Q2

INDEPENDENT ELECTRICITY MARKET OPERATOR OF THE PHILIPPINES

2022

WE RUN
Q U A R T E R LY R E P O R T MARKETS
APRIL 2022 TO JUNE 2022

W W W. I E M O P . P H
CONTENT

04
MARKET OPERATIONS REPORT

12
MILESTONES AND OTHER UPDATES

15
GALLERY

EDITORIAL TEAM

Isidro E. Cacho Jr.

Josell F. Co
Christian Karla A. Rica
Daniel James T. Layno

CONTRIBUTORS

Katrina G. Amuyot
Marie Emmanuelle T. Delarmente
Sheryll M. Dy
John Paul S. Grayda
Eryl Jansen D. Gregana
Jenny I. Jalandoni
Edward I. Olmedo
Karen Anne H. Siruma
Lilibeth Grace L. Vetus
IEMOP QUARTERLY REPORT 03
04 IEMOP QUARTERLY REPORT

MARKET OPERATIONS
REPORT

WESM REGISTRATION

Table 1. WESM Registration as of Q2 2022

Table 2. Detailed WESM Registration as of Q2 2022

2ND QUARTER OF 2022
 IEMOP QUARTERLY REPORT 05

RCOA REGISTRATION

Table 3. RCOA Registration as of Q2 2022

Table 4. Detailed RCOA Registration as of Q2 2022

2ND QUARTER OF 2022

06 IEMOP QUARTERLY REPORT

GEOP REGISTRATION

Table 5. GEOP Registration as of Q2 2022

Table 6. Detailed GEOP Registration as of Q2 2022

2ND QUARTER OF 2022

 IEMOP QUARTERLY REPORT 07

WESM MINDANAO REGISTRATION

Table 7. Detailed WESM Mindanao Registration as of 25 June 2022

SUPPLY, DEMAND, AND SPOT PRICES

SUPPLY DEMAND AVERAGE PRICE

Figure 1. Supply, Demand, and Average Price for Q2 2022

1 Private Distribution Utility +1: MILPI registered on 10 June 2022

2ND QUARTER OF 2022

08 IEMOP QUARTERLY REPORT
Table 8. Q2 Peak Demand for 2022 and 2021
The recorded system peak demand for 2Q 2022 was 14,380
MW which is higher by 4.57% compared to 2Q 2021. On a
regional scale, quarterly peak demand both occurred in May
2022 for Luzon and Visayas which rose by 502 MW (4.33%)
and 108 MW (4.96%), respectively from the previous quarter.
The demand growth is associated with the resumption of
economic operations since the COVID-19 Alert-Level System
has been downgraded to Level 1, which allows all private
offices and workplaces to operate at full 100% capacity. This
is far from last year’s quarter when the country was still under
modified/general community quarantine and the operations
of establishments were restricted to a particular capacity.
The supply level was mostly sufficient to support the demand
for the second quarter despite the fact that the period was
characterized by sustained periods of high prices with a Load
Weighted Average Price (LWAP) of P7.00/kWh.
Even though the average demand was greater than the
previous month, the supply margin in April 2022 was adequate
on most days. Forced and planned outages for the same
month caused the imposition of Secondary Price Cap (SPC)
in Luzon and Visayas for 902 dispatch intervals. Likewise,
regional SPC was applied in Luzon for 22 dispatch intervals
and in Visayas for 103 dispatch intervals when there was no
power exchange between the Luzon and Visayas grids.
Administered pricing was declared in the Visayas grid for 13
dispatch intervals (1825H-1925H of 31 March 2022) by the
1 Based on system 5-min real-time data for 2Q of 2022.
2ND QUARTER OF 2022
System Operator (SO) as a precaution to prevent the Cebu-
Negros submarine cable from overloading. Hence, the SO
implemented Manual Load Dropping (MLD) and the Visayas
grid was on Red Alert. Moreover, in April 2022 the average
market price was P6.26/kWh.
Major generators were operational in May 2022, causing a
noticeable increase in available supply. This increased supply
is noteworthy in light of the national election. Moreover,
SPC was applied for 109 dispatch intervals in Luzon and
115 dispatch intervals in Visayas on 29-30 May 2022.
Nevertheless, the May 2022 resulting spot price was P6.21/
kWh.
The average supply for June 2022 was reduced because
various generating plants were unavailable. The SO declared
red and yellow alerts in the Luzon grid due to the emergency
outage of Hermosa- BCCPP 230kV lines due to a breaching of
safety clearance over the distribution utility lines. Generators
on forced outage for the said period were GNPower Dinginin 1,
Mariveles 1 and 2, Calaca 2, SLPGC 1-3, and QPPL. Because
of the prolonged high-price incidents, SPC was enforced
for 3,188 dispatch intervals in Luzon and Visayas on 03-25
June 2022. The supply margin was further tightened as the
demand level upsurged leading to an average WESM price
of P8.51/kWh. Noting also that several generators responded
through their generation offers as brought by rising fuel
prices globally.

