the series of earthquakes in the province of Batangas.
__________________________
2 The HHI is a commonly accepted measure of market concentration that takes into account the relative size and distribution of participants in
the market, calculated as the sum of squares of the participant’s market share. The following are the widely-used HHI screening numbers: (1)
when HHI is less than 1,000 the market is not concentrated; (2) within the range of 1,000 to 1,800 the market is moderately concentrated; (3)
greater than 1,800 but less than 2,500 the market is concentrated; and (4) greater than 2,500 the market is highly concentrated and signals lack
of competition in the market.
3 The RSI measures the ratio of effective supply without a generator to the total supply required to meet the demand. Each generator has an RSI,
and the lowest RSI is considered the market RSI.

PRICE-SETTING FREQUENCY INDEX (PSFI)4
Fifty-four (54) generating plants qualified as price-setters within the range of PhP5,000/MWh and below. Major coal plants Sual
CFTPP, Masinloc CFTPP, Pagbilao CFTPP, and natural gas plants San Lorenzo NGPP, Ilijan NGPP and Sta. Rita NGPP topped
the list as the most frequent price-setters in Luzon while coal plants PEDC CFTPP, PCPC CFTPP and CEDC CFTPP were the
top price-setters in Visayas.
Price-Setting Frequency by Billing Month (PhP5,000/MWh and Below)
Plant Name
LUZON
AMBUKLAO HEP 6 4 1 9 16 9 1
ANDA CFTPP 113 50 67 9 14 18 15 37
ANGAT HEP 6 24 26 85 150 95 97 24 23
APEC CFTPP 26 44 70 23 10 11 141 67 6 13 11 15
AVION NGPP 40 33 7 7 12 63 22 62 75
BACMAN GPP 6 1 2 11 27 27 1 3 1 3
BAKUN HEP 1 1 2 5
BAUANG DPP 5 5 9 6 17 1 7 50 21 52 48
BINGA HEP 7 1 8 18 17 2 2
BOTOCAN HEP 6 1 11 14 22
CALACA CFTPP 1 1 3 3 15
CALIRAYA HEP 2 8 8 3
CASECNAN HEP 6 1 12 13 20
CIP DPP 22 2 6 4 8 76 69
HEDCOR HEP 6 1 11 14 21
ILIJAN NGPP 87 27 96 150 89 45 47 59 245 128 190 159
KALAYAAN PSPP 2 4 16 23 15 35 55 4 3 13 1 10
MAGAT HEP 5 1 14 70 53 26 35 10 57 27
MAKBAN GPP 6 1 1 11 27 29 2
MARIVELES CFTPP 5 1 2 24 31 47 61
MASINLOC CFTPP 70 133 114 170 254 157 289 177 23 138 98 172
MASIWAY HEP 6 16 25
NAVOTAS DPP 73 51 49 71 56 2 13 73 94 39 62 55
PAGBILAO CFTPP 97 114 181 159 188 232 292 137 34 70 63 143
PANTABANGAN HEP 6 9 7 1
PETRON SFFPP 1 2 2 8 8
QPPL CFTPP 49 59 128 97 120 180 230 2 55 30 59
SAN GABRIEL NGPP 24 6 4 5 15 15 43
SAN LORENZO NGPP 112 75 229 137 169 148 140 186 265 111 192 4
SAN ROQUE HEP 3 8 1
SLPGC CFTPP 2
SLTEC CFTPP 58 85 160 121 147 205 135 39 4 50 30 68
STA RITA NGPP 82 44 141 149 102 112 72 130 160 104 162 25
SUAL CFTPP 190 158 221 139 121 162 282 231 224 188 121 203
SUBIC DPP 17 12 6 15 9 1 27 27 26
TAPGC DPP 8 4 6 9 2 25 14 8 1
TIWI GPP 6 1 11 27 6
VISAYAS
CALUMANGAN DPP 1 1 1 1
CEDC CFTPP 75 47 81 102 102 132 231 62 140 166 81 140
CPPC DPP 26 24 14 17 15 2 2 57 24 3 8
EAUC DPP 33 37 40 18 19 1 2 26 6 2 5 5
KSPC CFTPP 81 28 20 56 30 121 198 116 83 40 20 24
LEYTE A GPP 28 19 33 66 20 55 101 48 75 40 2 3
NASULO GPP 20 19 10 54 13 82 233 136 115 51 3
PALINPINON GPP I 11 13 8 57 15 67 225 120 123 42 3 10
PALINPINON GPP II 20 19 6 80 235 131 109 51 2 8
PANAY DPP III 5 1 1 8 2 1
PB 101 1 1
PB 102 22 24 25 20 9 3 5 3 1
PCPC CFTPP 65 261 248 96 119 97 131 93 157 85 125
PEDC CFTPP 127 98 230 132 210 132 116 151 82 203 73 184
TONGONAN GPP 6 12 8 53 11 58 196 118 99 19 2
TPC (CARMEN) DPP 8 1 2
TPC (SANGI) CFTPP 1 4 1 8 1 1
__________________________
4 The PSFI measures 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.

The most frequent price-setters for prices above PhP5,000/MWh
to PhP10,000/MWh were mostly hydro and oil-based plants. On
top of the list were Visayas oil-based plants EAUC DPP, TPC
(Carmen) DPP, and CPPC DPP, followed by Luzon oil-based
plant Bauang DPP and Angat HEP.
Price-Setting Frequency by Billing Month (Above PhP5,000/MWh to PhP10,000/MWh)

Plant Name
LUZON
AMBUKLAO HEP 1 1 1 1 1 1
ANGAT HEP 6 5 20 1 25 32
AVION NGPP 7 13 8
BATANGAS DPP 2 2 2 4 1 5 3 2 1
BAUANG DPP 2 6 13 9 2 1 8 19 33 9 11
BINGA HEP 1 5 2
CASECNAN HEP 1 2 1 2 1 1
CIP DPP 1 3 3 6 15 16 13
MAGAT HEP 2 3 3 1 1 1 22 15 5 12
PETRON SFFPP 1
SAN GABRIEL NGPP 6 6
SAN ROQUE HEP 4 1 2 15 1 3
SUBIC DPP 1 2 1 10 1 5 3
TAPGC DPP 4 2 1 5 10 13 4
VISAYAS
BOHOL DPP 2 3 2 2 1
CALUMANGAN DPP 4 1 1 1 1 1 1 5 5
CEBU DPP I 3 2 1
CEBU DPP II 3 2 1
CPPC DPP 3 10 3 1 21 1 8 7 20 36 8
EAUC DPP 15 17 7 20 8 18 6 9 36 81 34 14
KSPC CFTPP 2
NABAS DPP 1 2 6 1 1
PANAY DPP I 1 1 2
PANAY DPP III 3 5 1 2 9 15 2
PB 101 6 5 10 12 3 3 7 10 19 14 4
PB 102 2 4 1 7 10 20 28 8
TPC (CARMEN) DPP 10 6 18 12 10 4 5 12 26 28 14 15

Luzon oil-based and hydro plants dominated the list of most frequent price
setters above the PhP10,000/MWh range, with Bauang DPP emerging as the
top price-setter. Limay CCGT, Anda CFTPP, Kalayaan PSPP, Angat HEP and
TAPGC came next, followed by Visayas oil-based plants CPPC DPP and Nabas
DPP. It is observed that the April billing month posted the highest frequency by
which plants were able to set the price at this level.
Price-Setting Frequency by Billing Month (Above PhP10,000/MWh)

Plant Name
LUZON
ANDA CFTPP 2 20 22
ANGAT HEP 1 3 8 12
BACMAN GPP 1 1
BATANGAS DPP 3 3
BAUANG DPP 4 4 1 1 9 8 17 2 1 47
CIP DPP 2 2 6 10
KALAYAAN PSPP 4 1 3 5 4 1 18
LIMAY CCGT 1 3 4 1 5 11 17 2 44
SAN ROQUE HEP 1 1 3 5
SUAL CFTPP 1 1
SUBIC DPP 1 2 2 1 6
TAPGC DPP 4 3 2 3 12
VISAYAS
CEBU DPP I 2 2
CEBU DPP II 2 2
CPPC DPP 2 8 1 11
NABAS DPP 2 2 2 1 7
PALINPINON GPP II 1 1
TPC (CARMEN) DPP 1 1

PIVOTAL SUPPLIER FREQUENCY INDEX (PSI)5
Luzon plants dominated the list of pivotal suppliers during the covered period. Natural gas plant Ilijan NGPP topped the list,
followed by major coal plant Sual CFTPP, natural gas plant Sta. Rita, major coal plants Pagbilao CFTPP, Masinloc CFTPP,
Mariveles CFTPP, natural gas plant San Lorenzo NGPP and hydro plant Kalayaan PSPP. Visayas geothermal plant Leyte A GPP
came next, showing the most number of frequency of being pivotal among the plants in Visayas, followed by coal plants PEDC
CFTPP, CEDC CFTPP, and KSPC CFTPP.
Pivotal Supplier Frequency by Billing Month
Plant Name
LUZON
AMBUKLAO HEP 10 3 1 4 3 6 2
ANDA CFTPP 3 3 1
ANGAT HEP 7 3 1 4 4 7 17
APEC CFTPP 2 2
AVION NGPP 4 3 2
BACMAN GPP 3 16 3 4 4 9 2 4
BAKUN HEP 8 3
BATANGAS DPP 1
BAUANG DPP 3 39 3 1 4 7 4 22 4 12
BINGA HEP 3 25 3 1 4 4 1 9 4
CALACA CFTPP 39 40 1 6 4 12 12 14 42 43
CALIRAYA HEP 2 1
CASECNAN HEP 5 1 4 2 2 1
CIP DPP 2 2
HEDCOR HEP 2
ILIJAN NGPP 299 208 165 175 130 57 47 253 120 277 299
KALAYAAN PSPP 45 52 6 3 3 5 1 31 28 38 74 45
LIMAY CCGT 10 61 4 1 4 5 7 35 8 22
MAGAT HEP 4 5 4 2 1 5 14 18 20 10 37
MAIBARARA GPP 2 2
MAKBAN GPP 5 43 3 1 5 7 2 20 4 12
MARIVELES CFTPP 49 100 30 11 2 9 1 4 10 59 57 81
MASINLOC CFTPP 86 141 22 11 11 5 41 21 75 65 89
NAVOTAS DPP 4 33 3 1 4 2 15 4 9
PAGBILAO CFTPP 22 131 66 34 25 15 1 70 103 9 22 129
PANTABANGAN HEP 3 3 3
QPPL CFTPP 39 84 16 4 3 6 10 57 31 47
SAN GABRIEL NGPP 1 1 9 18 43
SAN LORENZO NGPP 57 110 19 1 4 7 1 32 45 1 45 51
SAN ROQUE HEP 1 12 13 2 2 6 20 23 54 15 17
SLPGC CFTPP 3 1 3 1 11 26 8 23
SLTEC CFTPP 2 16 4 1 5 3 9 25 5 19
STA RITA NGPP 209 184 65 82 25 20 3 154 110 124 187 165
SUAL CFTPP 330 373 54 17 12 9 18 157 283 168 280 230
SUBIC DPP 1 19 3 1 4 3 6 2
TAPGC DPP 3 2 2 1 1
TIWI GPP 2 24 3 1 4 3 7 2
VISAYAS
CALUMANGAN DPP 1 1 2
CEDC CFTPP 5 36 6 1 3 5 4 2 25 6 20 113
CPPC DPP 6 3 1 3 1 1 1 16
EAUC DPP 3 2 1 2 1 1 10
KSPC CFTPP 5 41 4 1 3 4 7 6 23 4 5 103
LEYTE A GPP 21 65 15 3 6 6 25 30 59 33 48 311
NABAS DPP 1 1
NASULO GPP 3 2 1 3 1 1 11
PALINPINON GPP I 1 19 3 1 2 4 3 7 2 42
PALINPINON GPP II 4 2 1 3 1 1 1 13
PANAY DPP III 2 1 2 5
PB 101 1 1
PB 102 2 2 1 5
PCPC CFTPP 3 1 3 9 2 4 22
PEDC CFTPP 3 30 3 1 2 4 4 11 28 7 28 121
TONGONAN GPP 1 15 3 3 3 6 1 32
TPC (CARMEN) DPP 2 2 1 1 6
TPC (SANGI) CFTPP 12 3 2 4 1 7 2 31

PSI VS. PSFI
Sixteen (16) plants that were pivotal suppliers were able to set
the market price at the same time during the period. Among
these plants, Luzon natural gas plants Ilijan NGPP and Sta.
Rita NGPP showed the most frequency of being pivotal and
price-setter at the same time, followed by Luzon coal plant
Sual CFTPP, oil-based plant Bauang DPP, hydro plants Magat
HEP and Kalayaan PSPP. Visayas coal plant PEDC CFTPP
likewise figured in the list followed by Luzon oil-based plant
Limay CCGT.
PSI vs. PSFI, Frequency by Billing Month

Plant Name
LUZON
ANDA CFTPP 2 2
ANGAT HEP 1 4
BAUANG DPP 5 1 1 3 5 1 4
ILIJAN NGPP 40 9 15 17 17 2 3 24 41
KALAYAAN PSPP 1 4 3 4 3 1
LIMAY CCGT 3 1 1 2 1 2 2
MAGAT HEP 1 1 3 3 1 8
PAGBILAO CFTPP 1
SAN GABRIEL NGPP 2 5
SAN LORENZO NGPP 1 1
SAN ROQUE HEP 1 1 3 2
STA RITA NGPP 24 3 2 1 63 7 33
SUAL CFTPP 28 17 3 1 7 14 2 16
VISAYAS
KSPC CFTPP 1
PCPC CFTPP 1
PEDC CFTPP 3 3 5 4
__________________________
5 The PSI 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 because they are pivotal and their offered quantities will still be dispatched.

