BICOL UNIVERSITY

COLLEGE OF ENGINEERING
LEGAZPI CITY

WHOLESALE ELECTRICITY SPOT MARKET

BEDIS, STEVEN B.
DINO, GENEVIC N.
JACOB, JON LORENZ B.
MALACA, DARELLE DAVID B.
MORON, JETHRO A.
SARTE, JASPER KIM E.
BSME 5A

ENGR. EDUARDO C. BORROMEO, PME

Instructor
GROUP VII- Wholesale Electricity Spot Market (WESM)
Wholesale Electricity Spot Market (WESM)
- A centralized venue where buyers and sellers engage in the trading of
electricity as a commodity. Its price is based on actual use (demand) and availability
(supply).
- It serves as a clearing house to reflect the economic value of electricity for a
particular period, as indicated by the “spot price”. This market differs from other markets
because electricity cannot be stored in large quantities and it is not possible to trace
which generator produced the electricity consumed by a particular customer. For such
reasons, the wholesale electricity market uses the concept of a “pool” where all
electricity output from generators are centrally coordinated. Generators as well as
buyers of bulk electricity compete for a share of this pool, to be dispatched and
scheduled to meet the electricity demand in real time.
- was created by Republic Act 9136, the Electric Power Industry Reform Act
(EPIRA). This provides for the establishment of an electricity market that reflects the
actual cost of electricity and drives efficiency through competition.
History of WESM

The Republic Act No. 9136, also known as the Electric Power Industry Reforms
Act of 2001, is an act ordering reforms in the electric power industry, amending for the
purpose certain laws, and for other purposes. The act declares: to ensure and
accelerate the total electrification of the country; to ensure the quality, reliability, security
and affordability of the supply of electric power; to ensure transparent and reasonable
prices of electricity in a regime of free and fair competition and full public accountability
to achieve greater operational and economic efficiency and enhance the
competitiveness of Philippine products in the global market; to enhance the inflow of
private capital and broaden the ownership base of the power generation, transmission
and distribution sectors; To ensure fair and non-discriminatory treatment of public and
private sector entities in the process of restructuring the electric power industry; to
protect the public interest as it is affected by the rates and services of electric utilities
and other providers of electric power; to assure socially and environmentally compatible
energy sources and infrastructure; to promote the utilization of indigenous and new and
renewable energy resources in power generation in order to reduce dependence on
imported energy; to establish a strong and purely independent regulatory body and
system to ensure consumer protection and enhance the competitive operation of the
electricity market; and to encourage the efficient use of energy and other modalities of
demand side management.
In the pre-EPIRA, there is a state monopoly in generation and transmission by
the NAPOCOR; government plans for fuel diversity and energy autarky; government
has dirigiste oversight on what gets built and how plants are run: “least cost”
development planning, and dispatch based on economic merit order. Also, there are
bundled generation and transmission (NAPOCOR tariff), which are regulated by Energy
Regulatory Board using Return-on-Rate-Base regulation (recovery of actual costs;
subject to efficiency standards).
With the EPIRA, generation sector is open and competitive; generation mix and
what gets built are driven by the power market: establishment of Wholesale Electricity
Spot Market (RA No. 9136, Sec. 30); and transmission and distribution are regulated
services. Settlement of imbalances beyond contracts are taken care of, economic
scheduling and dispatch of capacities, promotion of cost-effective operations through
competition, transparency on power system operations, and accountability of trading
participants are some of the advantages of the establishment of WESM.

Objectives of WESM
To establish a competitive, efficient, transparent and reliable market for electricity
where:
 A level playing field exists among WESM Participants
 Trading of electricity is facilitated among WESM Participants within the spot
market
  Third parties are granted access to the power system in accordance with the
EPIRA
 Prices are governed as far as practicable by commercial and market forces
 Efficiency is encouraged.

The WESM Operational Features

Registration
A mandatory registration prior to injecting or withdrawing electricity, whether
direct or indirect participation, because no one is allowed to inject to or withdraw from
the grid unless such entity is a WESM member. Generators must offer all its capacity
(“Must Offer Rule”) and must run at Pmin (bid price zero).
Scheduling and Dispatch
Gross pool scheduling are dope based on offers and bids. Generators must bid
to win a market share regardless of their supply contracts. They are dispatched
according to their offer price from the cheapest to the most expensive. Central Dispatch
refers to the process of issuing direct instructions to electric power industry participants
by the grid operator to achieve the economic operation and maintenance of quality,
stability, reliability and security of the transmission system. This happens in a 5-minute
interval. Taking into account system status, Market Operator (MO) schedules all
available generation offers which are “stacked” from lowest to highest price until
demand is met.
Pricing
The WESM price is the offer of the last “block” to be “stacked” to meet the
demand. This means that it is set by the offer price of the plant necessary to serve the
demand. With Locational Marginal Pricing or Locational Market Pricing, a price is
computed at each node reflecting the cost of transmission loss or congestion.
Sometimes, special pricing conditions occurs (e.g., must-run unit, administered pricing,
price substitution methodology, secondary cap).
Settlement
Parties with bilateral contracts settle their transactions outside the WESM thru
net settlement (paying their counter-parties directly based on contract prices).
Settlements are essentially based on BCQ declarations. Any off-take of a DU from the
grid not matched with a generator’s Bilateral Contract Quantity (BCQ) declaration is
deemed supplied from the market (the “spot quantity” for which DU pays the WESM).

The spot market involves:

 An hourly trading/dispatch/settlement period;
 Ex-ante real-time prices based on the hour ahead load forecasts and dispatch;
  Ex-post real-time prices based on actual metered generation/load; and
 Nodal settlement prices based on the ex-ante prices applied to the ex ante
(forecast/dispatched) loads, supplemented by an “imbalance” settlement for the
difference between ex ante quantities and metered quantities at the ex post
prices.

Retail Competition and Open Access

Retail Competition
-refers to the provision of electricity to a Contestable Market by Suppliers through
Open Access.
Open Access
-refers to the system of allowing any qualified Person the use of transmission,
and/or Distribution System and associated facilities subject to the payment of
transmission and/or distribution retail wheeling rates duly approved by the ERC. For this
purpose, qualified Persons shall include all WESM Participants.

Integration of Reserves towards a More Efficient Market

Co-optimizing Energy and Reserve
Currently, reserve capacities are managed by the System Operator for the
secure and reliable operation of the grid. As such, these capacities are netted out of the
generation offers submitted to the Wholesale Electricity Spot Market (WESM). This
“sequential clearing” of capacities may provide sub-optimal solutions that eventually
hamper a more efficient manner of managing capacities.
Co-optimizing reserve capacities with energy in the WESM aim to make the costs
of electricity more competitive, and provide reliable pricing incentives for prospective
providers of both energy and reserve.

The Philippine Power Market

Market Operator
A new entity called the Market Operator (MO) will be constituted by the DOE to
administer the operation of the WESM. The MO will operate the market and will ensure
the optimal dispatch of generation by collecting offers from generators and bids from
customers, and from which a “spot price” for electricity throughout the grid is set. It shall
facilitate the settlement of financial accounts between trading participants, and
continuously provide market information.

