The WESM
The Wholesale Electricity Spot Market (WESM) is the venue for trading electricity as a commodity in the Philippines. The WESM was created by virtue of Section 30. of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act (EPIRA) of 2001. Its objective is to establish a competitive, efficient, transparent and reliable market for electricity where:
• A level playing field for the trading of electricity exists among WESM Participants;
• Third parties are granted access to the power system;
• Prices are governed by commercial and market forces; and
• Efficiency is encouraged.
The Wholesale Electricity Spot Market started its commercial operation in Luzon on 26 June 2006. This ushered in a new era of electricity trade in the Philippine Power Industry and brought a new hope for the growth of the industry through competition and transparency.
The Visayas region was integrated into the WESM on 26 December 2010 after a very successful trial operation. Such integration increased market participation that contributed to a more vibrant supply and demand interaction and created the right economic signals for strategic supply contracting among participants in the two regions.
Basic Features of the WESM
Gross Pool
All energy transactions – like the demand and supply of electricity – are scheduled through the market. This allows for all the power produced, supplied and used to be accounted in the market.
Locational Marginal Price
Marginal price is computed at each node or location to reflect transmission loss and/or congestion.
Net Settlement
Bilateral contract quantities transacted in the pool are settled outside the market.
Mandatory Market
Distribution utilities were mandated by law to procure at least 10% of their respective electricity requirements from the WESM for the first five years of its establishment. Entities directly connected to the grid are not allowed to inject or withdraw without registering in the WESM.
Retail Competition and Open Access
Retail Competition and Open Acess (RCOA) is a mechanism which allows qualified electricity end-users to choose their Retail Electricity Supplier (RES) for their electricity requirements on a voluntary basis. RCOA started commercial operations on 26 June 2013.
IEMOP currently serves as the Central Registration Body (CRB) for RCOA to facilitate registration and customer switching and exchange of needed information among retail market participants.
Green Energy Option Program
The Green Energy Option Program (GEOP) is a mechanism established under the Renewable Energy Act of 2008 to promote the development and utilization of renewable energy resources in the country. It provides end-users with the option to directly source their electricity supply from 100% renewable energy, including solar, wind, hydro, or geothermal technologies.
Participation in the program is open to consumers with a monthly peak demand of at least 100 kW for the preceding twelve (12) months. Qualified end-users may exercise their choice to shift from conventional power generation to renewable energy, thereby supporting the objectives of energy security, sustainability, and environmental stewardship.
The implementation of GEOP reflects the government’s commitment to diversifying the energy mix and advancing the transition towards a low-carbon economy.
Retail Aggregation Program
The Retail Aggregation Program is a policy mechanism under Retail Competition and Open Access (RCOA) that allows multiple electricity end-users to consolidate, or “aggregate,” their electricity demand to collectively qualify for participation in the retail electricity market. By pooling their consumption, smaller consumers are able to meet the minimum threshold of 500 kW, which grants them the ability to choose their own retail electricity supplier.
This program is intended to extend the benefits of RCOA to smaller end-users—such as small businesses, educational institutions, and local government units (LGUs)—who would otherwise not meet the demand requirement individually. Through aggregation, these groups can gain access to competitive electricity prices and supply options, including renewable energy sources.
There is no prescribed limit on the number of end-users that may form an aggregated group. However, participants must generally be located within a contiguous area or the same franchise area. The Retail Aggregation Program therefore broadens consumer participation in the retail electricity market and supports greater efficiency, choice, and inclusivity in the country’s power sector.