Enhanced WESM Design
via the New Market
Management System
The wholesale electricity spot market (WESM) has marked its There will also be automatic market price re-runs when prices
tenth year in operation with an enhanced market design and encounter pricing errors due to energy balance constraints, and
operations aimed to improve the efficiency and the transparency hour-ahead projections, in addition to the week-ahead and day-
of the country’s trading floor for electricity. ahead projections.
The Department of Energy (DOE) has issued Department These enhancements aim to address market operational audit
Circular (DC) No. 2016-10-0014 on October 14, 2016, adopting findings and introduce new features and functionalities such
the enhancements to the current WESM design and operations. as simplified compliance reporting process and demand side
bidding.
The enhancements were based on the WESM Design study
commissioned by DOE in April 2013 and results of the yearly The amended WESM Rules will be used for the development
independent audits of the system and procedures of the market and deployment of the new IT infrastructure, the New Market
operations. Management System (NMMS). The design phase was started
in 2015 and the new system is targeted to go live on June 26,
Under the new rules, the DOE shortened dispatch interval from 2017.
one hour to five minutes. This is expected to lessen intra-hour
deviations and imbalances, impose single pricing mechanism Since 26 March 2017, PEMC has been conducting Trial
and automatic pricing re-runs that will yield to availability of Operations Program (TOP) to familiarize stakeholders with the
prices in real-time. new infrastructure and processes such as in trading, scheduling,
pricing, and settlement.
It also reduced gate closure from one (1) hour to thirty (30)
seconds or less in submitting or revising generation offers. This
provides trading participants flexibility in managing risks for
unplanned events as well as co-optimized energy and reserves
that will ensure optimal scheduling of energy and ancillary
services.

Malampaya
maintenance shutdown
last Jan-Feb 2017
Early on, the Department of Energy (DOE) has warned of an Because of this, the DOE has convened a series of consultations
impending electricity rate increase when the Malampaya deep and coordination with concerned agencies, power generating
water gas-to-power project goes on scheduled shutdown from companies, large interruptible load program participants and
January 28 to February 16, 2017. representatives from the Senate and House committees on
energy.
According to Shell Philippines Exploration Corp. (SPEx) – the
operator of the Malampaya project, the maintenance activities This is to ensure adequate power supply during the Malampaya
will cover the repair of sub-sea facilities, upgrades on the shutdown and to minimize the impact of the looming increase
platform and maintenance on the onshore plant. in electricity prices.
Malampaya supplies the gas requirements of the Lopez Group’s With the expected tight supply situation, the DOE said the
1,000-megawatt (MW) Sta. Rita, 500-MW San Lorenzo, 414- 650-megawatt Malaya thermal plant in Rizal—which is
MW San Gabriel and 97-MW Avion plants in Batangas and managed by the state-run Power Sector Assets and Liabilities
Kepco Philippines’ 1,200-MW Ilijan plant also in Batangas. Management Corp.—will run to address power supply deficiency
in the Luzon grid.
The gas project’s 20-day scheduled maintenance meant Luzon’s
three major power plants that source fuel from Malampaya will The agency also said that the 97-MW Avion gas-fired plant will
either have to go on shutdown or run on a derated capacity run on diesel to help augment supply.
using more expensive alternate fuel like diesel or condensate.
Other mitigating measures laid down is the interruptible load
Apart from these gas plants, power supply is expected to be thin program (ILP) and demand side management from consumers
with a number of power plants also under scheduled shutdown, to prevent power interruptions.
with around 1,850 MW lost to the Luzon grid.

Yellow & red alerts
last July-August 2016
Just as the new administration kicked in, several instances of yellow and red alerts, and at
least two brownout incidents plagued Luzon.
The supply problem stemmed from sudden outage of some power plants, while a number
or power facilities were under scheduled maintenance.
There were several instances of yellow alert in the June, July and August supply months.
While the alert status did not translate brownouts, contingency reserves were below the
minimum level set by the regulator, putting the grid in danger in the event that a big power
plant suddenly bogs down.
The worst case happened on August 5, 2016 when the grid status was raised to red alert
due to severe power deficiency. Because of this, parts of the Luzon grid suffered from up
to three-hour power outages.
The Wholesale Electricity Spot Market (WESM) charges remained within the P3-5 per
kilowatt-hour (kWh) range, with effective settlement spot prices (ESSPs) settling at P5.787
per kWh in June, P3.372 per kWh in July, P4.161 per kWh in August.
These prices did not breach the secondary price cap of P6.245 per kWh put in place by the
ERC. With this in place, the power regulator said we may not see the spot market prices
reaching extraordinary levels.
Price swelling was contained during those critical times because of decreased demand,
lower temperature and power supply imported from the Visayas grid.

MARKET
REPORT
WESM GOVERNANCE COMMITTEES
SUPPORTING INNOVATION FOR A BRIGHTER TOMORROW
Many look upon change as fearful and unsettling. While it is policies and directives already set out during the previous year
true that change, in general, instills fear, change that comes pursuant to the directions set by the Department of Energy
in the form of transformational change, on the other hand, through DOE Circulars 2015-10-00152 and 2016 -10-00143.
sparks excitement and optimism. The WESM Governance
Committees1 recognize that this kind of change brings on major After laying down the policy framework for the enhancement
breakthroughs in paradigms, beliefs and behaviour that will of the WESM through key changes in its design and operation
transform the WESM into a better market and thus support such in 2015, the DOE, on 14 October 2016, thereafter adopted
positive changes for a more dynamic market towards a brighter major amendments to the WESM Rules that shall guide and
tomorrow. govern the market participants in the new market environment
contemplated by DOE’s directives as set out through DOE
Thus, for the period in review, various initiatives were pursued Circular 2015-10-0015.
by the WESM Governance Committees to support government
THE RULES CHANGE COMMITTEE

Enhancing Market Architecture, and Refining Market Processes and Operations
Rules Change Committee. (2017)
__________________________
1 The WESM Rules provide for the creation of committees with specific responsibilities to support the Philippine Electricity Market Board of
Directors (PEM Board) in the exercise of its governance functions. Governance committees oversee the varied activities of the electricity market
and play a significant role in the attainment of good governance in the WESM. These committees, composed of appointed qualified personnel, are
as follows: the Rules Change Committee (RCC), PEM Audit Committee (PAC), Technical Committee (TC), the Dispute Resolution Administrator
(DRA) and the Market Surveillance Committee (MSC).
2 DOE Department Circular 2015-10-0015, was promulgated by the DOE on 23 October 2015 directing the adoption of enhancements to the
WESM Design and Operations, as follows: a) Removal of Pmin constraint in the MDOM; b) Shorter trading and dispatch interval of five (5) minutes;
c) Ex-ante pricing for every five (5) minute trading and dispatch interval; d) One (1) hour settlement interval for settlement purposes based on
weighted average of the five (5) minute ex-ante prices; e) Automated pricing corrections; f) Mandatory integration of the Distribution Utilities’ sub-
transmission network which materially affect dispatch schedules and prices in the WESM, into the Market Network Model; g) Changing the values
and priorities of some of the Constraint Violations Coefficients (CVCs), including the corresponding values thereof taking into consideration the
imminent implementation of the WESM Reserve Market; and h) Imposition of WESM offer cap and floor for energy and reserve, as determined
through joint study by the DOE, Energy Regulatory Commission (ERC) and PEMC.
3 DOE Department Circular 2016-10-0004, was promulgated by the DOE on 14 October 2016 adopting amendments to the WESM Rules for the
enhancement of the WESM Design and Operations pursuant to DOE Department Circular 2015-10-0015.

The Rules Change Committee (RCC) is tasked to provide assistance to the PEM Board and the Department of Energy (DOE) in
the formulation and amendment of the WESM Rules, the Retails Rules and Market Manuals. The formulation and amendment of
the WESM Rules, Retail Rules and Manuals aim to enhance market design and market architecture to respond to the needs of an
evolving market as well as refine market processes and operations appropriate for the current environment.
In preparation for the migration of the current market systems to the enhanced WESM Design and Operations, the Rules Change
Committee (RCC), given its mandate to provide assistance to the Philippine Electricity Market Board of Directors (PEM Board)
and the Department of Energy (DOE) in the formulation and amendment of the WESM Rules, Retail Rules and Market Manuals,
convened its meetings more frequently during the year to ensure that all proposed amendments to the WESM Rules and Market
Manuals were thoroughly deliberated and evaluated with dispatch. It was a very productive period for the RCC as it churned
out the numerous proposals4 not only to amend the WESM Rules, Retail Rules and Market Manuals to align these with the
requirements of the enhanced WESM Design and Operations but to also enhance operational efficiency and transparency in the
current market environment.
Thus, pursuant to the directive of the DOE to submit proposed changes to the WESM Rules, Retail Rules and Market Manuals
necessary for the implementation of the enhancements to the WESM Design and Operations, the RCC, after due consultation and
deliberation, approved the proposed amendments to the following:
a. Price Determination Methodology (PDM) and distinguish the priority among transmission equipment;
b) revise the order of CVCs; and c) reflect changes to ensure
This proposal aims to consolidate pricing and settlement consistency with the revisions to the order of CVCs.
provisions and equations into one (1) manual, effectively
rendering obsolete the following manuals: d. Load Forecasting Methodology
1. Procedure for Determining Ex-Post Nodal Energy The changes to the WESM Manual on Load Forecasting
Prices Methodology aim to align the said manual with the requirements
2. Methodology for Determining Pricing Errors and of the enhanced WESM Design and Operations, which, among
Price Substitution Due to Congestion for Energy others, include the following:
Transactions in the WESM
3. Administered Price Determination Methodology 1. deletion of defined terms that are no longer
4. Segregation of Line Rental Trading Amounts applicable using the new Market Management
5. Management Net Settlement Surplus System (MMS);
6. Management of Must-run and Must-stop Units 2. provision of amendments to Section 4 on Demand
Forecast for Market Projections, renamed to Short-
b. Constraint Violation Coefficient (CVC) Manual term Load Forecast (STLF), in relation to forecasting
for week-ahead projection (WAP) and day-ahead
The proposal aims to facilitate more efficient pricing, scheduling projection (DAP) using the new MMS;
and dispatch of energy and reserves, and also to facilitate the 3. Inclusion of the provision of load scenarios for DAP
filing of the proposed pricing and settlement methodologies to using varying sensitivities (i.e., ±5% and ±3%);
the ERC. The proposed amendments to the CVC Manual cover 4. new MMS load forecasting parameters for
the proposed changes to the CVC hierarchy, implementation of consistency with the new MMS functionalities; and
automatic pricing re-runs and the conduct of market pricing re- 5. Details in the Appendix on weather adaptive,
runs upon the issuance of pricing error notices. This proposal similar day, and pattern matching algorithms for
intends to consolidate the provisions related to CVC and market STLF to provide more information on the new MMS
pricing re-runs into the revised CVC Manual, thereafter to be functionalities.
referred to as CVC and Pricing Re-run (CVC-PR) Manual.
e. Billing and Settlement Manual
The proposed amendments to the PDM and CVC-PR Manuals,
as well as the WESM Rules affected by the proposed changes Amendments were likewise made to the Billing and Settlement
to the said manuals, were subsequently approved by the DOE Manual, which included among others, the following:
on 20 April 2017 via DOE DC 2017-03-0001.
1. deletion of references to ex-post trading amounts
c. Further amendments to the Price Determination with the implementation of ex-ante only pricing;
Methodology and Constraint Violation Coefficient and 2. updating in the references on settlement
Pricing Re-run Manual calculations for consistency with the approved Price
Determination Methodology Manual;
Further amendments, initially as urgent amendments and 3. deletion of line rental trading amounts as a
thereafter re-submitted as regular amendments, were component in the calculation of aggregate trading
subsequently approved by the RCC both for the PDM Manual amounts since line rental is already embedded in
and the CVC-PR Manual. The proposed amendments to the the calculation of energy trading amounts; and
PDM Manual aim to revise the proposed calculation of price 4. Addition of the provisions on the calculation of line
adjustment for customers in the non-administered region to rental trading amounts for energy transactions to be
ensure that there is no cross-subsidy when the administered provided by the Market Operator for informational
region under market intervention or suspension is exporting purposes.
power to the non-administered region. The proposed
amendments to the CVC-PR Manual, on the other hand, intend
to: a) add constraints to provide the details of the categories
__________________________
4 For the details of the proposals approved by the RCC during the period, please refer to the RCC page on RCC Resolutions or the Semestral
Reports covering the 2nd semester 2016 and 1st semester 2017 in the WESM Market Information Website.