The Buyers: Captive and Contestable Market

Captive Market
- refers to electricity end-users who do not have the choice of a supplier of
electricity, as may be determined by the Energy Regulatory Commission (ERC) in
accordance with the EPIRA. The Captive Market are the end-user customers of DUs
whose average demand is less than 1,000kW. Some of the relevant EPIRA provisions
are: Sec 23 - The DUs have the obligation to supply electricity in the least cost manner
to its captive market subject to the collection of retail rate duly approved by the ERC;
and Sec 25 - Retail rates shall be subject to ERC regulation based on principle of full
recovery of prudent and reasonable economic costs incurred, or such other principles
that will promote efficiency as may be determined by the ERC.
Contestable Market
- refers to the electricity end-users who have a choice of a supplier of electricity,
as may be determined by the ERC in accordance with the EPIRA. The Contestable
Market are end-user customers (or those directly connected to the grid) whose average
demand is at least 1,000kW (the current “Contestability Threshold”). The Contestability
Threshold reduces to 750 kW by July 2016 and to 500 kW by July 2018. Contestable
Customers may secure PSAs from licensed Retail Electricity Suppliers (RES) or from
the DUs Local RES; The DUs will continue to provide Distribution Wheeling Services.
They are solely responsible for securing their supply; in the absence of a RES, a
Contestable Customer may be supplied by ERC designated Supplier of Last Resort
(SOLR). Any WESM requirement of a Contestable Customer is secured through its. The
Contestable Market size is expected to grow as the Contestability Threshold is reduced
(~ 35% when threshold reaches 500 kW).
WESM Membership Registration
The Philippine Wholesale Electricity Spot Market operates as a gross pool where
all energy transactions through the grid are scheduled. No person or entity shall be
allowed to inject or withdraw electricity from the grid unless that person or entity is a
registered member of the WESM. Failure by such persons or entities to register in the
WESM is a ground for disconnection from the grid.

All electric power industry participants are eligible to register as WESM members
particularly the following:
 Distribution companies, including private distribution utilities, local government
public utilities, and electric cooperatives
 Generation companies
 Suppliers
 IPP Administrators
 System Operator
 Metering Service Provider
 Ancillary Services Provider
 Directly-Connected end-users
 Contestable Customers

Categories of WESM Members

WESM Members may participate in the WESM as:

 Trading Participants
o Customers
o Generation companies
 Network service provider
 Ancillary service provider, may which be
o Trading participant, or
o Network service provider
 Metering service provider
 System Operator

A qualified person or entity may register in one or more categories of WESM

Membership.

MEMBERSHIP TYPE

Direct WESM Member- A qualified person or entity that wishes to trade directly in the
WESM must register as a Direct WESM Member.

Direct WESM Member may be:

 Generator - Persons or entities qualified to register under the Generation
Company are those that are authorized by the Energy Regulatory
 Commission to operate facilities used for the generation of electricity and
which are connected to the transmission or distribution system

 Customer - Persons or entities qualified to register as Customer are those

engaged in the activity of purchasing electricity supplied through the
transmission system or a distribution system to a connection point (other than
where all that persons electricity are purchased from a supplier). Customer
may be –

o Distribution companies, including private distribution utilities, local

government utilities, electric cooperatives and Eco zone owners or
operators authorized to engage in distribution of electricity within their
Eco zones.
o Retail electricity suppliers
o Wholesale aggregators
o Bulk users or end consumer
o Contestable customer

Indirect WESM Member – Any person or entity that wishes to trade indirectly in the
WESM shall register as indirect WESM member. An indirect WESM member, once
registered, can trade in the WESM but only through a direct WESM member.

Intending WESM Member - Any person or entity which can demonstrate to the Market
Operator of its bona fide intent to commence within a reasonable timeframe an
activity which would qualify it to become a WESM Member. A registered Intending
WESM Member does not trade in the WESM.

Advantage of Registered WESM Members

Registered members of the WESM will have access to market data and can go
through dispute resolution processes. They can also avail for themselves directly the
wholesale price. Conversely, if they are not trading participants they are not directly
responsible for meeting prudential and technical standards of the spot market. Buying
from sources other than the WESM enables them to insulate themselves more from the
volatility of the spot market, by engaging in more comprehensive supply arrangements
that will normally be available for purchase through the spot market. In general, we
could expect that direct participation in the market would expose buyers of bulk
electricity to lower prices but greater risks, than buying from other sources.

How do Generators compete in the WESM?

Generation companies assume full responsibility for how and when their plant is
operated. Each generator offers their plant into the WESM using a series of
price/quantity bands or tranches. These price/quantity tranches may be used however
the generator wishes. Since generators can only make money when they are actually
running, they must structure their offers in either case to enable them to be scheduled
and dispatched.
 For generation companies with small generating units that fall below the specified
threshold size of dispatchable plant, they must submit to the Market Operator a standing
schedule of loading levels for each generating unit.

How do Customers compete in the WESM?

In this case, however, there is usually much less flexibility in the physical system
underlying demand to actually alter their demand. Many consumers will find it enough to
bid a fixed estimate of their load for the settlement period without attaching a price (the
price is assumed to move a specified large volume). Initially, demand-side bidding is
optional since customers may have difficulty making meaningful bids. Without a good
history of metered demand they will not have the information to participate in demand-
side bidding.

Dispatch Schedules and Spot Prices

A single optimization is performed with all of the system requirements included in
the linear programming model, which is called the “market dispatch optimization model”.
At each dispatch event, the dispatch schedule and spot price are determined by
accounting for:
 Energy offers;
 Demand-side bids or forecast load;
 Reserve offers (when applicable);
 Reserve requirements;
 Transmission system parameters, modeled using DC load-flow equations; and
 Most recently observed plant status.

The price determination process is based on and maintains consistency with the
offer price/quantity preferences of Trading Participants, and provides a single market
clearing price at any point in time and location in the network.

Scheduling and Dispatch in the WESM

 WESM was established as the trading platform of energy transactions.
 WESM was also established as the central platform for the dispatch scheduling
of generating facilities.
 SO is still responsible in the dispatch of generating units at real-time.
 MO has the responsibility of forecasting demand, and prepares a Security
Constrained Economic Dispatch (SCED) schedule of generators and loads
based on the hourly demand bids and generation offers.
o MO also maintains a Market Network Model (MNM) which shall be used by
the Market Dispatch Optimization Model (MDOM), which shall be able to
consider transmission constraints and losses.