CONGESTION
Table 9. Frequent Congestions from April to June 2022
Congestion on the Cebu-Negros submarine cable
(Samboan-Amlan Line 2) was still persistent manifesting
for a total of 4,777 dispatch intervals (or 18.0% of the
time). The said congestion is attributed to the outage of
Samboan-Amlan Line 1 on 15 June 2021, which was damaged
by DPWH dredging operations, reducing the MW transfer
capacity between Cebu and Negros by half. The majority of
the congestion occurred during peak hours when renewable
and conventional facilities in Negros and Panay were prioritized
in scheduling which eventually be exporting power to Cebu, the
Visayas grid’s load center.
GENERATION MIX
Coal-fired generation remained the biggest component of the
generating mix, growing to 58.9% from 53.6% in the previous
quarter. This increase was driven by the commencement of
operations of GNPower Dinginin Unit 2, which added 668MW
to the total capacity.
Figure 2. Generation Mix from from April to June 2022
2ND QUARTER OF 2022
IEMOP QUARTERLY REPORT 09
Network congestion transpired at the main corridor from the
Hermosa substation (Mexico - Hermosa lines 1 and 2) for
3,329 dispatch intervals (12.6% of the time) due to the derated
MW transfer capacity on both Mexico - Hermosa lines 1 & 2
to ensure reliable and secured grid operations. This mostly
occurred in May 2022 and in the early days of June 2022.
Extreme nodal price separation due to network congestion
was largely addressed by the Price Substitution Methodology
(PSM).
A moderate decline in natural gas production was noticed
primarily caused by the depletion of Malampaya’s gas supply.
Hydropower plant generation reduced from 5.4% to 4.1% this
quarter due to the summer season that lowered water flow
and power production.
10 IEMOP QUARTERLY REPORT

MARKET TRANSACTION

BILATERAL QUANTITY SPOT QUANTITY CUSTOMER ESSP

Figure 3. Trend of Market Transactions from Q1 2022 to Q2 2022

This quarter’s total consumption was 22,594 GWh, a 17.6%
increase over the previous quarter’s usage of 19,216GWh.
Meanwhile, overall spot transactions for 2Q 2022 were
10.2% of total consumption, up from 9.2% during 1Q
2022. Comparing quarter-to-quarter, the average Effective
Settlement Spot Price (ESSP) climbed correspondingly from
P6.96/kWh to P7.29/kWh.
Monthly consumption in April 2022 reflected a total of
7,224GWh with a spot transaction of 10.1% (731GWh) applied
with a WESM rate of P6.44/kWh. Furthermore, May 2022 has
the biggest share of spot consumption for this quarter having
a spot exposure of 11.3% (849GWh) of the total consumption
of 7,538GWh. In June 2022, the highest consumption was
recorded at 7,831GWh with a lower spot transaction of 9.2%
(718GWh). In addition, the June 2022 ESSP was P9.01/kWh
which was an all-time high for the past 8 years.