f. Retail Rules and Retail Metering Standards and c. Guidelines Governing the Constitution of PEM
Procedures Committees;
d. Criteria and Guidelines for the Issuance of Pricing
The RCC approved the proposed amendments to the Retails Error Notices and Conduct of Market Re-run and
Rules and the Retail Manual on Metering Standards and the Methodology for Determining Pricing Errors and
Procedures, with changes, as follows: Price Substitution due to Congestion for Energy
Transactions in the WESM;
For the Retail Rules: e. WESM Rules and WESM Manual on Dispute
1. replacement of the term “trading interval” with Resolution and Registration, Suspension and De-
“settlement interval”; registration Criteria and Procedures regarding
2. deletion of particular provisions related to the WESM Disputes ;
calculation of ex-ante and ex-post trading amounts f. WESM Rules and Dispute Resolution Market
and allocation of ex-ante and ex-post settlement Manual regarding Dispute Resolution Process;
quantities (re-defined as “gross energy settlement g. Registration, Suspension and De-Registration
quantities”); and Criteria and Procedures to streamline the
3. Revision in the determination of metered quantities procedures for assessment of applications
(MQ) to reflect MQ for every dispatch interval. for WESM Membership and post-registration
transactions;
For the Retail Manual on Metering Standards and h. Retail Manual on Metering Standards and
Procedures: Procedures;
1. revision in the capability of the mass memory of i. WESM Rules regarding Bilateral Contract Quantities
meters from recording 15-minute demand interval (BCQ) Declaration and Line Rental Calculation; and
to 5-minute demand interval; j. WESM Manuals on Registration, Suspension and
2. addition of a provision requiring load profiles to De-registration Criteria and Procedures and Billing
be submitted by the Trading Participant upon and Settlement regarding Bilateral Contract Quantity
registration of metering installation to include (BCQ) Declaration and Line Rental Calculation
5-minute data;
3. change in the resolution of meter data submitted During the period covered in this report, the RCC also
by Retail Metering Services Providers (MSP) to the reviewed the following amendments to the WESM Rules,
Central Registration Body (CRB) from fifteen (15) Retail and Manuals and other relevant matters. Lined up for
minutes to five (5) minutes; and final deliberation and discussion by the RCC are the proposed
4. Revision of the resolution of meter data used by the amendments to the following:
CRB for data validation, estimation and editing from
fifteen (15) minutes to five (5) minutes. a. Dispatch Protocol Manual (DPM)
b. WESM Manual on Metering Standards and
All the above proposals, with the exception of items a and b, Procedures
which have earlier on been promulgated by the DOE, have c. Market Operator Information Disclosure and
been approved and submitted by the RCC to the PEM Board Confidentiality (IDC) Manual
for its deliberation and approval for endorsement to the DOE. d. WESM Rules and WESM Market Surveillance,
Compliance and Enforcement Market Manual
Considering that the current WESM Design is still being e. WESM Rules regarding Enforcement and
implemented and in acknowledgment that the concerns and Compliance and Proposed New Market Manual on
issues regarding the same need to be similarly addressed, Enforcement and Compliance
various proposals were also approved by the RCC to enhance f. WESM Rules and Manual on Metering Standards
operational efficiency and transparency in the current market and Procedures
environment. The following proposals5 amending the WESM
Rules and various Manuals were similarly approved by the
RCC:
a. Management of Net Settlement Surplus;

b. Dispatch Protocol Manual;
__________________________
5 DOE has issued the corresponding circulars approving changes to the following: Management of Net Settlement Surplus, Dispatch Protocol
Manual, Guidelines Governing the Constitution of PEM Committees and WESM Rules and WESM Manual on Dispute Resolution and Registration,
Suspension and De-registration Criteria and Procedures regarding WESM Disputes. The DOE also approved the proposed timeline for the issuance
of pricing error notices effective immediately but included the said provision in the CVC and Pricing Rerun Manual. The PEM Board subsequently
approved the proposed changes to the WESM Rules and Dispute Resolution Market Manual regarding the Dispute Resolution Process, except the
matter of the proposed revision of arbitrators’ fees and arbitration costs, which was remanded to the RCC for further discussions. The proposed
changes to the WESM Rules regarding Bilateral Contract Quantities (BCQ) Declaration and Line Rental Calculation have also been approved
by the PEM Board for endorsement to the DOE. The proposals for the amendment of the Registration Manual and Retail Metering Manual have
recently been submitted by the RCC to the PEM Board, while the WESM Manuals on Registration, Suspension and De-registration Criteria and
Procedures and Billing and Settlement regarding Bilateral Contract Quantity (BCQ) Declaration and Line Rental Calculation was deferred by the
Board Review Committee in consideration of the implementation of the Central Registration and Settlement System (CRSS) and the NMMS.

THE TECHNICAL COMMITTEE
Reviewing and Monitoring Technical Matters in the WESM
2. Study on the Participation of
Embedded Generation in the Market.
The Technical Committee initiated its study on

the participation of embedded generators in the
WESM, as requested by the DOE. As part of its
consultation process, the Technical Committee
discussed and consulted with PEMC regarding
the matter. The Technical Committee, in its letter
submitted to the DOE on 17 April 2017, discussed
the issues that it had identified regarding the
participation of embedded generators in the
WESM and its comments to the discussion paper
submitted by the PEMC on the same issue.
3. Study on the Operation of the Reserve Market and the

Integration of Variable Renewable Energy Resources.
The Technical Committee continued with its

study on the operation of the Reserve Market
and the integration of VRE resources in 2016.
The Technical Committee conducted several
Technical Committee. (2017)
meetings with resource persons to discuss
and clarify matters on the subject matter.
The Technical Committee is mandated by the WESM Rules
to: a) monitor technical matters relating to the operation of the Currently, the TC is providing further inputs to the
spot market; b) assist the PEM Board by providing expertise draft study paper on the Operation of the Reserve
in relation to information, technology and any other matters of Market and the Integration of Variable Renewable
a technical nature relating to the spot market; and c) propose Energy Resources. The study will be submitted to
amendments to the WESM Rules in relation to technical matters the PEM Board upon its completion.
to improve the efficiency and the effectiveness of the operation
of the spot market. The PEM Audit Market Manual, likewise, b. Review of Proposed Amendments to the WESM Rules
mandates the Technical Committee to assist the PEM Audit and Manuals
Committee in the conduct of market audits and the review of
metering installations and arrangements in the WESM and the The Technical Committee submitted comments to the following
Retail Market. proposals: a) Proposed Amendments to the WESM Manuals
on Price Determination Methodology, Constraint Violation
Pursuant to its mandate, the Technical Committee accomplished Coefficient and Pricing Re-Runs; b) Proposed Amendments
the following: to the WESM Manual on Metering Standards and Procedures;
c) Proposed Amendments to the WESM and Retail Rules and
a. Conduct of Technical Studies or Reviews Various Manuals for the Implementation of WESM Design.
1. Study on the Framework of Participation of Aside from the above, the Technical Committee supported the
Battery Energy Storage Systems in the Market PEM Audit Committee in the Conduct of the Joint 6th Market
Operations Audit and 3rd Review of Metering Installations and
The Technical Committee completed its study on Arrangements (2016 Market Audit) . Pursuant to its mandate
the framework of the participation of battery energy under the WESM Rules, the Technical Committee continued to
storage (BES) systems in the WESM. The study provide assistance to the PAC in the conduct of the 2016 Market
was submitted to the PEM Board, for its information Audit. The Technical Committee likewise joined the PAC during
and endorsement to the DOE and ERC, on 20 its regular meetings, conduct of in-site metering inspections and
January 2017 and was subsequently published the harmonization TWG meetings held during the period.
in the market information website on 23 January
2017. The result of the study was then presented to To broaden the basic knowledge of the non-engineer
the ERC and DOE participants on 23 March 2017 independent members of the WESM Governance Committees,
and to the ERC Commissioners on 17 April 2017. as well as PEMC employees on matters relating to electricity,
the Technical Committee conducted a seminar on Power
Presently, the TC is drafting its proposed System 101 (Introduction to Power Systems for Non-Engineers)
amendments to the WESM Rules and relevant on 26 September 2016,. Said seminar aimed to enhance the
Market Manuals in view of the imminent participation knowledge of the participants on technical matters, particularly
of BES systems. on the power system, deemed useful in the performance of their
respective tasks.

THE PEM AUDIT COMMITTEE
Facilitating the Conduct of Audits for Enhancements to the WESM
PEM Audit Committee. (2017)
The PEM Audit Committee administers and facilitates the a. 6th Independent Audit of Systems, Procedures and
efficient conduct of market audits in the WESM. As provided for Performance of the Market Operator.
under the WESM Rules and the PEM Audit Manual, the PEM
Audit Committee is tasked with the conduct of annual audits of Similar to the previous audits, this activity is being undertaken to
the Market Operator and its settlement system and any other review the following areas of market operations: market software
procedures, persons, systems or other matters relevant to and systems, information security and technology, rules and
the spot market as well as undertake the review of metering manuals, process and compliance and bid-to-procedure. The
audits and installations. The audits which the PEM Audit audit is anchored on WESM Rules Clause 1.5 which mandates
Committee administers and supervises are seen as effective the conduct of annual audits of the Market Operator and its
tools to introduce positive changes into the market to bring settlement system, and other procedures, persons, systems,
about necessary improvements and enhancements to market among others.
systems, procedures and processes.
b. 3rd Review of Metering Installations and Arrangements
During the reporting period, the Committee spearheaded the
procurement process for the engagement of external auditors There were 245 metering sites inspected by the external
for the 2016 Market Audit and its subsequent implementation. auditors across the country as part of the review tasks. Each
The audit is comprised of the 6th Independent Audit of the of the 12 MSPs were likewise visited for the review of their IT
Systems, Procedures and Performance of the Market Operator systems and document processes and procedures relative to
(6th MO Audit) and the 3rd Review of Metering Installations metering functions. Also included in the task was the review of
and Arrangements (3rd RMIA). The conduct of the joint audit rules and manuals on metering and associated rules.
was initiated to attain administrative efficiency and for a holistic
review of the electricity market. The conduct of the 2016 Market Audit with the assistance of the
Audit Technical Working Group created by the DOE, will draw
Further to the on-going operational and metering audit, the to a close this July 2017.
PEM Audit Committee likewise handled the selection process
of external auditors for the independent audit of the new Market c. Independent Audit of the NMMS and CRSS
Management System (NMMS) and the Central Registration and
Settlement System (CRSS). Software testing and document review of the NMMS and
CRSS is presently in full blast. This activity is being conducted
The PEM Audit Committee is currently undertaking the conduct in compliance with Section 10.2.1 of PEM Audit Manual,
of the following audits: which requires an independent software testing of the market
operator’s software for generation scheduling, dispatch, price
calculation or settlement.