Responsibilities in WESM’s Scheduling and Dispatch

The MO, SO, and Trading Participants (TPs) are the three entities involved in the
scheduling and dispatch of generating facilities in WESM

MO Responsibilities in Scheduling and Dispatch

  Maintenance of the MNM in coordination with the SO
 Generation of dispatch schedules using the MDOM
 Transmittal of dispatch schedules to the SO for implementation

SO Responsibilities in Scheduling and Dispatch

 Submission of overriding constraints to ensure the reliable operation of the grid

o Outage Schedule - List of Equipment (e.g. generators, lines, transformers,
breakers, etc.) that will be out of service for a certain defined period.
o Contingency List - List of Equipment enlisted for contingency analysis (as per
Grid Code: N-1 Contingency Requirement).
o Security Limits - List of Generators and Branch Groups that will have its limits
overridden for security purposes (e.g. MRU/testing/commissioning).
o Transmission Limits - list of transmission capacities of lines and transformers
to be consider in the scheduling process
 Implementation of the dispatch schedules provided by MO
 Issuance of deviation report to MO (actual vs. schedule)

TP Responsibilities in Scheduling and Dispatch

 Submission of bids and offers to WESM consistent with the WESM Timetable
 Comply to the dispatch instructions of SO
WESM Timetable
 Trading activities in WESM operate at different time frames
o Week Ahead Projection (WAP)
o Day Ahead Projection (DAP)
o Hour-Ahead or Real-Time Dispatch (RTD)
o Real-Time Ex-post (RTX)
WESM Timetable: WAP
 The Week-Ahead Projection (WAP) gives indicative hourly dispatch schedules
and spot prices for the next seven days.
 Its results serve as a guide to the following entities:
o Participants when bidding transactions in the market for the next seven days
o SO in the determination of the cost impact of planned outages
 It considers the following information, which shall be used by the Market
Management System (MMS) to generate schedules:
o Demand bids and energy offers from Trading Participants
o Demand forecasts
o Outage Schedules
o Security Limits
o Latest available system snapshot
 WAP is executed every day to produce results for the next seven days.
  WAP is executed at 0900H of each trading day

WESM Timetable: DAP

 The Day-Ahead Projection (DAP) gives indicative hourly dispatch schedules and
spot prices covering the succeeding hours of the day up to the end of the
following day.
 It allows the SO to prepare a more accurate contingency plan for the relevant
intervals.
 It considers the following information, which shall be used by the Market
Management System (MMS) to generate schedules
o Demand bids and energy offers from Trading Participants
o Revisions of bids and offers for consideration in the DAP run can be done
until a cut-off time (four hours prior to the trading hour)
o Demand forecasts
o Outage Schedules
o Security Limits
o Latest available system snapshot
 DAP is executed every four hours to produce results for the succeeding hours
until the end of the following day.
  The latest information provided by SO prior to each DAP run shall be
used: 1. The latest bids and offers shall be used. Submission or revision of
bids and offers relevant to the succeeding hours can be made prior to the
execution of the DAP run.2. Demand forecasts for each of the succeeding
hours evaluated by the DAP run should be provided prior to its execution.
Revisions may still be implemented prior to the DAP run0800H
 DAP Study Period

WESM Timetable: RTD

 The Hour-Ahead or Real-Time Dispatch (RTD) publishes schedules that shall be
implemented by SO, and spot prices that shall be used in the settlement of
market transactions.
 The RTD schedules are subject to the final screening of SO before a dispatch
instruction is issued to a Trading Participant.
 The dispatch schedule is the target MW loading of all Trading Participants at the
end of a trading interval.
 RTD is executed every 55th minute of the hour.
 WESM Timetable: RTX
 The Real-Time Ex-Post (RTX) represents the duration of the trading interval.
 It is not used by the SO in the dispatch implementation since it is merely used for
“price discovery”, in which its results represent the actual events that transpired
for the duration of the trading interval
 Its results are used to settle imbalances in the market (schedule vs. actual)
 RTX is executed every 1st minute of the hour

During Normal Conditions

Majority of the day-to-day activities in the market fall under the category of normal

conditions

During Emergency Conditions

 WESM Rules 6.3.1.1 states that an emergency condition is a situation which has
an adverse effect on electricity supply or which poses a significant threat to
system security

Sample Cases of Market Intervention

(06 February 2012: 1200Hto 1400H)

Market Suspension
(14 July 2010)
Sample Normal Dispatch Process
FOR THE 0900H TARGET TRADING INTERVAL (08:01 AM UNTIL 09:00 AM)

Load Forecasting
Forecasting is a process of predicting market condition using historical data. In the
WESM, we predict the energy to be consumed in a certain area for a specific trading
interval incorporating historical data, real time grid system status, weather condition and
events. This process is known as Load Forecasting. The provision of load demand is
necessary for the calculation of market prices and dispatch schedules. It is an integral
requirement of the market dispatch optimization model. The WESM Rules provide the
calculation of market projections and real-time schedules which require accurate load
demand forecast information. The load forecasting in the market has three time frames;
namely hour-ahead, day-ahead and week-ahead forecasting.

Hour-Ahead Forecast
The process of forecasting the load energy demand for next top of the hour. It is
conducted every hour and uses the latest real time grid system status, weather
condition and events. The Ex-ante (Real-Time Dispatch or RTD) utilizes this forecast.

Day-Ahead Forecast
The process of forecasting the load energy demand for the next day and is being
updated every four hours to accurately reflect the near real time load energy demand.
The Day-Ahead Projection (DAP) utilizes this forecast.
Week-Ahead Forecast
The process of forecasting the load energy demand for the next seven days. It is being
updated daily. The forecast output is an indicative figure for Market Participant bidding
strategy and generator maintenance scheduling. The Week-Ahead Projection (WAP)
utilizes this forecast.

Demand Forecast for Market Projections

Week-Ahead and Day-Ahead Demand Forecasts

 Hourly Demand Forecasts for each Forecast Area from the current day to the
next seven days shall be determined by the Market Operator using the Similar
Day Load Forecast (SDLF) module of the Market Management System (MMS).
 The Demand Forecasts obtained in the week ahead forecast shall be used as
Input Demand Forecasts to obtain the WAP and the DAP.
 The summation of the Net Load Forecast plus the losses computed for a
Forecast Area after the optimization process in the relevant market run (i.e. WAP
or DAP) constitutes the Final Demand Forecast for that Forecast Area.

Demand Forecast for the Real-Time Dispatch Runs

Hour-Ahead Forecasts
 Demand Forecasts for the next hour in each Forecast Area shall be determined
by the Market Operator using the Load Predictor (LDP) module of the Market
Management System.
 The Demand Forecasts obtained in the hour-ahead forecast shall be used as
Input Demand Forecasts to obtain the Real-Time Dispatch (RTD).
  The summation of the Net Load Forecast plus the losses computed for a
Forecast Area after the optimization process in the relevant RTD run constitutes
the Final Demand Forecast for that Forecasted Area.

Operational Market Reports

The Market Operator (MO) regularly publishes operational market reports to the
public required by the WESM Rules in accordance with the WESM Timetable. Using a
web-based report system, operational market reports are easily made available online
to the trading participants and the general public.

