PEMC halts collection of ‘congestion charges’

By Francis Allan L. Angelo

The Philippine Electricity Market Corp (PEMC), the governing body of the Wholesale Electricity Spot Market (WESM), assured the suspension of the collection of congestion-related charges from Visayas customer participants following the damages to the National Grid Corporation of the Philippines’ (NGCP) Cebu-Negros Submarine Cable.

“We recognize the financial burden that the Visayas electric power consumers may bear attributable to the congestion caused by the damaged submarine cable. As such, we are working with the Department of Energy (DOE), the Energy Regulatory Commission (ERC), the Independent Electricity Market Operator of the Philippines (IEMOP), and the NGCP in maintaining the balance between protecting the consumers and ensuring the sustainability of the generators,” PEMC President Leonido J. Pulido IIIsaid in a statement.

The suspension will benefit distribution utilities and electric cooperatives in Panay and Negros via lower electricity rates.

The surge in congestion-related charges and other fees was due to damage caused by the contractor of the Department of Public Works and Highways (DPWH) on one of the lines of the Cebu-Negros Submarine Cable while conducting an amphibious dredging in the mouth of Bio-os River, Brgy. Pondol, Amlan, Negros Oriental last June 2021.

The submarine cable is operated by the National Grid Corporation of the Philippines (NGCP).

The damaged line consequently resulted in decreased transfer capacity of the Cebu Negros Submarine Cable, which led to congestion that limits the available supply.

Consequently, costlier diesel plants were tapped to compensate for the required load, ultimately setting the marginal costs that define the current electricity pricing in Negros and Panay.

High line rental amounts due to congestion also jacked up prices of electricity.

“The incident cannot discount the fact that supplying power also entails costs on the part of the dispatched generators. Hence, further study and discussion with the stakeholders need to be undertaken to also allow for the recovery of the congestion costs for the power supplied to the areas affected by this incident and how these will be considered in the WESM Bills of Customers,” Pulido added.

The PEMC, in coordination with IEMOP, submitted information to the ERC on September 15, 2021 supporting the regulator’s review of the unusual results of the July and August 2021 WESM billing periods, specifically the high line rental charges in the Negros and Panay regions.

This led to the ERC’s directive to suspend the collection in a letter dated September 20, 2021.

With the NGCP repair activities estimated to last up to 26 months, the ERC issued its directives to PEMC on September 23, 2021 to minimize the burden on consumers in the affected areas.

The application of the adjustments in the WESM billing and settlements will be retroactive from the June 2021 Billing Period.

“PEMC, in coordination with the IEMOP, is currently fleshing out the details of the amounts and the manner of refund to the affected customers, as well as the recommendations to be submitted to the ERC on the pricing and settlement solution that may be applied during the repair period,” Pulidosaid.

Once finalized, the proposed solution shall be formalized through the incorporation of changes to the market rules, specifically on the dispatch protocol as well as the billing and settlement provisions.

True to its mandate of ensuring a transparent and level-playing field to the participants of the power bourse, PEMC, together with its WESM Governance Committees (WGC), shall continue to perform its functions and coordinate with all the involved parties to discuss all these concerns, and monitor their activities and compliance with the directives issued by the ERC.