THE DISPUTE RESOLUTION ADMINISTRATOR
Facilitating the Efficient Resolution of WESM Disputes
The updated list was the result of the DRA’s request, published
in March 2017 in the website, for all WESM Member to submit
their respective designated DMP Focal Person and Alternate,
both of whom will serve as the first points of contact for the
notification of WESM-related disputes.
The designated DMP Focal Persons and alternates have the

adequate understanding of the WESM Dispute Resolution
Process, and also have a high level of authority for the resolution
of disputes or have quick and easy access to people with the
requisite level of authority.
c. Development of Guidelines for Administrative Support during

WESM Mediation and Arbitration. As provided in the Dispute
Resolution Market Manual, the administrative and logistical
tasks required to facilitate WESM Mediation and Arbitration
shall be outsourced to a WESM-accredited Alternative Dispute
Resolution Support Service Centers (ASSC). Differences
between the dispute resolution processes of the WESM and the
usual mediation and arbitration processes facilitated by regular
ADR institutions drove the need to develop sets of guidelines
that would serve as reference for the ASSC to efficiently
implement the rules and procedures of WESM Mediation and
Arbitration.
The DRA initiated the still on-going development of the Guidelines

for ADR Support Service Centers for WESM Mediation and
Arbitration in order to provide the appointed ASSC with clear,
practical and methodical instructions for providing support to
Dispute Resolution Administrator the mediator and the arbitral tribunal during WESM Mediation
and Arbitration, respectively. Said guideline was patterned after
The WESM alternative dispute resolution is a process which
similar guides or practice notes from international ASSCs in
follows the stages of negotiation, mediation and arbitration. The
Singapore and Hong Kong and the International Chamber of
Dispute Resolution Administrator (DRA) is tasked to facilitate
Commerce.
the resolution of disputes between or among the parties in
accordance with the WESM dispute resolution process. In this
The DRA is similarly developing the Guidelines on the
regard, the DRA is continuously reviewing the WESM Dispute
Appointment, Duties and Remuneration of Administrative
Resolution process and its internal procedures to ensure that
Secretaries to the Arbitral Tribunal. Arbitral Tribunals may
the processes for dispute resolution will be ready in case a
choose to engage the services of Administrative Secretaries
WESM Dispute is filed.
who, unlike ASSCs, perform such administrative and/or non-
substantive tasks as may be directed by the Tribunal related to
In this regard, the DRA accomplished the following during the
the resolution of the case. So as to provide guidance to both the
covered period:
Arbitral Tribunal and Administrative Secretaries, and likewise
for the information of parties, the DRA initiated the development
a. Proposed Amendments to the WESM Rules and WESM
of said guidelines to set out the policy and practice regarding
Manuals on Dispute Resolution and Registration, Suspension
the engagement of Administrative Secretaries.
and De-registration Criteria and Procedures. The DRA
introduced amendments to the WESM Rules and WESM
d. Drafting of Proposed Amendments to the Dispute Resolution
Manuals on Dispute Resolution and Registration, Suspension
Market Manual relative to Fees and Costs of WESM Mediation
and De-registration Criteria and Procedures in order to enhance
and Arbitration. Due to the framework of WESM Dispute
and refine the WESM dispute resolution process and further
Resolution that differs from typical mediation and arbitration,
clarify the kinds of disputes that are admissible for resolution in
certain procedures specifically related to the financial phase of
the WESM. Consisting of two (2) separate proposals, the same
the mediation and arbitration were found to be in need of further
were submitted to the Rules Change Committee (RCC) on 29
clarification and amendments to be more suitable within the
July 2016.
context of the WESM. The development of procedures related
to the proper determination of the WESM Mediator’s fees, as
b. Updated the List of Dispute Management Protocol Focal
well as the receipt and handling of fees and costs for both
Persons. In compliance with Section 8.2 of the Dispute
WESM Mediation and Arbitration are therefore presently being
Resolution Market Manual, the updated list of Dispute
undertaken.
Management Protocol (DMP) Focal Persons as of May 2017
was published in the MyWESM portion of the Market Information
Website, for the exclusive access of WESM Members.

THE MARKET SURVEILLANCE COMMITTEE
Monitoring the Market and WESM Participants
Market Surveillance Committee. (2017)
The MSC primarily monitors and assesses the trading activity reviewed and adopted by the MSC, provides an assessment of
as well as the activities of WESM Participants in the WESM the retail market behavior and analysis of the monitoring indices
to ensure market efficiency and fair competition. In line with as contained in the Catalogue of Retail Market Monitoring Data
this mandate, the MSC deliberated on a number of compliance and Indices.
matters and monitored participants during the period covered.
The MSC also reviewed and deliberated the Annual Retail
a. Assessment of Wholesale Electricity Market. As part of Market Assessment Report covering the period 26 December
its mandate to monitor compliance by the WESM members, 2015 to 25 December 2016 submitted by the MAG. The Annual
the MSC regularly reviews the market behavior of Trading Retail Market Assessment Report discusses the outcome
Participants (TPs) and assesses the price trading and offer of monitoring indices which were set out in the Catalogue of
patterns of plants, the supply and demand condition and the Retail Market Monitoring Data and Indices. The Report provides
significant events affecting the market. indications on how the retail market performed during the period
in review. After due deliberation, the MSC approved the report
During the period, the MSC submitted to the PEM Board, for submission to the PEM Board, ERC and DOE.
DOE and ERC its Monthly Monitoring Reports for the covered
period, detailing its monthly accomplishments together with c. Review of Over-riding Constraints. Pursuant to Section 6.2.1
the Market Assessment Report (MAR). The MAR is prepared (i) of the Market Surveillance, Compliance and Enforcement
for the purpose of monitoring and assessing the efficiency and Market (MSCEM) Manual, the MSC is tasked to review over-
competitiveness of the WESM under different time-scales and riding constraints imposed on the market dispatch optimization
market conditions. model at the recommendation of the System Operator. During
the covered period, the MSC reviewed the monthly monitoring
The MSC also reviewed and deliberated the Annual Market report on over-riding constraints, submitted by the MAG.
Assessment Report covering the period 26 December 2014 Said report details the results of the monitoring of over-riding
to 25 December 2015, submitted by the MAG. After due constraints imposed by the System Operator on generators and
deliberation, the MSC approved and subsequently submitted the N-1 contingency requirements. It also contains a month-on-
the 2015 Annual Market Assessment Report to the PEM Board, month comparison of the number of generators and number of
ERC and DOE on 08 August 2016, for their information and over-riding events6 imposed per generator resource type. As
reference. The 2015 Annual Market Assessment Report was necessary, the MSC also conducted meetings with the System
also published in the PEMC market information website. Operator and/or the Market Operator to assess the constraints
imposed and assess the impact of the imposition of said
b. Assessment of Retail Electricity Market. The MSC submitted constraints on the market. Furthermore, the MSC elevated the
to the PEM Board its Retail Market Monitoring Reports for identified issues relative to the conduct of test and commission
the covered period together with the quarterly Retail Market of new generating plants to eth ERC for its information.
Assessment Report (RMAR) prepared by the MAG. The RMAR,
__________________________
6 The monitoring of the over-riding constraints on generators is done on a per generator trading node per trading interval. A constraint imposed
on a generator trading node on a particular trading interval is considered as one over-riding event. The monitoring of the over-riding constraints
is based on the data and information provided by MO (i.e. real time market results and MMS-input files on security limits) and SO (i.e. SO Data
for Market Monitoring).

d. Review of ECO Investigation Reports. Pursuant to Section similar with the process of approval of the Catalogue of Market
6.2.1 (i) of the MSCEM Manual, the MSC is tasked to review the Monitoring Data and Indices (CMMDI), with the final output
Investigation Reports prepared by PEMC-ECO to assess the submitted to the DOE for approval.
Investigation Report with respect to: a) Compliance by the ECO
with the procedures set forth in this Manual for the conduct of h. Review of Rules on Outages. As an offshoot of its discussion
Investigation; and b) Validity and completeness of the data and on the high level of outage capacity during the review of its
documents upon which the factual findings are based. market assessment reports, the MSC created a subcommittee
on the review of rules on outages. The MSC subcommittee
During the period covered, the MSC completed its review of the reviewed the existing and applicable rules on outages under
fifteen (15) consolidated ECO Investigation Reports covering the WESM Rules, relevant Market Manuals, Philippine Grid
the fifty-five (55) ECO cases corresponding to the 55 RFIs and Distribution Codes, and other relevant issuances and
issued by the MSC for the various billing months. circulars, with the view to provide recommendations to the
DOE as necessary. The MSC completed its review and
The MSC has also commenced with its review of the twelve (12) subsequently transmitted to the DOE the letter incorporating its
ECO Investigation Reports for possible non-compliance with recommendations on 17 January 2017.
the MOR and RTD schedule involving fifty-two (52) cases. The
MSC will finalize its review and submit the same for presentation i. Review of ERC Draft Resolution. The MSC reviewed the
to the PEM Board. draft ERC resolution adopting amendments to the pre-emptive
mitigating measure in the WESM. The MSC subsequently
e. Review of Market Intervention Events. Pursuant to Section agreed to submit its comments on the same, citing the following:
6.2.1 (h) of the MSCEMM, the MSC is tasked to investigate (a) retain the 7-day rolling average because it contains all the
an event of market intervention or market suspension and days of the week such that weekdays and weekends will have
prepare the corresponding market intervention report or market the same weight in every average (though weekdays will always
suspension report to be submitted to the PEM Board. The MSC have a greater weight because they are five days vs. two days
started its review of the MO-initiated market intervention (MI) for weekends); and (b) the 7-day rolling average is seen to be
event that occurred on 05 November at 2000H and the SO- more stable. The MSC transmitted its letter incorporating its
initiated market intervention event that occurred on 15 November comments to the draft resolution on 24 March 2017.
2016 at 2000-2300H. The MSC will be completing its report on
the review of market intervention events after gathering all the j. Submission of Requests for Investigation. The MSC filed a
relevant information and finalizing its discussions on the same. total of 930 Requests for Investigation (RFIs) from June 26,
2016 to June 25, 2017 on alleged breaches of the WESM Rules
f. Review of the Market Surveillance, Enforcement and for the billing months of April to December 2016 and January
Compliance Manual (MSCEMM). Pursuant to its mandate as to April 2017. The RFIs were based on the MSC’s assessment,
provided in the WESM Rules, the MSC initiated the review of the finding possible non-compliances of Trading Participants
MSCEMM Issue 3.0 through the constitution of a subcommittee. to the WESM Rules regarding the Submission of Offers and
The review was envisioned to focus on the provisions Compliance to RTD schedules.
related to market monitoring, assessment and surveillance in
conjunction and close reference to the proposed new WESM k. Participation in the WESM Open House. On 06 October 2016,
Enforcement and Compliance Manual as drafted by ECO. The the MSC participated as one of the resource speakers during
MSC approved the ECO’s proposed WESM Enforcement and the WESM Open House attended by WESM Participants. The
Compliance Manual, to be jointly submitted with PEMC, as well MSC presented the revisions in its Compliance Monitoring
as its proposed Market Surveillance Manual, for submission to Process in consideration of the submission of Significant
the RCC. Event Reports pursuant to the WESM Compliance Bulletin
6.0. The WESM Compliance Bulletin 6.07, which provides the
The proposal was accompanied by the proposed changes to the procedures for the submission of the Significant Event Report
WESM Rules in order to align the provisions in said Rules and required of the trading participants under WESM Rules Clause
the proposed Market Surveillance Manual. The proposed WESM 3.5.11.7, and the description of the Significant Event Notice and
Enforcement and Compliance Manual and Market Surveillance the Significant Event Report Form required to be submitted to
Manual were transmitted to the RCC on 06 December 2016 and comply with the reportorial requirements under said Rule.
29 December 2016 respectively. Presentation to the RCC was
scheduled on 13 January 2017. l. Participation in the Market Participant’s Update. The
MSC participated as resource speaker during the Market
g. Review of Penalty Manual. The MSC commenced its review of Participants’ Update (MPU) held on 05 May 2017 in Sibulan,
PEMC’s proposed Penalty Manual. On the process of approval, Negros Oriental. During the MPU, Dr. Peter Lee U presented
the MSC agreed that instead of undergoing the Rules Change the Market Assessment Highlights for Q4 2016 to Q1 2017.
Process, consultation with stakeholders should be conducted,
__________________________
7 A revised version, the WESM Compliance Bulletin 6.1, was also issued on 30 June 2016. The revision provides details on the electronic facility
that will be used for submission of the report in accordance with the procedures set out in the said Bulletin.