PROCEDURE

Market Participant Interface (MPI)

Registered Trading Participants (TPs) shall have access to the Market
Management System (MMS) or WESM through a Market Participant Interface (MPI).
The MPI is connected to the MMS through the world-wide web. The MPI shall be used
by all TPs to bid and retrieve market information from the WESM-MMS.
The MPI may be accessed through: www.mms.wesm.ph
 Information to be Published
o System Messages
The System Messages display is the primary link between the Trading Participant
and the WESM Market Operator. The TP is notified of all kinds of system events
such as report publication and availability, market suspension or re-activation, and
the like.
 System Messages are classified as:
- Normal: These are generally system-generated messages displayed in GREEN
- Urgent: Urgent Messages are displayed in BLUE
- Emergency: Emergency Messages are displayed in RED
o Market Status Display- the Market Status Display shows the status of Hourly
Energy Markets e.g. if the Market is still Open or had already Closed.
o Market Participant Interface Data
Using MPI, the Trading Participants will be able to access the following
information:
- Market Participant Registration
- Bids and Offers Data
- Market and System Advisories
- Updates on Market Prices, Dispatch and Pre-dispatch schedules
- Demand Forecasts
- Real-Time Ex-post (RTX) Prices
- Market Participant Specific, All Market Participants, and ADHOC Reports
- Settlement (Prudential Requirements)

DAILY OPERATIONS REPORT

The Market Operator shall closely monitor Market Operations on an hourly basis within
the trading day. Likewise, the MO shall record and verify all significant events that are
not recorded in the MMS. The MO-DOR shall be reviewed and approved by the
Operations Unit Head.

At the end of every trading day, the Market Operator shall prepare a report containing
the summary of its operations on an hourly basis of the previous day which includes the
contents of the Post-Dispatch Report.

The following are the daily Operations report being published by the Market Operator:

 WAP_DAY_LUZON
 WAP_DAY_VISAYAS
 NEXT_DAY_LUZON
 NEXT_DAY_VISAYAS
 PREVIOUS_DAY_LUZON
 PREVIOUS_DAY_VISAYAS
 RTD Marginal Plant
 RTX Marginal Plant

Market Participant Interface (MPI)

 RTD OUTAGE SCHEDULE

 RTX OUTAGE SCHEDULE
 PEN REPORT
  DAP Pmin
 PSM REPORT-Hourly Price Substitution occurrence if any for RTD and RTX

NEXT WEEK SUMMARY (NWS)

A summary of the results of WESM´s Week-Ahead Projection (WAP).

The Next Week Summary (NWS) report contains a daily summary of the following
results for each of the trading days included in the relevant WAP workflow run.

1. Demand and Reserve Requirement

2. Market Participant Bids and Offers Summary
3. Energy and Reserve Schedules
4. Market Price Summary

The WAP is executed daily to project the hourly results for the next seven days (e.g.
Monday WAP run contains hourly results from the next day (Tuesday) up to the
following Monday).

NEXT DAY SUMMARY (NDS)

A summary of the results of WESM´s Day-Ahead Projection (DAP).

The NDS report contains a summary of the following results projected for the following
day as obtained in the relevant DAP workflow run.

1. Demand and Reserve Requirement

2. Market Participant Bids and Offers Summary
3. Energy and Reserve Schedules
4. Market Price Summary

The DAP is executed every four hours to project the hourly results from the next hour of
the same day, up until the end study period of a particular run (some DAP runs end at
2400H of the same day while other DAP runs end at 2400H of the next day). The
following table shows the study periods of the different DAP runs.
PREVIOUS DAY SUMMARY

A summary of the results of WESM´s Hour-Ahead or Real-Time Dispatch (RTD) and

Real-Time Ex-Post (RTX)

The Previous Day Summary (PDS) report contains a summary of the following results
that transpired during the previous day involving the RTD and RTX workflows in the
market.

1. Demand and Reserve Requirement

2. Market Participant Bids and Offers Summary
3. Energy and Reserve Schedules
4. Market Price Summary

The information contained herein are those obtained at real-time for the RTD and RTX
workflows, and it does not reflect any pricing corrections that may be involved in cases
of pricing errors.

The Market Operator regularly publishes market reports to the public that contains a
summary of the market´s results, primarily involving the RTD and RTX.

MARGINAL PLANTS

The Marginal Plant (MP) data presents information on the hourly Marginal Plants and
their corresponding price offers in the market.
The MP is the generating unit or plant whose price offer corresponds to the system
marginal price for a given trading interval.

In an unconstrained system, the market price is set by one MP (i.e., the system
marginal price). This price is adjusted for each node to consider transmission losses
and/or congestion costs to come up with a resulting value called the Locational Marginal
Price (LMP).

Where the system is constrained, the relevant flows of electricity are affected as the line
limitations arising from the congestion may impede the supply of cheaper electricity
from one area to another. In such cases, there may be more than one MP setting the
marginal price for the different nodes on either side of the constraint.

MARKET PARTICIPANT INTERFACE (MPI)

The results of the Real Time Dispatch (RTD and RTX) shall be published in the Market
Participant Interface (MPI). The following information shall be published (for each
Resource of a Trading Participant)

Other system data that will be published includes the following:

1. Total energy dispatched

2. Total dispatchable load
3. Total system losses
4. Locational Marginal Prices

PUBLICATION OF RESULTS

The results of the Real Time Dispatch shall be published in accordance with the WESM
timetable.
The results of the Real Time Dispatch shall be published in the Market Participant
Interface (MPI) and correspondingly submitted to the System Operator on the following
schedules:

RTD Outage Schedule

The RTD Outage Schedule data presents information on the hourly Outage Schedules
for the RTD run for the 24-hour interval within a trading day.

RTX Outage Schedule

The RTX Outage Schedule data presents information on the hourly Outage Schedules
for the RTX run for the 24-hour interval within a trading day.

PEN Report

The PEN Report data presents information on the summary of all the Pricing Error
Notice (PEN) issued within the trading day.

DAP Pmin

The DAP Pmin data presents information on the computation of the total Pmin of the
generators resulted from the 1600H DAP run of the trading Day. It aims to see whether
there shall be a possibility of an over generation for the next trading day.

PSM Report

The PSM Report data presents information on the hourly price substitution occurrence if
any for RTD and RTX.

BILLING, SETTLEMENT, & METERING

SETTLEMENT PROCESSES
INTRODUCTION
 Trading amount is calculated for each trading interval (i.e., one hour). Monthly
settlement amount is aggregate of hourly trading amounts.
 Two-settlement system applies so that the hourly trading amount is the total of
the ex-ante and ex-post trading amounts for each trading interval.
  Full nodal pricing applies to both generators and customers, thus the nodal
prices determined at their respective locations are used for settlements.
 Settlement calculations are made at the market trading node levels, consistent
with pricing and scheduling processes which are also determined at the market
trading nodes.
 Bilateral contract quantities are netted out in the WESM settlements.

Total Trading Amount (TTA) Formula

TTAi = Ex-Ante Amount + Ex-Post Amount
 Without Bilateral Contract TTAi = [EAQ*EAP] + [(MQ’-EAQ)*EPP]
 With Bilateral Contract TTAi = [(EAQ – BCQ)*EAP] + [(MQ’ - EAQ)*EPP]
Where: TTAi – Total Trading Amount
i – Trading Interval (1 Hour)
MQ’ – Metered Quantity (SSLA applied)
EAQ – Ex-Ante Quantity = ½(Initial + Target)
BCQ – Bilateral Contract Quantity
EAP – Ex-Ante Price
EPP – Ex-Post Price

DETERMINATION OF EX-ANTE QUANTITY (EAQ)

 Ex-Ante Quantity = ½ (Initial Schedule + Target Schedule)

BILATERAL CONTRACT QUANTITIES (BCQ)

BCQ is declared to the WESM by the generator counterparty (identifying source node,
delivery point/node, and hourly quantity). Hourly BCQ declaration is submitted the day
after the delivery date.

