ERC approves additional IEMOP transaction fee until 2028

The Energy Regulatory Commission (ERC) has approved, with modifications, the application of the Independent Electricity Market Operator of the Philippines (IEMOP) to impose additional market transaction fees to support the operation of the new Electricity Market Management System (IEMMS) from 2025 to 2028.

Under the ruling, the ERC authorized IEMOP to charge an additional market transaction fee to all generation companies registered in the Wholesale Electricity Spot Market (WESM), starting with a recoverable rate of PHP 0.00265 per kilowatt-hour (kWh) for 2025.

The fee will be collected over 12 months beginning January 2026.

The ERC also fixed the additional market transaction fees for the succeeding years at PHP 0.00123/kWh for 2026, PHP 0.00106/kWh for 2027, and PHP 0.00081/kWh for 2028, reflecting a declining recovery profile as project costs are amortized.

To ensure consumer and market protection, the Commission imposed firm annual caps on cost recovery.

These ceilings were set at PHP 364,910,871.10 for 2025, PHP 187,848,573.66 for 2026, PHP 169,981,148.00 for 2027, and PHP 136,288,935.00 for 2028, stressing that IEMOP’s collections must not exceed the approved amounts.

IEMOP filed its application on 14 May 2025, seeking approval to recover a proposed budget of PHP 1,010,250,000.00 for the development and operation of the IEMMS over the 2025–2028 period.

Prior to the final ruling, the ERC granted interim relief on 28 August 2025, allowing IEMOP to collect PHP 452,839,844.66 for 2025 at an interim rate of PHP 0.00311/kWh, which remained in effect until December 2025.

In its application, IEMOP argued that the existing Market Management System (MMS) used in the WESM is already beset by frequent software glitches, performance degradation, advanced system age, incompatibility with newer technologies, and increased exposure to security threats due to end-of-support limitations.

The ERC agreed that the proposed IEMMS would significantly enhance system efficiency through upgraded software architecture, co-development of system peripherals, and the capacity to “quickly and easily make changes to the system in response to the continuous evolution of the WESM.”

 

The Commission further found that the new system is critical in supporting future electricity market mechanisms, including the Capacity Market and the Day-Ahead Market, as the Philippine power market becomes more complex and dynamic.

In approving the project, the ERC concluded that the IEMMS is a necessary upgrade to address the “increasing complexity and evolving demands” of the electricity market while mitigating growing operational and cybersecurity risks.

As a condition of approval, the ERC directed IEMOP to implement “mandatory governance, risk, and security controls in accordance with ISO 27001 Certification,” underscoring the importance of international standards in information security management.

The Commission also instructed IEMOP to ensure a “controlled transition” from the existing MMS to the new IEMMS to avoid market disruptions during system migration.

In addition, the ERC ordered the “proper disposal of the existing MMS” in compliance with regulations governing the handling and disposal of systems that contain sensitive and confidential data, reinforcing data protection and cybersecurity safeguards in the power sector.