MARKET
REPORT
ENFORCEMENT AND
COMPLIANCE UPDATES
ENFORCEMENT
As in previous years, requests for investigation endorsed to the priority dispatch generating units, were subject of investigations
Enforcement and Compliance Office (ECO) for investigations for possible RTD non-compliance.
during the year consist of cases of Possible Non-Compliance
with the Must Offer Rule ( “MOR” non-compliance) and Possible Notwithstanding the increase in the number of generation
Non-Compliance with Real Time Dispatch Schedules and/ facilities being investigated, there was a reduction in the
or Instructions (“RTD” non-compliance). These investigation coverage of the investigations in terms of number of trading
cases involved scheduled generating units and priority dispatch intervals with possible non-compliance. A comparison of the
generating units. coverage of the investigation cases for WESM billing year 2015
(i.e., 26 December 2014 to 25 December 2015) and billing year
A total of 662 requests for investigations were endorsed for 2016 (i.e., 26 December 2015 to 25 December 2016) show
possible non-compliances with the WESM Rules occurring some reduction in the year 2016. The reduction in coverage is
during the period from 26 June 2016 to 25 February 2017 (i.e., observed in most billing months.
July 2016 to February 2017 billing months). All requests were
submitted by the Market Surveillance Committee based on the The total number of intervals for investigation covering the
results of its monitoring of the compliance of scheduled and billing months for 2016 is 383,820 for MOR non-compliance
priority dispatch generating units registered in the WESM. cases, and 89,703 intervals for RTD non-compliance. These
intervals account for about 60%, and 14%, respectively, of the
The number of generating units covered by the investigations total possible intervals for the year. The “total possible intervals”
in 2016 increased as compared with the coverage in 2015. This refers to the total intervals for the month multiplied by the
is because of the inclusion of priority dispatch generating units. number of facilities registered during the billing period.
Monitoring of priority dispatch generating units for possible
RTD non-compliances was started by the Market Surveillance During the one-year period from July 2016 to June 2017,
Committee in the May 2016 billing month. ECO has completed investigations of 89 of the cases covering
possible MOR and RTD non-compliances occurring in 2014
By the end of 2016, there were 73 generation facilities in Luzon and 2015. The results of the investigations were submitted to
and Visayas that were registered in the WESM, consisting of the Market Surveillance Committee for review, in accordance
eight (8) priority dispatch generating units and sixty-five (65) with the procedures under the WESM Market Surveillance,
scheduled generation facilities. All the 65 scheduled generating Compliance and Enforcement Manual.
units were subject of investigations for possible MOR non-
compliance. Seventy (70) generation facilities, including eight

FOSTERING COMPLIANCE
Enhancements to the enforcement and compliance
processes in the WESM were proposed by PEMC through
submission of proposals for changes to the WESM Rules,
the existing WESM Market Surveillance, Compliance and
Enforcement Market Manual, and the WESM Financial
Penalty Manual. The proposals include the adoption
of separate Enforcement and Compliance Manual and
Market Surveillance Manual. The proposed manuals and
Inside the Control Room, Casecnan Hydroelectric Power Plant, 09 March
2017. associated rules changes were submitted to the Rules
Change Committee in December 2016 while the proposed
changes to the WESM Penalty Manual has been submitted
to the Market Surveillance Committee in April 2017.
Overall, the proposed rules changes and market manual

on enforcement and compliance intend to consolidate
all guidelines and procedures pertaining to the various
enforcement and compliance processes, provide for more
detailed guidelines and procedures and clearly delineate
roles and responsibilities of the various units and entities
involved in the enforcement processes. The proposals also
intend to align these processes with the changes that are
expected as a result of the implementation of the enhanced
market design, in order to ensure that the Enforcement
and Compliance Office, Market Assessment Group and
the Market Surveillance Committee are better equipped to
manage enforcement and compliance processes under the
enhanced market design.
Activities to foster compliance amongst WESM

members, particularly generation companies, were also
carried out during the year. These include conduct of
Conference and plant tour debriefing, Kalayaan Pumped Storage Power
trainings and lectures as well as issuance of compliance
Plant and Caliraya Hydroelectric Power Plant, 02 March 2017.
bulletins on generator compliance standards.
The submission of significant event reports by trading

participants was implemented in 2016 following
amendments on WESM Rules clause 3.5.11.7 requiring
notification and reporting of significant events affecting
the operations of WESM Members and the facilities being
transacted in the WESM. To facilitate compliance by
WESM Members with this reportorial requirement, report
templates and reporting procedures were developed by
PEMC. A facility for submission of reports through electronic
means was also made available. The reports submitted are
currently being used in monitoring compliances with the
WESM Rules, particularly, of generation companies.

MARKET
REPORT
POLICY & REGULATORY UPDATES
POLICY ISSUANCES
Establishment of WESM in Mindanao Enhancements to WESM Design and Operations
To provide a venue for the efficient scheduling, dispatch The DOE, thru DC2016-10-0014,2 approved the amended
and settlement of energy withdrawal and injections in the WESM Rules, which shall be initially used for the development
Mindanao Grid, the Department of Energy (DOE) issued of the New Market Management System (NMMS) and the
Department Circular (DC) No. DC2017-05-0009,1 declaring the actual implementation of the enhancements to WESM design
establishment of the Wholesale Electricity Spot Market (WESM) and operations.
in the Mindanao Grid.
Some of the new provisions introduced are under Reserve
The said DC set the launch date of the WESM in the Mindanao Market Arrangements, System Operator Data, Dispatch
Grid on 26 June 2017 and has outlined the responsibilities of the Conformance Standards, Market Information, Financial
Philippine Electricity Market Corporation (PEMC) as the Market Transmission Rights, as well as definitions in the Glossary to
Operator (MO); the National Grid Corporation of the Philippines include Automatic Pricing Re-run, Customer Market Trading
(NGCP) as the System Operator (SO), transmission Network Node, Dispatch Conformance Standards, Dispatch Instruction,
Service Provider (NSP), and WESM Metering Service Provider Dispatch Interval, Energy Settlement Price, Energy Trading
(MSP); WESM Participants; and of the National Electrification Amount, Generator Market Trading Node, Gross Energy
Administration with regard to the Electric Cooperatives (ECs). Settlement Quantity, Hour-Ahead Projection, Market Run, Nodal
Upon its effectivity, all Electric Power Industry Participants in Energy Dispatch Price, Reserve Price, Reserve Settlement
the Mindanao Grid shall be considered as WESM Participants Price, Reserve Settlement Quantity, Reserve Trading Amount,
and shall submit and comply with the registration requirements and Settlement Interval, among others.
as prescribed under the WESM Rules and Market Manuals.
The DC also highlighted the responsibility of PEMC to review
A Trial Operations Program will be administered by PEMC, and facilitate the necessary amendments to the related Market
with the cooperation of the Trading Participants and the Manuals in order to ensure its consistencies with the amended
SO, to ensure a proper transition and to comply with one of WESM Rules.
the requirements prior to the declaration of full commercial
operations of the WESM in the Mindanao Grid by the DOE.
__________________________
1 Entitled “Declaring the Launch of the Wholesale Electricity Spot Market (WESM) in Mindanao and Providing for Transition Guidelines,” dated
4 May 2017.
2 Entitled “Adopting Further Amendments to the WESM Rules (Enhancements to the WESM Design and Operations),” dated 14 October 2016.

REGULATORY ISSUANCES
Recalculated Pre-Emptive Mitigating Measure Installed Generating Capacity and Market Share
Limitations for 2017
To balance the effective curbing of high market prices triggered
by extreme conditions with the current market developments, The ERC has set anew, through Resolution No. 5, Series of
the Energy Regulatory Commission (ERC) issued Resolution 2017,4 the installed generating capacity per Grid and National
No. 4, Series of 2017,3 adopting a recalculated Cumulative Grid and market share limitations per Grid and National Grid
Price Threshold (CPT) level of PhP 1,080,000.00 equivalent to for the year 2017. The issuance is pursuant to its mandate to
the Generated Weighted Average Prices (GWAP) over a rolling promote free and fair competition in the generation and supply
five (5)-day period or one hundred twenty (120)-hour trading of electricity, to achieve greater operational and economic
interval; which is equivalent to an average spot price of PhP efficiency, and to ensure consumer protection and enhance the
9,000.00/MWh over the period. competitive operation of the markets for generation and supply
of electricity.
CASE UPDATES
Market Fees Setting Rules Market Fees for Calendar Years 2014 to 2017
PEMC filed before the ERC a Petition for the Issuance of Market For calendar year 2014, the ERC has approved the amount
Fees Setting Rules (“MFS Rules”) for the Philippine Wholesale of P702,984,728.00 as Market Fees to be collected by PEMC.
Electricity Spot Market (WESM) on 21 November 2016. The PEMC’s Motion for Reconsideration has been partially granted
MFS Rules propose an approval procedure that is unique to by the ERC. However, due to a new matter included in the
market fees and different from what is being currently observed ERC Resolution, PEMC filed a Motion for Leave to File and
for rate cases. Public consultations were conducted by the ERC Admit Attached Motion for Partial Reconsideration, as well as a
on 17 and 24 February 2017 at the ERC Office in Ortigas Center, Manifestation and Submission in further support of its Motion for
Pasig City, and on 22 February 2017 at its Visayas Field Office. Partial Reconsideration, and its Compliance and Submission
The Petition is currently pending resolution with the ERC. to directives issued by the ERC. The same is still pending
resolution as of date.
For calendar year 2015, PEMC applied for the amount of

PhP896,410,000.00. The ERC has ordered to continue
imposing the approved Market Fees for calendar year 2014,
pending the final resolution of the application. PEMC filed an
Urgent Motion to Resolve. The same remains pending to date.
For calendar years 2016-2017, PEMC applied for the amounts

of PhP1,031,837,000.00 and PhP975,942,000.00, respectively.
PEMC has completed its presentation of evidence and has
formarly offered the same. The case is pending resolution to
date.
__________________________
3 Entitled “A Resolution Adopting Amendments to the Pre-Emptive Mitigating Measure in the Wholesale Electricity Spot Market (WESM),” dated
9 May 2017.
4 Entitled “A Resolution Setting the Installed Generating Capacity and the Market Share Limitations Per Grid and the National Grid for 2017,”
dated 23 May 2017.

FEATURE ON
WESM
MINDANAO
INTEGRATION OF MINDANAO TO WESM
WITH a surplus of about 1,000 megawatts (MW) of power The flood of new capacity is causing an oversupply of power
generation capacity in the southernmost grid, the time for in Mindanao, the country’s second-largest island that suffered
Mindanao to have a spot market is now. up to eight hours of power curtailments daily not too long ago.
Mindanao has experienced excess generation supply starting In 2016, Mindanao had an additional generating capacity of 748
first half of 2016, which increased even further with the entry MW.
of other large generation capacities in the latter part of 2016,
and shall increase even further in 2017 according to the latest As of January 2017, DOE data indicates that Mindanao’s
Department of Energy (DOE) data. available capacity stood at 3,162MW, of which, 2,702 MW is
considered dependable capacity. The highest peak demand
The new power facilities contributing to Mindanao’s additional recorded in 2016 is 1,653MW.
capacity include the following coal plants of Therma South Inc.’s
Unit2 (150MW) in Davao del Sur, Saranggani Energy Corp.’s With an oversupply of power, a power spot market in Mindanao
(SEC) 118MW in Sarangani, San Miguel Corp.’s (SMC) Unit 1 will provide a venue for efficient scheduling, dispatch and
and 2 (150MW each) in Davao del Sur, and FDC’s three units settlement of energy withdrawal and injections in the Mindanao
of 135MW in Misamis Oriental. grid. More importantly, it will ensure a reliable and stable supply
of electricity.
CRITERIA
The DOE has formally declared the launch of the Wholesale
Electricity Spot Market (WESM) in Mindanao on June 26, 2017.
Mindanao is currently undergoing trial operations for the WESM.
The start of WESM Mindanao’s commercial operations will be

declared by the DOE when the following criteria are met:
1. All systems and procedures needed in operating

the spot market must be put in place.
2. The trial operations program should be completed.
3. The forecasting, scheduling, dispatch, pricing,
metering and settlement processes of the WESM
should be fully operational in the Mindanao grid.
4. Training programs shall have been conducted for
the WESM Mindanao trading participants.
5. ERC approval must be secured for the price
determination methodology, and
6. The Market Dispatch Optimization Model must be
certified by an independent auditor.
The DOE has tasked PEMC, the country’s power spot market
operator, to submit a certification on the compliance to the
criteria within three (3) months from the launch date.