Bilateral Contract Quantities Allocation

Bilateral “sell” quantity declared by the generator is equal to the bilateral “buy” quantity
netted out of the customer’s settlement quantity. Thus, the cost of losses and
congestion associated with the delivery of the BCQ is by default charged to the
customers/loads.
  BCQ Declaration on Generator Side – Resource Level
 BCQ Declaration on Load Side – Participant Level/Metering Point/CCs

DETERMINATION OF METERED QUANTITY (MQ)

Metering Installation Standards
1. Location at the Market Trading Node (MTN)
Location of Metering Point
 Metering Point located ideally at the MTN
For loads with meters located at the MTN (coincident with RTU location):
 MQ’ = MQ reading
2. Location after the MTN
For loads with meters after (below) the MTN, consider site specific loss
adjustment:
 MQ’ = MQ * (SSLA factor) or
 MQ + Total Loss
Total Loss
Where: SSLA factor =1 +
MQ
Total Loss = LinekW-Loss + CopperLoss-M + CoreLoss-M
CALCULATION OF GENERATOR/SUPPLIER TRADING AMOUNTS
TTAGi = [(EAQG – BCQG-L)*EAPG] + [(MQG’ - EAQG)*EPPG]

CALCULATION OF LOAD/CUSTOMER TRADING AMOUNTS

TTALi = [(EAQL – BCQG-L)*EAPL] + [(MQL’ - EAQL)*EPPL] + [(EAPL – EAPG)*BCQG-L

Line Rental (LR) Trading Amount

 It is the economic rental arising from the use of a transmission line, calculated as
the difference in value between flows out of the receiving and sending node
(WESM Rules 3.13.12).
LR = (EAPL – EAPG)*BCQ
 WESM Rules Sec. 3.13.1.1(b) states that the seller shall: “Identify the
counterparty to the bilateral contract and the party that will pay the line rental
trading amount associated with the bilateral contract quantity submitted;
 provided, however, that in case only one of the bilateral counter parties is
registered as a Direct WESM Member, that WESM Member shall be the party
that will pay the line rental to the Market Operator; xxxx”.
(As amended by DOE DC No. 2004-07-008 dated 7 July 2004 and further
amended by DOE DC No. 2006-11- 0013 dated 09 November 2006.)
Net Settlement Surplus (NSS)
Net Settlement (NS)
 NS = TTA collection – TTA payment
 If NS > 0, Net Settlement Surplus (NSS)
 If NS < 0, Net Settlement Deficit (NSD)
NSS or NSD is allocated to relevant Trading Participants
 100% flow-back, no retention effective January 2014

OTHER SETTLEMENT METHODOLOGIES

ADMINISTERED PRICE DETERMINATION METHODOLOGY

Conditions
 Shall be used for settlement in cases where there is Intervention in the market by
the System Operator (SO) or where the market is suspended by the Energy
Regulatory Commission (ERC).
 Market intervention by the SO is permitted when the grid is in extreme state
condition arising from an emergency:
- a significant supply capacity shortfall
- a power system disturbance
- a significant environmental phenomenon
- a system blackout or significant power system under-voltage condition
- material damage to a distribution system
- a situation in which the Government proclaims or declares an emergency
- a threat to system security
- an event of force majeure
 Applies also when the Market Operator (MO) is not able to generate or determine
the price for energy for any given trading interval.
 Under clause 6.8.1 of the WESM Rules, only the ERC may suspend the
operation of the spot market or declare a temporary market failure. Below are the
conditions for Market Suspension:
- natural calamities
 - following official declaration of a national and international security emergency
by the President of the Philippines
Calculation of Administered Prices
 The equivalent administered price will be computed by taking the load weighted
average ex-post energy price of the corresponding trading interval of the four
preceding similar days that have not been administered.
 In case any of the prices covered by the four preceding same or similar days
have been administered, said price will be excluded to be replaced by the prices
that have not been administered from the most recent earlier same or similar
day.

Generator Settlement – Calculation of Trading Amount

For market intervention intervals, the trading amount for generators shall be computed
as:
Determination of Administered Price for Customers

Customer Settlement – Calculation of Trading Amount

For market intervention intervals, the trading amount for loads shall be computed as:

Additional Notes
 The total trading amount of the generator is equal to the total trading amount of
load.
 There are no surplus for the trading intervals that are tagged as market
suspension or market intervention.
 The participants that complied with the market instructions during market
suspension or market intervention may be entitled to additional compensation,
upon determination and sufficient proof that the administered price is not
sufficient to cover the fuel costs and variable O & M costs during the time that the
plant is complying with the dispatch instructions.
 Claims for additional compensation should be made no later than two weeks
from market resumption.
MUST-RUN UNIT (MRU) SETTLEMENT

Payment
 Generation Price Index (GPI) is the price mechanism use to complete the MRU
compensation.
 A total of 24 GPIs are computed for each billing month – 1 GPI for each hour of
the day.
 GPI is computed using the market data of the immediately preceding billing
month inclusive of price substitutions and market re-run.
 MRU Volume = MQ = max (EAQ, BCQ)
 MRU Compensation = MRU Volume * GPI
Generation Price Index

Where:
Paymentbilateral = ΣBasic Charges + ΣOther charges - ΣApplicable Discounts
Paymentspot = ΣTrading Amounts spot + ΣLine Rental - ΣSettlement Adjustments
Additional Notes
 The participants that complied with the market instructions may be entitled to
additional compensation, upon determination and sufficient proof that the MRU
settlement amount is not sufficient to cover the fuel costs and variable O & M
costs during the time that the plant is complying with the MRU call.

CALCULATION OF VAT
Generation Mix Ratio
 It is an indicator of how much of the monthly total spot settlement amount will be
subjected to VAT and will be applied to those negative trading amount.
 It uses the hourly spot sales or the spot energy delivery that resulted to positive
trading amount.
Value Added Tax
Vatable Generator
 VAT on Sales = SALES (Positive Amount) * 12%
 VAT on Purchase = PURCHASE (Negative) * GMR * 12%
Non Vatable Generator
 VAT on Sales = 0
 VAT on Purchase = Purchase (Negative) * GMR * 12%
WESM BILLING –SETTLEMENT INFORMATION
Hourly Settlement Information
Settlement Prices
 Nodal prices (ex-ante and ex-post)
 Special price (MRU, administered prices and substitute)
Settlement Quantities
 Ex-ante (scheduled) quantities (initial and target quantity)
 Meter data (adjusted meter data, raw meter data, transformer losses, site specific
loss adjustment)
 Bilateral contract quantities (hourly declaration, generator-customer
counterparties)
Trading amounts
 Total trading amounts (ex-ante and ex-post trading amounts; line rental trading
amounts)
 Additional/adjusted trading amounts (MRU, application of administered prices,
etc.)
Other settlement information
 Net settlement surplus allocation
 Value added tax data (tax payments/collections, generation mix ratio
Settlement Timetable
WESM Billing Statement
Peculiarities of the WESM Bill:
 All transactions integrated into one form
 Transactions Summary
 Purchases by Market Participants from WESM (Accounts Receivable) are tagged
by “negative sign”
 Sales by Market Participants to WESM (Accounts Payable) are tagged by
“positive sign”
 Market participants may have a “dual” role, that of buyer and seller
 Bill is reflected as “net” value
 All negative values are posted in accounting as Accounts Receivable
 All positive values are posted in accounting as Accounts Payable
Electronic Funds Transfer (EFT)
 Basic interference between the PEMC and the PEMC Bank (SCB-BDO) for
settlement of WESM transactions.
 Primary mode of payments and collections in the WESM
 Possible Alternatives:
- Over the counter cash payment
- Local Bank Check (LBC)
- Authority to debit
- Real-Time Gross Settlements
WESM EFT Providers
 Standard Chartered Bank
- For payment transactions (i.e., payment to generators)
- Depository bank for prudential requirements (security deposit)
 Banco de Oro
- For collection transactions (i.e., customer payments)

Prudential Requirement
 To ensure the effective operation of the spot market by providing a level of
comfort that WESM members will meet their obligations to make payments as
required under the WESM Rules.
Acceptable Forms of Security
 WESM Rules Sec. 3.15.3 provides the following:
- Cash
 - Surety Bond
- Other forms of security or guarantee acceptable to the Market Operator
Default in Payment
 Consequence of default in payment
- Issuance of Default Notice to defaulting participant
- Withdrawal on prudential security up to the full amount
- Need to top-up prudential security level in cases of default
- Failure to replenish prudential security may result in market participant’s
suspension from the market
PEM BOARD
INTRODUCTION
The Philippine Electricity Market Board of Directors (PEM Board) is a 15-man body with
a composition designed to ensure that the different sectors of the electric power
industry, generation, distribution, supply, and transmission are well-represented. There
are also four seats allotted to independent members.

Notes: DOE - Department of Energy

ERC - Energy Regulatory Commission
ECO - Enforcement and Compliance Officer
MO - Market Operator
MAG - Market Assessment Group
A/S Providers - Ancillary Service Provider
 SO-NGCP - System Operator - National Grid Corporation of the Philippines
DU - Distribution Utility

PEM COMMITTEES
INTRODUCTION
The WESM Rules provide for the creation of the PEM Committees where each
Committee has a responsibility in the governance of the electricity market.
The PEM Committees are composed of working groups with appointed qualified
personnel as follows:
 Market Surveillance Committee (MSC)
 Rules Change Committee (RCC)
 PEM Audit Committee (PAC)
 Technical Committee (TC)
 Dispute Resolution Administrator (DRA)

The composition of the PEM Committees and the Committee members’ terms of office
are prescribed under the WESM Rules and the Guidelines on the Constitution of the
PEM Board Committees. Committee members are appointed by the PEM Board.

PEM Audit Committee (PAC)

The PAC, composed of three members independent of the Philippine electric power
industry appointed by the PEM Board, is tasked to conduct audits of the operation of the
spot market and of the Market Operator in accordance with clause 1.5 of the WESM
Rules.
The PAC, through an External Auditor, performs the following functions in accordance
with the WESM PEM Audit Manual and other relevant manuals and guidelines:
 Conduct annual audits of the Market Operator and the settlement system and
any other procedures, persons, systems or other matters relevant to the spot
market;
 Conduct of Metering Review to assess the adequacy of the metering standards
and security systems and processes in the WESM;
 Test and check any new items or versions of software provided by the Market
Operator for use by WESM Members;
 Review any procedures and practices which are covered by the WESM Rules at
the direction of the PEM Board;
 Recommend changes to the WESM Rules where the PEM Auditor detects
deficiencies as a consequence of an audit, review, test, check or other form of
review; and
 Publish in the market information website the results of any finding and
recommendation under clause 6. 1.5.1.
The PAC may appoint a qualified team of auditors to carry out a review of the
scheduling and central dispatch processes under the WESM Rules. In coordination with
PEMC and under the supervision of the Department of Energy, the PAC selects the
external auditor for the market audits through a competitive bidding process.

Upon completion of the audit project, the PAC submits the final audit report to the PEM
Board, the Energy Regulatory Commission (ERC) and the Department of Energy
(DOE). The report is also published in the WESM website for the reference of market
participants and the general public.

Technical Committee (TC)

The TC is tasked to assist the PEM Board regarding technical matters on the operation
of the spot market in accordance with clause 1.7 of the WESM Rules. The TC is
composed of five members, two as independent members and representatives from the
Grid Management Committee, Distribution Management Committee, and the System
Operator, respectively.
The TC performs the following functions and responsibilities as set out in the WESM
Rules:
 Monitor technical matters relating to the operation of the spot market;
 Provide a report to the PEM Board on any matter of a technical nature relating to
any WESM member which in the reasonable opinion of the TC, causes:
a. The inability of the WESM Member to comply with the WESM Rules; or
b. Unintended or distortionary effects to the WESM operation.
 Assist the PEM Board by providing expertise in relation to information and
metering technology including 3. any matter of technical nature relating to the
spot market; and
 Propose amendments to the WESM Rules, as necessary and appropriate, with
respect to the following:
a. Improving the efficiency and the effectiveness of the WESM operation; and
b. Improving or enhancing the prospects for the achievement of the WESM
Objectives.
Further, pursuant to Section 4.1 of the TC Market Manual (TCMM), the TC is mandated
to conduct technical reviews and studies in relation to:
 power plant technical parameters;
 transmission technical parameters;
 metering technology and metering data;
 information technology;
 matters of technical nature that led to the non-compliance of any WESM
Participant, and/or distortionary effects to the WESM operation;
 improvements and new trends in technology relating to the WESM that may
enhance efficiency and effectiveness of the operation of the spot market and the
prospects for the achievement of the WESM objectives; and
 any other matter of a technical nature relating to the spot Market.
Under Section 4.3 of the TCMM, the WESM Governance Committees, PEMC and the
Trading Participants may submit a request for technical review or study to the TC using
the prescribed Request Form. Upon determination that the study falls within the
coverage and scope as defined in Section 4.1 of the TCMM, the TC shall undertake the
technical review or study within a reasonable timeframe established by the TC. In the
course of the conduct of its review or study, the TC may call for a consultation meeting
with the PEMC, WESM Governance Committees or WESM Participants to solicit
comments in relation to the study. The completed technical review or study shall be
submitted to the PEM Board for information and necessary action. A copy of the study
shall likewise be furnished to the requesting party.
Subject to the provisions set in the TCMM on confidentiality and disclosure of
information, the TC may publish public versions of the completed study requested by
other parties.
Following is the general process flowchart as provided for under the TCMM.
Rules Change Committee (RCC)
The RCC is tasked to assist the PEM Board and the DOE in the formulation and
amendment of the WESM Rules and Market Manuals with the aim of enhancing the
market design and refining market processes and operations appropriate for the current
environment.
The Committee is comprised of the following:
 One member from the Market Operator;
 One member from the Transmission Sector;
 Four members from the Distribution Sector; two of whom represent the Electric
Cooperatives, and the other two, the Private Distribution Utilities;
 Four members representing the Generation Sector;
 One member representing the Customers, including but not limited to the Supply
Sector; and
 Four representatives who are Independent of the Philippine electric power
industry.
The Rules Change Process
Proposals for amendments to the WESM Rules and the Market Manuals, as well as the
formulation of new Market Manuals, may be submitted by any WESM Member, the
Market Operator, the PEM Board or its Committees, any government agency, or any
other interested party affected by the operations of the WESM. Proposals should be in
writing addressed to the Rules Change Committee (through the Secretariat) using the
prescribed Rules Change Proposal Form, together with a Discussion Paper; and should
indicate whether the Proposal requires a general, urgent, or minor amendment.
All Proposals for amendments that meet the formal requirements of the Rules Change
Committee are published in the WESM website for comments. In the same way, All
comments submitted to the Rules Change Committee that meet the deadline of
submission are considered in the deliberations of the Rules Change Committee of the
subject Proposal.
In considering Proposals for amendments, the Rules Change Committee, shall be
guided by the following —
 consistency with the objectives of the WESM as defined in WESM Rules Clause
1.2.5;
 legal, technical, and commercial feasibility; and
 Reasonableness of the cost to implement.
The Rules Change Committee’s decision on a Proposal is reported to the PEM Board.
Approved amendments are endorsed to the PEM Board, for approval. The PEM Board
may approve, disapprove, or remand a Proposal to the Rules Change Committee.
Amendments to the WESM Rules and Market Manuals that are approved by the PEM
Board are endorsed to the DOE for promulgation.
Following is the general process flowchart for Rules Changes, as provided for under the
WESM Rules and the Manual of Procedure for Changes to the WESM Rules.