PREPARATORY ACTIVITIES
PEMC, for its part, said it is “very much prepared” to comply need to move forward with the Information, Education and
with the DOE’s directives. Communication (IEC) drive.
To ensure their readiness for the WESM commercial Through the IEC, the DOE hopes to address also occasional
operations, PEMC is currently conducting trial operations with opposing views, which can be attributed to the lack of deeper
Mindanao WESM participants and the National Grid Corp. of understanding of the WESM.
the Philippines (NGCP).
The information drive will help more Mindanaoans better
The NGCP, as the System Operator, Network Service Provider understand WESM and appreciate the benefits it will bring in
and Metering Services Provider, plays a crucial role in ensuring sustaining investments in Mindanao, which needs a robust
the availability and robustness of all transmission and metering power sector to support a booming economy.
facilities in the Mindanao grid for the efficient operation of the
electricity bourse. These preparations are also meant to attract in more WESM
participants. Data from ERC and NGCP reveal a total of 81
Public consultations were also held during which energy trading participants expected to sign up. These include 35
experts and power industry participants, as well as investors, generation companies and 46 customers, which include 27
consumers, members of the academe and other stakeholders electric cooperatives, 4 private distribution utilities, and 15
were gathered. directly connected-customers.
The DOE noted that most of the concerns raised during

the consultations were operational in nature rendering the

PRICE CAP
To shield consumers from sudden price spikes, the WESM Tripartite Committee, which
includes the DOE, PEMC and ERC, made permanent the P32 per kWh price ceiling.
The price cap is the highest offer that sellers could give when they sell their electricity to the
market.
These price caps were imposed by the ERC in 2014, after prices at the WESM soared
resulting in increase in retail rates by P4.16 per kwh in December 2013 due to the month-long
Malampaya natural gas field shutdown in late 2013.
Originally at P62 per kwh, the WESM price ceiling had been reduced to P32 per kwh. Meanwhile,
the power regulator also put in place in May 2014 a secondary price cap at the spot market to
further protect consumers from excessive price spikes triggered by supply tightening.
Called the price threshold mechanism, the P6.245/kWh secondary cap kicks in the market
once an average threshold of P9/kWh is reached over a 168-hour period.
Though made permanent, these price caps would be reviewed regularly by the committee.
BENEFITS
A WESM is being implemented in Luzon and the Visayas.
The Interim Mindanao Electricity Market (IMEM), which was set up in 2013 as the region’s
trading floor for electricity was effectively terminated upon effectivity of DOE Circular No. 2017-
05-0009.
IMEM was placed under intervention in February 2014 following a grid-wide power interruption
in the region, preventing power companies with excess generating capacity to offer their output
to distribution utilities (DUs).
Apart from instances of power interruptions during its operations, PEMC also faced the difficulty
of getting payments from DUs for the capacity bought in IMEM.
When supply problems had already been resolved for Mindanao, the clamor for the
establishment of a functioning and indissoluble spot market for the grid had intensified.

RETAIL COMPETITION
IMPLEMENTATION
HIGHLIGHTS
PROMOTING CUSTOMER EMPOWERMENT

The passage of the Electric Power Industry Reform Act of 2001 The contestable customers have the power to choose their
(EPIRA) laid the groundwork for the establishment of the retail supplier and negotiate for the terms that best suit their needs
supply sector through the introduction of the retail competition and preferences to fully enjoy the benefits of RCOA.
and open access (RCOA) regime.
The EPIRA further calls for the lowering of the threshold until
The RCOA is envisioned to end monopolies, encourage the the contestable market includes the household demand level.
entry of new industry players and generate robust competition Initially, the threshold level shall be lowered to 750 kilowatts
that will benefit consumers in terms of better rates and services. thus benefiting more power customers.
The successful implementation of RCOA is seen to foster a
vibrant and competitive retail electricity market. In the event that these contestable customs are not able to find
suppliers, they can be supplied by an ERC-regulated Supplier
During the initial phase, the EPIRA called for the Energy of Last Resort (SOLR).
Regulatory Commission (ERC) to allow all electricity end-users
with a monthly average peak demand of at least one megawatt The ERC evaluates and grants licenses to RES while certificates
for the preceding 12 months to be the contestable market and of contestability are issued to qualified constable customers.
as such can choose their electricity supplier.
The contestable market, as large users of electricity, are

expected to negotiate contract rates with retail electricity
suppliers (RES) with the necessity of getting ERC approval.

FACILITATING CUSTOMER CHOICE
As the designated Central Registration Body by the Department observed that serve as a reference guide for PEMC and the
of Energy and Energy Regulatory Commission, PEMC has retail market participants
been tasked to handle enrollment of retail supply contracts, to
carry out customer switching between Suppliers and provide an As of 25 June 2017, there are 27 licensed RES, 12 local RES,
information exchange among retail market participants. and 21 SOLR. Contestable Customers including Directly
Connected Contestable Customers total 842.
Following the promulgation of Retail Rules and Market Manuals,
business procedures and systems have been drafted and being
WAY FORWARD
RCOA gained traction with the several issuances and Competitive Retail Electricity Market”; and Resolution No. 28,
promulgations from the ERC and the Department of Energy series of 2016 entitled “Revised Timeframe for Mandatory
(DOE) with the end view of a full implementation in the future. Contestability, Amending Resolution No. 10. Series of 2016
Entitled Revised Rules on Contestability”.
DOE issued Circular No. DC 2015-06-0010 entitled “Providing
Policies to Facilitate the Full Implementation of Retail The mandatory contestability for end users with an average
Competition and Open Access (RCOA) in the Philippine Electric monthly peak demand of at least one megawatt was supposed
Power Industry.” to be on February 26, 2017 and for end-users with an average
monthly peak emend of at least 750 kW on June 26, 2017.
ERC also issued resolutions in support of RCOA specifically
Resolution No. 5 series of 2016 entitled “A Resolution The Supreme Court, however, issued a temporary restraining
Adopting the 2016 Rules Governing the Issuance of Licenses order against the said ERC and DOE issuances and as
to Retail Electricity Suppliers (RES) and Prescribing the a consequence mandatory contestability and lowering of
Requirements and Conditions Therefor, Resolution No. 10, contestability threshold were put on hold.
series of 2016 entitled “A Resolution Adopting the Revised
Rules for Contestability”; Resolution No. 11, series of 2016 Market participants are looking forward to the resolution of the
entitled “A Resolution Imposing Restriction on the Operations case pending in the Supreme Court that will pave the way for
of Distribution Utilities and Retail Electricity Suppliers in the the broadening of customer choice.

SPECIAL FEATURE
ON COMPETITIVE
SELECTION PROCESS
MARKET OPERATOR’S ROLE IN CSP BUT WHY CHOOSE PEMC?

The operator of the Wholesale Electricity Spot Market (WESM) Gatchalian said PEMC is already an existing entity tasked to
has been assigned to become the TPA under the proposed look for buyers and sellers in the country’s electricity trading
Senate Bill 1308 titled “An Act Institutionalizing Reforms in the floor.
Procurement by Distribution Utilities of Supply for the Captive
Market.” “Since PEMC is already a market maker, they are the ones who
are responsible to look for buyers and sellers in the WESM. This
Lodged by Senate Committee on Energy Chairman Sherwin scenario is similar to the Philippine Stock Exchange. Similarly,
Gatchalian, this legislative measure seeks to institutionalize the this will be done in the CSP,” said the senator.
competitive selection process (CSP) in order to enhance first,
competition and second, transparency. The WESM is a centralized venue for buyers and sellers to
trade electricity as a commodity where its prices are based on
“For competition, a centralized CSP, to be conducted by a third- actual demand and supply availability. PEMC is on top of this.
party auctioneer (TPA), shall be required for all the uncontracted
demand of the captive market. Also, the CSP can only be The WESM began commercial operations in Luzon in June 2006
undertaken if it is in accordance with the approved Power and in the Visayas in December 2010. The WESM in Mindanao
Supply Procurement Management Plan (PSPMP) of each DU. has just been ceremonially launched in June this year.
While for transparency, power supply agreements, contracts, The WESM was created by Republic Act 9136, the Electric
and forms shall be standardized for ease of review and Power Industry Reform Act (EPIRA) of 2001. This provided for
comprehension. Furthermore, these, as well as other information the establishment of an electricity market that reflects the actual
related to the CSP, shall be available to the public through an cost of electricity and lowers its price through more efficient
online electronic portal,” stated Gatchalian in his explanatory production through competition.
note attached to his proposed bill.
“PEMC already has the software and by maximizing that
The highlight of the proposed bill is the TPA, which, according software that is already there we can use the existing software
to the senator, is “non-negotiable.” for a CSP set up. There is no better choice now than PEMC
because of its expertise and its current role in the power sector,”
stressed Gatchalian.
READY AND ABLE

PEMC President Melinda Ocampo said her office welcomes the The study also includes PEMC’s calculations on the level of
senator’s proposed bill. fees that it shall levy corresponding to its role as the TPA.
The market operator has the expertise and resources to carry During a recent Upper Chamber hearing, PEMC said the fees
out its duties as a TPA. “Yes, it’s the same function as we are would be lower than its current collection, which is one centavo
doing in the trading of electricity,” said Ocampo. per kilowatt hour. “We have to study whether those figures are
justifiable,” said the lawmaker. “But from the looks of it, it’s
To get the ball rolling, Gatchalian has asked PEMC to conduct minimal.”
a study on this. “I asked them to do a study on whether PEMC
can be the TPA.” Overall, PEMC, as the TPA, will make sure that the conduct of
the CSP is fully independent and transparent.
The study was already submitted to the senator. Ocampo said
the study centered on “how to operationalize the methodology Five years after the bill takes effect, the Department of Energy
in case we will be appointed as the auctioneer.” (DOE) will review the performance of the TPA. Should PEMC
fail to meet the performance targets based on a Performance
In case the study will be approved, Ocampo said, “We need Monitoring and Evaluation Plan (PMEP), the DOE may procure
to start capacitating our people, though some of them already a new TPA.
have initial knowledge on the proposal.”

HOW CSP WORKS
Under a centralized CSP, the power requirements of all DUs Upon failure of each CSP, the TPA shall submit a report to the
and ECs will be aggregated. After which, power generation DOE and the ERC.
companies will make offers, meaning, they will sell their capacity
to the DUs via an auction that will be administered by a TPA. The entire bidding process shall not exceed 60 days from
the time the call for bidders is made public, unless exigent
There will be one observer from the DOE, Energy Regulatory circumstances warrant the extension of the period.
Commission (ERC), the Philippine Competitive Commission But more importantly, it is the DOE that will craft the CSP
(PCC), or the Commission on Audit (COA), or in the case of framework, which, among others, will provide for the procedure
ECs, a member of the National Electrification Administration and schedule for a centralized CSP, the terms of reference, bid
(NEA) during all stages of the CSP. documents, standardized PSA, qualification criteria to determine
the winning bidder, procedures for the Swiss Challenge
The observers shall keep all information confidential while the procurement, timelines to be observed, among others.
competitive bidding is still ongoing. Further, a report on the
procurement activities must be submitted by the observers to “The CSP framework shall be regularly reviewed by the DOE to
the DOE and ERC. reflect existing policies and to facilitate a more streamlined and
transparent CSP for DUs,” stated the bill.
A CSP is considered failed when only one generation firm
submitted an offer or generation companies failed to meet the But it shall be the ERC that shall have the power to review
requirements to participate as a bidder. whether the parties have complied with the CSP rules. “The
ERC shall have primary and exclusive jurisdiction over all
Upon two failed CSPs, a generation firm may submit an contents and cases involving and relating to the conduct of the
unsolicited proposal to a DU, which shall then invite competitive CSP,” the proposed bill stated.
counter proposals. Thereafter, the original bidder shall be given
the opportunity to match the best bid, which comes out of the
counterproposals.
‘NO SWEETHEART DEALS’

The proposed centralized CSP may seem the same under the “The proposed CSP is envisioned to be centralized rather
current CSP regime in which DUs are required to undertake than regional. There will be no sweetheart deals because it is
competitive bidding to secure PSAs with generation companies. automated. Power generators will bid without knowing who the
However, the current set-up allows DUs to conduct CSPs on off takers are. For example, the power requirements of Meralco
their own, giving the DUs the free will to tailor-fit the terms of (Manila Electric Company) can be combined with that of the
reference in conducting the auction. And because there is no small DUs,” Ocampo said.
standard on how the auction process will be undertaken, many
are asking, “Can competition be truly achieved? Is there really According to the senator, the concept of his bill was based on
level playing field under the current CSP?” the results of consultations held with various power generators,
consumer groups, experts, and DUs, among others.
Hopefully, the senator’s proposed bill would address these
concerns. “This bill will prescribe a very strict framework of “There are stories or anecdotes about collusion and trying to
CSP,” said Gatchalian. eliminate competition or favoring a generator. So, to eliminate
all doubts, we proposed the TPA, which is not unique because
Ocampo, meanwhile, is certain that a centralized CSP will this set up is being done in other countries,” said Gatchalian.
eliminate “sweetheart deals” between a DU and a power
generation firm.
CHEAPER POWER RATEST

Based on consultations and studies, Gatchalian said the favored generator. If you look at EPIRA, DUs are supposed to be
conduct of a CSP would result in lower electricity rates. involved only in wired business…It is really going to be a radical
reform. We are facing a lot of resistance but we truly believe
“In fact, our own estimates and from experts, the cost of power that this CSP will benefit consumers because competition will
can be reduced to 30 to 40 percent. “ This, he said, is the end- definitely result in cheaper prices,” explained Gatchalian.
goal of the bill.
In the end though, the draft bill seeks to provide a level playing
The measure is being fine-tuned at a technical working group field, which will result in a healthy competition and eventually
(TWG) level before advancing it into next levels of legislative bring down the cost of power.
processes. This early, there is already resistance from some
DUs, particularly those that have expanded its business into “All the foregoing are towards the enhancement of the security
power generation. of supply and ultimately the attainment of optimal generation
charges for the consumer. Thus, the immediate passage of this
“It’s now with the TWG. We have encountered a lot of resistance measure is sought,” said the senator. With contribution from
because it will take out from the DUs the power to select their Lenie Lectura.

CORPORATE
REPORT
PEM BOARD ACCOMPLISHMENTS
The PEM Board in partnership with the Governance Committees and sanctions the imposition of appropriate penalty to caution
industry stakeholders, issued thirty-one (31) Board Resolutions from the participants into observing the rules for the benefit of
June 2016 to June 2017. the entire power system.
8. Approved the PEMC’s Audited Financial Statements, Net
The following are the highlights of the PEM Board accomplishments: Settlement Surplus Report, and Budget Variance Report
for CY 2016 attesting to the reliability over PEMC financial
1. Approved three (3) changes to the WESM Rules and implementation and operation consistent with recognized
amendments to seventeen (17) Market Manuals to support international standards.
the impending implementation of the enhanced WESM 9. Confirmed the changes in Registration Capacities of
Design and Operations pursuant to DOE Department the following Trading Participants pursuant to ERC
Circular 2015-10-0015: Certifications affecting the registered capacities of the
• Implementation of Preferential Dispatch following power generation plants:
• MRU-MSU Manual and APDM regarding Additional • SIPC’s Panay Diesel Power Plant 3 Unit 1 (Pmax)
Compensation • Palinpinon Geothermal Power Plants I & II
• Management of Net Settlement Surplus(NSS) (Registered capacities)
• Governing the Constitution of WESM Governance • Calaca Coal-Fired Thermal Power Plant
Committees (Registered capacities)
• Overhaul of Dispatch Protocol • Nasulo Geothermal Power Plant (Registered
• Dispute Resolution and Registration, Suspension capacities)
and De-Registration Criteria and Procedures • SLPGC’s Coal Fired Power Plant. (Registered
• Price Determination Methodology and Constraint capacities)
Violation Coefficient • PETROSOLR’s Tarlac Solar Power Plant
• Bilateral Contract Quantities Declaration and Line (Registered capacities)
Rental Calculation • SM North EDSA Solar Power Project (Registered
2. Approved the Market Fee Setting Rules (MFSR) and capacities)
authorized the filing of Application with the ERC which • APRI Generation Facilities (Registered capacities)
aimed to improve the process involving the application of • YHGEI’s Hermosa Solar Power Plant (Registered
PEMC for Market Fees sanctioned by the WESM Rules capacities)
giving way to more efficient Market operation. • FFHC Co-Generation Bagasse-Fired Power Plant
3. Approved the amendments to the Corporate Performance (Registered capacities)
Measures (CPM) imposing stricter standards pertinent to • SOLARPHIL’s Calatagan Solar Farm (Registered
the assessment of PEMC competence. capacities)
4. Approved the results of the bidding to engage the services • San Gabriel Power Plant (Registered capacities)
of an international expert-auditor for the 2016 Market • San Gabriel Avion Power Plant (Registered
Operation’s Audit. capacities)
5. Approved the 3-year horizon (2017-2020) Corporate • Nasulo Geothermal Power Plant (Registered
Strategic Plans of PEMC keeping its organizational capacities)
objectives and goals up to date and responsive to the • Palinpinon Geothermal Power Plant I (Registered
needs of the Market, participants and the power industry capacities)
and to comply with policy and regulatory directives. • Batangas Diesel Power Plant (Registered
6. Approved the Terms of Reference for the Independent capacities)
Audit of the New Market Management System and the • Mariveles Coal-Fired Power Plant (Registered
Central Registration and Settlement System relative to the capacities)
obligation of PEMC to maintain, upgrade and undertake • Clark Solar Power Plant (Registered capacities)
development of the required systems and processes in the • MPPCL Coal-Fired Thermal Power Plant
performance of its functions. (Registered capacities)
7. Acted on the Request for Reconsideration upon ECO’s • Subic Solar Power Plant (Registered capacities)
recommendation covering 15 cases involving violations of • Valenzuela Solar Power Plant (Registered
the provisions of WESM Rules on Must Offer Rule (MOR) capacities)
and non-compliance with Real Time Dispatch/Schedules • Isabela Bioethanol and Cogeneration Plant
(RTD) which validated the finding of breach of the WESM (Registered capacities)
Rules by the participants involved. This is in keeping with • Palinpinon Geothermal Power Plant II (Registered
the governance provisions of the WESM Rules which capacities)

CORPORATE
REPORT
SUSTAINING THE GAINS: RE-CERTIFICATION OF QUALITY
MANAGEMENT SYSTEM AND INFORMATION SECURITY
MANAGEMENT SYSTEM
PEMC remains committed to maintaining its Integrated One of the various process improvements of the organization
Management System (IMS) ISO-Certification. Among its current is the launching of the computerized IT Service Management
activities are the preparation for the re-certification of the Quality System (ITSMS) which includes the Non-conformity, Corrective
Management System (QMS) using the ISO9001:2015 standard and Risk-Based Action Request (NCRAR) Monitoring module
and Information Security Management System (ISMS) using the and ICT Change Management System. The NCRAR report
ISO 27001:2013 standard which are valid until 2018-03-05 and processing improved with zero (0) % percent delay from January
2018-02-14 respectively, following the completion of trainings, to March 2017 and the Objectives, Targets and Programs
conduct of internal audit, risk assessment and documentation (OTP) annual compliance rating indicated the successful
review. The IMS re-certification audit is scheduled in October achievement of most of its IMS objectives and targets in 2016.
and November 2017. It resulted in a streamlined process that continues to adhere
to international standards on information security, business
For now, the company successfully passed its QMS transition continuity management, risk-based processes and enterprise
certification and ISMS surveillance audits in November 2016. risk management.
One of the major accomplishments last year was the successful
transition of ISO 9001 version 2008 to ISO 9001 version 2015.
PEMC demonstrated the ability to consistently provide services
that meet customer requirements and enhanced customer
satisfaction through effective application of systems including
processes for improvement of the systems.
Photo of awarding QMS and ISMS Certificates during the Market Participants’ Update 2017 in Dumaguete.

In keeping with the theme Brighter of this year’s Annual Report, the
Philippine Electricity Market Corporation (PEMC) has embarked on a
number of Corporate Social Responsibility (CSR) projects that intend
to brighten and make a difference in the lives of our brethren. . A
brighter life means a more meaningful existence through education
and capability building as well as by bringing joy and hope to the less
privileged and socially marginalized people by sharing oneself.
Back-to-School Program
(Pagsanjan Laguna)
June 2016
As a socially responsible corporation, the

Philippine Electricity Market Corporation (PEMC)
is committed to take part in brightening the minds
of young students. A back-to-school program
was undertaken by the company to support the
educational requirements of young students in
Pagsanjan Laguna in June 2016. The CSR activity
is PEMC’s small but lasting gift or contribution for
the children in its immediate community to have a
brighter future.
Computer Donation
(Ilin Island, San Jose, Occidental Mindoro)
November 2016
PEMC contingents travelled as far as Occidental

Mindoro to provide new set of computers to the
community in San Jose. This is accompanied by a
power generator set to bring light to their community
54 WESM Works 2016 - 2017 Brighter and provide electricity supply for computer use.
Adopt-A-Child
(Jollibee Katipunan)
December 2016
PEMC continues its partnership with Kythe Foundation

to brighten the lives of young cancer patients by bringing
hope and joy during Christmas with the conduct of the
Adopt-A-Child Program in December 2016. PEMC
employees were given the opportunity to share their
blessings by fulfilling the holiday wishes of the kids.
Back to School Program

(Dueg National High School)
May 2017
PEMC has chosen the Dueg

National High school located at
Sitio Dueg, San Clemente, Tarlac
to be the recipient of sixteen (16)
computers for their school library.
It is way of helping the school
ameliorate its learning facilities so
as to better equip and to cultivate
the value of computer education
among the indigenous students
as well as the faculty in the age of
information technology.

CORPORATE
REPORT
INTERNATIONAL LINKAGES
PEMC ATTENDS APEX AND EISG MEETINGS
APEX 2016 CONFERENCE

On 12-14 of October 2016, PEMC attended the 2016
Annual International Association of Power Exchange (APEx)
Conference held at Medellin, Colombia. The APEx Conference
2016 is a gathering of power exchanges from all over the globe.
The conference serves as a venue for members to familiarize
themselves with the latest developments, as well as exchange
ideas, practices and lessons that are essential to the growth
and development of their respective markets.
The APEx is an international organization comprised of

electricity markets that aim to foster free communication of
ideas and practices geared towards information sharing among
market operators.
PEMC has been a member of the APEx since July 2007.
33RD EISG 2016 MEETING

PEMC participated in the 33rd Energy Intermarket Surveillance The 33rd EISG Meeting focused on several topics such as
Group (EISG) Meeting held in New Orleans, Louisiana, USA market power mitigation and experiences from other markets
from 06-08 November 2016. EISG meetings provide a private in integrating renewable energy into the energy mix. PEMC has
forum for market monitors from various jurisdictions to discuss been a registered member of EISG since 2006.
issues, techniques, and significant developments on market
monitoring and surveillance.

Carlito C. Claudio fondly called as “Sir Lito” has a proven track record and vast experience in
the Philippine power industry. Prior to his present stint as the Vice President of PEMC’s Trading
Operations Department, Sir Lito had forays in the academe and institutions such as National Power
Corporation, National Transmission Corporation and National Grid Corporation of the Philippines.
Sir Lito brought his solid knowledge and expertise in system operations and transmission planning
to his function as overseer of the day-to-day trading operations of the WESM.