Market Surveillance Committee (MSC)

The MSC is tasked to monitor and report on the activities in the spot market in
accordance with clause 1.5 of the WESM Rules. The MSC is composed of 5 members
all of whom are independent of the Philippine electric power industry and of the
Government.
The MSC performs the following functions and responsibilities as set out in the WESM
Rules and the WESM Market Surveillance, Compliance and Enforcement Market
Manual (MSCEMM):
 Monitor activities conducted by WESM Participants in the spot market;
 Prepare periodic reports, which outline the featuring:
a. Activities of WESM Participants in the spot market; and
b. Matters concerning the operation of the spot market generally, which reports
shall be submitted to the PEM Board, the DOE and ERC upon completion.
 Assist the PEM Board or the Enforcement and Compliance Office (ECO) to
investigate and gather evidence of suspected or alleged breaches of the WESM
Rules by WESM Members.
 From time to time if the MSC in its discretion deems necessary or appropriate,
propose amendments to the WESM rules in accordance with chapter 8 of the
WESM Rules with a view to:
a. Improving the efficiency and the effectiveness of the operation of the WESM;
and
b. Improving or enhancing the prospects for the achievement of the WESM
objectives;
5 Assist the Rules Change Committee in relation to its assessment of proposals to
amend the WESM Rules under chapter 8;
6. Review Investigation Reports prepared by the ECO pursuant to an investigation
of an alleged Breach, and submit its review to the PEM Board;
7. Review the Non-Compliance Report prepared by the ECO pursuant to the review
of a Non-Compliance Notice, and submit its review to the PEM Board;
8. Investigate an event of Intervention or Market Suspension and prepare the
corresponding Intervention Report or Market Suspension Report to be submitted
to the PEM Board;
9. Review Over-Riding Constraints; and
10. Review of the significant variations reports.
Market Review
In line with its mandate, under the WESM Rules Clause 1.4.7.1(d) and MSCEMM
Sections 6.3.1(d), 7.1.1 and 7.1.4, the MSC conducts a monthly review of the market
performance and the activities conducted by the WESM Participants. During its regular
meetings, the MSC discusses the result of market monitoring indices as contained in
the Monthly Market Assessment Report submitted by the MAG. After due deliberation,
the MSC prepares its Monthly Monitoring Report and submits the same to the PEM
Board.
Compliance Monitoring
In line with the MSC’s function under the MSCEMM Section 6.2.1 (b) to identify acts or
omissions which may constitute breaches, the MSC reviews the generator Trading
Participants’ (TP) compliance with the Must-Offer Rule (MOR) and Real-Time Dispatch
(RTD) schedule/instruction by looking at the offered capacities and actual dispatch of
scheduled generating units on an hourly basis. In the event that the MSC identifies any
potential breach of the WESM Rules or Manual, the MSC then submits to the PEM
Board a request for investigation. The Board then directs the ECO to conduct an
investigation.

Review of Over-riding Constraints

Pursuant to MSCEMM Section 6.2.1 (i), the MSC is tasked to review over-riding
constraints reports. The SO, MO or WESM Member may also request the MSC to
review a decision by the SO to impose or relax a Constraint under Section 11.5.5. The
process is as follows:
Dispute Resolution Administrator (DRA)
The DRA is tasked to facilitate the resolution of disputes, speed up the resolution of
conflicts and ensure the application of the provisions of the Dispute Resolution Market
Manual, in accordance with clause 7.3 of the WESM Rules.

Dispute Categories and Parties

1. The dispute resolution procedures established in the WESM Rules and set out in
the Dispute Market Manual shall apply in the case of disputes that may arise
between or among any of the following parties:
a. The Market Operator;
b. The System Operator;
c. The PEM Board and its Working Groups except the Dispute Resolution
Administrator;
d. WESM Members;
e. Intending WESM Members; and
f. Persons or entities that applied for registration as WESM Member and whose
application has been f. denied by the Market Operator provided, however, that
any person seeking relief under the WESM Dispute Resolution Market Manual
shall agree to be bound by all Applicable Law, Rules and Regulations
notwithstanding the denial of application.
2. A dispute may arise under or in connection with or in relation to one or more of
the following:
a. The application of any of the provision of the WESM Rules, including its Market
Manuals;
b. The interpretation of any of the provisions of the WESM Rules, including its
Market Manuals;
c. The failure of a person to become registered as a WESM Member;
d. Any act, omission or behavior by any of the parties mentioned above in a manner
inconsistent with d. the WESM Rules;
e. Any obligation to settle payment under the WESM Rules;
f. Any dispute under or in relation to a contract between two or more persons or
entities [referred to f. a) to e) above] where the contract provides that the dispute
resolution procedures under the WESM Rules are to apply to any dispute under
or in relation to that contract with respect to the application of WESM Rules; or
g. A dispute under or in relation to the rules and regulations issued by the ERC and
DOE under the g. EPIRA, where such rules and regulations provide that the
dispute resolution procedures under the WESM Rules are to apply to any dispute
under or in relation to those rules and regulations.
h. Any dispute relating to or in connection with a transaction in the WESM.
1. Negotiation
Parties to a dispute shall complete negotiation before taking any other action. The
parties act in good faith and use all reasonable efforts and sincerely endeavor to
negotiate and amicably settle their dispute through the procedures and mechanisms
established in their Dispute Management Protocol.

Dispute Management Protocol (DMP)

Any prospective parties to a WESM dispute must have an established Dispute
Management Protocol or system that shall have the object of efficiently and pro-
actively settling their disputes amicably between and/or among themselves
without having to refer the matter to the DRA for mediation and/or arbitration.
 The DMP Focal Person is the first point of contact for the notification of disputes
relating to WESM disputes. The Market Operator and all WESM Members shall
submit to the DRA, through the Market Assessment Group, their Focal Persons
and Alternates which will be published in the market website. The Focal Person
must:
 have a high level of authority for the resolution of disputes or has a quick and
easy access to a. people with requisite level of authority; this will ensure that all
agreements reached during the negotiation are binding to all concerned parties;
 be easily accessible through landline phone, mobile, fax, email and postal
address contact on b. weekdays, during office hours; and
 Notify the DRA of any changes to keep the records updated.

2. Mediation
A mediator, selected by the disputing parties from the roster of WESM-Accredited
Mediators, facilitates communication and negotiation, and assists the parties in reaching
a voluntary agreement regarding a dispute.
3. Arbitration
Three (3) arbitrators from the roster of WESM-Accredited Arbitrators are selected and
appointed to constitute an Arbitral Tribunal to resolve a dispute by rendering an arbitral
award.

ENFORCEMENT AND COMPLIANCE OFFICE

INTRODUCTION
The primary function of the Enforcement and Compliance Office (ECO) is to serve as
the primary technical and investigation unit in the WESM, particularly for the
investigation of possible breach of the WESM Rules and market manuals by WESM
members. It is tasked to review the non-compliance notices upon the direction of the
PEM Board and to recommend mitigation measures to the MSC. It also assists in
promoting compliance amongst WESM members.
Enforcement activities in the WESM are currently targeted towards two types of non-
compliance, namely, non-compliance with must offer rule (MOR cases) and with the
real-time dispatch schedules (RTD cases) by scheduled generation companies.

Voluntary Compliance
Non-Compliance Notice
 Effect/Exemption
o PEM Board may grant exemption from compliance when a party provides
adequate remedial plan to solve non-compliance, non-compliance has no
adverse market effects, and is not unreasonable.
 Coverage
o Within 3 months from WESM membership or issuance of new/amended
WESM Rule, market manual, rules and regulations, and WESM objective.
WESM Compliance Officers
 Rationale
o Help foster a culture of compliance in the WESM by engaging the WESM
members in promoting compliance within their own organizations
o Increase market confidence

 Coverage
o Trading Participants, Market Operator, System Operator, Metering
Services Provider and other service providers

Subject of Investigation
 Any act, omission, conduct or behavior contrary to or in violation of the WESM
Rules and the WESM market manuals.
 Excludes disputes and anti-competitive behavior or abuse of market power
 By a WESM Member, the System Operator or the Market Operator
Selected Compliances
Continuing membership & participation
 Mandatory registration
 Continuing compliance with membership criteria
Scheduling and dispatch
 Operations in accordance with scheduling and dispatch procedures
Settlements
 Prompt settlement
 Prudential requirements
 Declaration of bilateral contract quantities within timetable
Governance
 Appointment of WCO
 Compliance with reporting/data requirements
 Self-reporting of non-compliances
Compliance with “must offer” rule, There is non-compliance if the following are
present:
 The trading participant is a scheduled generation company and its facility is a
scheduled generation unit.
 It has no valid offers or its offers for a trading interval is less than the unit’s
maximum available capacity.
 The unit is not on scheduled or forced outage or its capacity is not derated due to
allowable constraints.
 technical (plant failure or ambient temperature)
 hydro (limitation water elevation, turbine discharge or MW output) or
 geothermal constraints (limitation of steam quality, steam pressure and
temperature variation, well blockage, limitation on steam/brine collection system).
 If the offers are cancelled, the offers are cancelled outside the permissible
conditions.
 Valid Cancellation: Total Pmin capacity of all scheduled units is greater than
forecast demand for a trading interval as determined in the 1600H DAP run.
Compliance with RTD schedule and/or instructions, There is non-compliance if
the ff. are present:
 The trading participant is a scheduled generation company and the unit is a
scheduled generation unit.
 Unit is scheduled/dispatched for a trading interval at a target loading level duly
communicated to trading participant.
 Actual generation level deviates from target and deviation is beyond the dispatch
tolerance, currently set at -/+ 3% of schedule.
 The generating unit or the trading participant has not been required to respond in
accordance with ancillary service or reserve contracts or to respond to dispatch
instructions from the System Operator.
 The participant/unit fails to comply with dispatch instructions.

WESM REPORTS
A.)
WEEKLY MARKET UPDATES
30 December 2019 – 05 January 2020
I. SYSTEM CONDITION
No yellow or red alert for Luzon and Visayas grids.
II. SUPPLY AND DEMAND CONDITIONS
A. Supply Cushion
B. Outages

III. PRICE INDICATORS

A. Locational Marginal Price
Mindanao prices are invalid.
B. Market Clearing Prices

C. Generator Weighted Average Price (GWAP)

D. Bid Screen
B.)
 WEEKLY MARKET UPDATES
06 – 12 January 2020
I. SYSTEM CONDITION
No yellow or red alert for Luzon and Visayas grids.
II. SUPPLY AND DEMAND CONDITIONS
A. Supply Cushion

B. Outages

III. PRICE INDICATORS

A. Locational Marginal Price

Mindanao prices are invalid.

B. Market Clearing Prices

C. Generator Weighted Average Price (GWAP)

D. Bid Screen
C.)
 WEEKLY MARKET UPDATES
13 – 19 January 2020
I. SYSTEM CONDITION

II. SUPPLY AND DEMAND CONDITIONS

A. Supply Cushion

B. Outages

III. PRICE INDICATORS

A. Locational Marginal Price

Mindanao prices are invalid.

B. Market Clearing Prices

C. Generator Weighted Average Price (GWAP)

D. Bid Screen
D.)
 WEEKLY MARKET UPDATES
20 – 26 January 2020
I. SYSTEM CONDITION
No yellow or red alert for Luzon and Visayas grids.
II. SUPPLY AND DEMAND CONDITIONS
A. Supply Cushion

B. Outages
III. PRICE INDICATORS
A. Locational Marginal Price

Mindanao prices are invalid.

B. Market Clearing Prices

C. Generator Weighted Average Price (GWAP)

D. Bid Screen
POWER STATISTICS AS OF MARCH 2019
Reference Documents
 Republic Act No. 9136 (Electric Power Industry Reform Act of 2001)
 Republic Act No. 9136 (Implementing Rules and Regulations)
 WESM Rules
 Market Surveillance, Compliance and Enforcement Market Manual
 PEMC-ERC Memorandum of Agreement and Protocol (January 2008)
 WESM Participant Handbook Volume 1
 WESM Participant Handbook Volume 2
 WESM Participant Handbook Volume 3
 WESM Participant Handbook Volume 4