In this sit-down interview, Sir Lito shared his challenges and learnings in shepherding PEMC as
the pioneering market operator be certified as compliant with the ISO 27001: 2013 standard and
how he is currently taking the lead in the shift to a new market management system (NMMS).
1. As the Vice President of Trading
Operations, what is a typical day for you?
A typical day for me would involve reviewing

of market reports, discussing with staff the
operational issues, and attending various
meetings.
2. What are the most challenging situations

that you have encountered so far? What
are the lessons, if any?
One of the most challenging situations I

have encountered was when PEMC made
the mandatory transition of the Information
Security Management System from ISO
27001:2005 to ISO 27001:2013. We had
only two months to prepare before the
certification audit and we had to squeeze
all activities, including the readiness
assessment by an independent party,
within this limited period. We learned
from this experience and so, with our
Quality Management System, we made
the transition from ISO 9001:2008 to ISO
9001:2015 straightaway without waiting
for the transition grace period to expire,
although our certification is valid until 2018.
3. If we take a step back during our ISO

certification process and preparatory
activities leading to the deployment of
the new market management system,
what are your thoughts on how PEMC
collectively accomplish those feats?
PEMC was able to accomplish those feats

because of the cooperation of all personnel
and the commitment of the IMS teams
and NMMS project team to achieve their
respective goals. The experience and
lessons learned during the previous MMS
project also helped us.
4. Not resting on your laurels, what are the next milestones you are working on?
We hope that ERC will approve the reserve market along with the price determination
methodology (PDM). We are currently collaborating with GMC and NGCP for the
finalization of the Ancillary Services Requirements and Specifications. We are also
working on enhancing our Business Continuity Management System. But I think it will
take a couple more years before our BCMS matures enough for ISO certification.

Human capital is PEMC’s greatest asset. As the Market
Operator, PEMC is committed to its vision of achieving
the highest standard of self-governance and market
operations in the competitive electricity market. Officials
and employees of PEMC are guided by the following
core values:
1. Excellence in Professionalism,
2. Excellence in Integrity,
3. Excellence in Fairness,
4. Excellence in Teamwork,
5. Excellence in Service, and
6. Excellence in Innovation.
This section features the organizational units of PEMC

that make WESM works.

OFFICE OF THE PRESIDENT
Leading by Example
• Provides direction and leadership toward the achievement of
PEMC’s vision & mission
• Responsible for the over-all implementation of strategic goals &
objectives of the company
• Oversight of PEMC’s internal compliance program
• Lead unit in escalating issues to appropriate government
agencies and other relevant entities
From left:
Melinda L. Ocampo, Ana Fe C. Monica Aguila, Analiza R. Bedia, Imelda B. Amoroso, Criselda S. Martin-Funelas, and Camille C. Soliven

OFFICE OF THE
CORPORATE SECRETARY
Promoting Good Corporate Governance
• Provides legal and administrative support to Philippine Electricity
Market Corporation’s Board of Directors (Board)
• Ensures compliance with the Board’s directives and submission
of reports to Securities & Exchange Commission
• Guarantees the proper flow of communication and instruction
from the PEM Board to PEMC units, WESM Governance
Committees and relevant government agencies
From left:
Sheena Marie M. Antonio, Claudette G. Ubaldo-Dema, and Sherwin T. Casidsid

ENFORCEMENT &
COMPLIANCE OFFICE
Fostering WESM’s Culture of Compliance
• Promotes good governance in the WESM through programs
that will encourage compliance with WESM Rules and Market
Manuals and through effective enforcement of said Rules and
Manuals
• Investigates suspected breaches of WESM Rules and Manuals
From left:
Daisy Jane C. Alfafara, Ma. Hazel M. Gubaton-Lopez, Mark Anthony C. Andrada, Arjon B. Valencia, Allan V. Fontanilla, Darlene C. Dublar, & Paola Maire C. Viedor
Rachel Angela P. Anosan, Hilary Romeli C. Florendo, and Michael B. Dy

LEGAL DEPARTMENT
Advocates of PEMC’s Integrity
• Provides over-all legal guidance and assistance to PEMC units
and WESM Governance Committees
• Serves as the legislative liaison office of PEMC
• Ensures the timely filing of application for the approval of
PEMC’s budgetary requirements and other pricing-related
methodologies
From left:
Caryl Miriam Y. Lopez-Mateo, Maybelle R. Tolentino, Sheryll M. Dy, Audrey June E. Valdez, and Celina R. Encarnacion
Criselda S. Martin-Funelas

MARKET ASSESSMENT GROUP
Vanguard of Market Governance & Competition
• Responsible for the over-all conduct of market monitoring and
assessment
• Serves as the primary support unit of WESM Governance
Committees
• Prepares and submits market assessment report to Market
Surveillance Committee
From left:
Divine Gayle C. Cruz, Rheinhart O. Banogon, Hiyasminh Aleia D. Dagum, Marie Claire L. Reyes, Maria Delia B. Arenos, Geraldine A. Rodriguez, and Karen A. Varquez
Mik Albert A. Vivo, Kathleen R. Estigoy, Dece Marwil B. Falar, Chrysanthus S. Heruela, Bienvenido C. Mendoza, Jr., and Aldjon Kenneth M. Yap
Shalom Grace T. Llamzon, Charmaine Joyce M. Navarro, Katherina B. Evangelista, and Romellen C. Salazar

CORPORATE SERVICES
DEPARTMENT
Stewarding PEMC’s Resources
• Responsible for finance-related activities and services including
budget administration and tax compliance, among others
• Exercises the function in the collection and validation of
metered quantities as well as carrying out activities related to
billing and settlements
• In charge of the manpower recruitment and planning and
PEMC’s organizational development
• Ensures judicious utilization of corporate assets and resources
HUMAN RESOURCES & ADMINISTRATIVE SERVICES
From left:
Olivia J. Gabriel, Helen Joy E. Loon, Maricar D. Magadia, Al Crise Antoni S. Aguilar, Yves Celine R. Faelnar, Joel M. Galindez, Maica G. Molina, Michelle Mabelle E.
Dones, and Gretchen S. Ipapo
Robelyn R. Vidallon, Marissa P. Gandia, and Dennis Frederick A. Alingod

CORPORATE SERVICES DEPARTMENT
FINANCE
From left:
Anadelle I. Ramos, Krina Vinia G. Duyor, Herbie C. Ngirngir, May S. Sadsad, Maria Cristina W. Loresco, Ryan L. Maniling, Carolina S. Magsambol, and Victoria S.
Carino
Abigael V. Buban, Mark Geoffrey G. Sagun, Janna R. Kangleon, Allan Kris T. Tarampi, Marissa P. Gandia, Mary Anne T. Santiago, and Annsburg A. Resurreccion

CORPORATE SERVICES DEPARTMENT
BILLING, SETTLEMENTS, AND METERING DEPARTMENT
From left:
Jerahmeel Philippe A. Mendoza, Irene D. De Guzman, Fernando G. Dizon, Karen C. Catindig, Richard Glenn C. Araullo, Leslie G. Razo, Jacqueline Lee V. Paz, and
Marie Emmanuelle T. Delarmente
Yhardlee D. Centeno, Renato B. Afurong, Marissa P. Gandia, and Millan H. Libongco

CORPORATE PLANNING &
COMMUNICATIONS
Marshalling Market Developments and
Stakeholders’ Engagement
• Formulates, manages and monitors the business and annual
operational plans of PEMC
• Handles the conduct of participants’ training and development
of training modules and materials
• Manages the membership procedures in the WESM
• Lead unit in enhancing PEMC’s corporate image, conduct of
public relations activities and stakeholder relations
• Conducts market studies, simulations and researches in
accordance with the company’s strategic plans
From left:
Jonathan B. de La Viña, Juanita C. Sta. Maria, Eric Niño U. Louis, Isidro E. Cacho, Jr., Robinson P. Descanzo, Phillip C. Adviento, Dennis L. Enciso, Katrina G.
Amuyot, and Zachary Edgar C. Gutierrez
Maricel A. Portillo, Ana Corazon C. Reduta, and Mitzi Vina S. Tamayo
Rhlee B. Amojilar, Christian Karla A. Rica, Raymond Joseph A. Marqueses, Josell F. Co, Cerise M. Cabactulan, and Clares Loren C. Jalocon
TRADING OPERATIONS
DEPARTMENT
Archetype of Excellence in Market Operations
• Responsible for the daily trading operations of the WESM that
covers market forecasting and projection, dispatch scheduling
and pricing, and facilitation of market re-runs
• Handles the development and updating of the market network
model
• Publishes market operations reports
From left:
Edward I. Olmedo, Jade J. Lungay, Emmanuel A. Navarro, Edwin N. Mosa, Marcial Brummel J. Jimenez, Valfia U. Gregorio, Maria Anita E. Bautista, Jocelyn S.
Canicon, Gaddy B. De Leon, Jenny I. Jalandoni, Amador C. Mangosing, Jr., and Michael Dan B. Usman
Marco N. Accad, Rhe-An A. Abrasia, Arthur P. Pintado, Carlito C. Claudio, Robert C. Lacerna, and John Paul S. Grayda
Edsel Y. Evasco, Henry E. Marasigan, Ervin M. Santos, John Vincent L. Pernia, and Matt Jester B. De Castro

INFORMATION SYSTEMS
& TECHNOLOGY DEPARTMENT
Information Technology Mavericks
• Develops and manages the Information Systems & Technology
(IST) operations and requirements of the company and the
WESM
• Ensures maintenance of the ISO standards on quality
management system and information security and management
system
From left:
Elmae Grace A. Genita, Alejandro H. De Guzman, Jr., Julius Patrick O. Apud , Christian Bryan D. Delos Santos, Gilbert R. Ombao, Joe Allan M. Dudang, Christopher
R. Vistro, Resty S. Hong, Kevin M. Turbanada, and Pricillano Jesus G. Dela Cruz, Jr.
Janeth A. Ceniza, Orlando C. Ninon, Salvador D. Subaran, Patrick S. Fernandez, and Reshyl D. Elicano
Eldin Paulo S. Reyes, Vladimir E. Espiritu, and Rhonel S. Esguerra

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This year’s theme of our Annual Report, Brighter, sheds light on how supply.

upply. As the designated Central Registration Body, PEMC has

Advisory Panel Editorial Team

Melinda L. Ocampo Phillip C. Adviento

Ana Fe Monica C. Aguila Clares Loren C. Jalocon

© Copyright 2017 WESM WORKS

Thank you and Mabuhay!

Inasmuch as there is still a handful to be achieved in the industry,

Not only do we ensure that the WESM remains transparent, PEMC

Amidst numerous changes and the constant evolution of the electric

For a brighter tomorrow,

REGISTERED CAPACITY LIST

Total Registered Capacity (Pmax) - Luzon 14,708.1

4 WESM Works 2016 - 2017 Brighter

Market Share (%) by Registered Capacity

WESM Works 2016 - 2017 Brighter 5

6 WESM Works 2016 - 2017 Brighter

Preferential dispatch for emerging renewable energy resources

WESM Works 2016 - 2017 Brighter 7

Enhanced market design and deployment of new market system

Streamlined approval process in market membership

Integrated quality management process

Improved stakeholder engagement

8 WESM Works 2016 - 2017 Brighter

Integration of Mindanao in the WESM

Moving Forward: Raising Competition

WESM Works 2016 - 2017 Brighter 9

CONTINUOUS GROWTH IN DEMAND

jump of 10.6%, this year’s peak demand only saw

Demand levels in Luzon and Visayas also reached

1,894 MW (01 June 2017).

Figure 1. Luzon-Visayas (System) Peak Demand (July 2016 – June 2017)

2016 due to its typically high demand levels. The

in August 2016 further aggravated the already low 10000

supply levels from July 2016. 9000

It was only during the middle of September 2016 8000

where supply margins eased up a bit with generating 7000

Mostly, this trend of ample supply margins continued

a. Between February and March 2017 due to maintenance outages

10 WESM Works 2016 - 2017 Brighter

Participants, started the implementation of the 600

“Central Scheduling and Dispatch of Energy and

One of the major goals of this process is to centrally

the WESM, as well as increase the accuracy of the

largely driven by the interaction of supply and

time, especially on periods affected by outages

MARKET PRICE, PESOS PER MWh

Since these high prices were only momentary

continued until June 2017. To further highlight, only 9000

600 NON-CONGESTION NON-CONGESTION

high number of pricing error notices issued, largely

the use of the price substitution methodology,

imported to Cebu from the islands of Negros and

across Luzon and Visayas, the resulting HVDC flow 300

(70.3% of the time) and at also a higher average

VISAYAS TO LUZON LUZON TO VISAYAS

Figure 7. Hourly HVDC Flows (July 2016 – June 2017)

5.7% 7.7% 9.8% 9.2% 4.9% 5.8%

25.8% 27.4% 27.4%

monthly generation mix.

Coal plants, reflected its highest share in the 20%

WESM generation mix just recently in June 2017

The participation of renewable energy sources 7.0%