BILATERAL QUANTITY SPOT QUANTITY CUSTOMER ESSP

Figure 4. Trend of Market Transactions from January 2022 to June 2022
2ND QUARTER OF 2022
 IEMOP QUARTERLY REPORT 11

RCOA TRANSACTION
Retail Competition and Open Access (RCOA) Transactions suppliers with the most contestable customers are Manila
now has 1,911 customers (1,875 DU-connected contestable Electric Company (MRLCOLRE), Aboitiz Energy Solutions,
customers and 36 directly connected contestable Inc. (AESIRES), and AdventEnergy, Inc. (ADVENTRES). The
customers) registered in the Central Registration Body Contestable market now has an average 25% energy share
(CRB), as of 25 June 2022. IEMOP processed a total of for the second quarter of 2022.
944 supplier switches by contestable customers. The top 3

RETAIL SUPPLIERS RE SUPPLIER DISTRIBUTION UTILITIES AND BULK USERS

Figure 5. Customer Energy Volume from Q3 2021 to Q2 2022

Figure 6. RCOA Membership as of Q2 2022

2ND QUARTER OF 2022
12 IEMOP QUARTERLY REPORT
MILESTONES AND
OTHER UPDATES
POLICY & REGULATORY
MILESTONES
Promulgation of the Department of Energy’s (DOE)
and Energy Regulatory Commission’s (ERC) Issuances
Governing the Philippine Wholesale Electricity Spot
Market (WESM)
Below are the Department Circulars promulgated by the DOE
between the months of April to June 2022, along with a brief
overview of each issuance:
Department Circular No. 2022-03-0003, entitled “Adopting
Further Amendments to the WESM Rules and Its Market
Manual on Billing and Settlement for the Implementation of
Enhancements to WESM Design and Operations (Provisions
for Prudential requirements)”. The Department Circular
incorporates the following provisions in the WESM Rules and
Billing and Settlement Manual:
a. Addition of assessment by request of prudential
requirements;
b. Inclusion of force majeure events and large reduction
in load served as considerations for replacement
month in the computation of maximum exposure;
c. Revision for the basis of security amount from
average price and monthly quantities to hourly price
and hourly quantities;
d. Revision for the grounds for exempting a WESM
Member from prudential requirement;
e. Revision on the allowed forms of security; and
f. Clarification on the process of refund
Thus, the Department Circular amended the provisions of
the WESM Rules and Billing and Settlement Manual on (1)
provision, form, refund and of security, (2) calculation of
prudential requirement and (3) conditions for exemption from
prudential requirement.
2ND QUARTER OF 2022
Department Circular No. 2022-03-0009, entitled “Adopting
Further Amendments to the WESM Rules and WESM
Registration manual (Provisions for De-Registration and
Cessation of Registration)”. The amendments aim to allow
IEMOP’s timely compliance with its obligation to publish
notices of cessation of WESM membership by providing
for the process of de-registering WESM Members that have
recently become ineligible for membership, and the validation
period for such cessation.
Department Circular No. DC2022-03-0010, entitled
“Adopting Further Amendments to the Market Manual on
Registration, Suspension and De-Registration Criteria and
Procedures to Clarify Bilateral Contracts Accounted for in
Settlements”. The Department Circular adopts the provisions
of Registration Manual on notices to the Market Operator on
bilateral contracts, and enrollment of a Generation Company
as Supply Customer under specified conditions.
Department Circular No. DC2022-03-0011, entitled
“Adopting Further Amendments to the WESM Rules and its
Market Manual on Information Disclosure and Confidentiality
(Exceptions for Confidentiality Undertakings for DOE and
ERC)”. The Department Circular aims to facilitate efficient
market data provision, including confidential market data,
to the DOE and ERC as oversight bodies, by exempting
them from the requirement of executing a non-disclosure
agreement in favor of the Market Operator. Meanwhile, IEMOP
and the Philippine Electricity Market Corporation (PEMC),
as the Market Operator and Governance Arm of the WESM,
respectively, shall execute a general non-disclosure and
confidentiality agreement to facilitate sharing of confidential
information.
Department Circular NO. DC2022-05-0015, entitled
“Supplementing Department Circular No. DC2021-06-0013
on the Framework governing the test and commissioning of
 IEMOP QUARTERLY REPORT 13

generation facilities for ensuring readiness to deliver energy

RULES CHANGE PROPOSALS
to the Grid or Distribution Network”. The Department Circular
supplements DOE DC2021-06-0013 which provides for the
To maintain competitive, transparent and efficient operations
timeline for the conduct of testing and commissioning of
of the WESM, IEMOP continues to formulate and submit
generators. Thus, pending the issuance of the Certificate
proposals to amend the WESM Rules and Manuals. For the
of Compliance (COC) by the ERC, a Generation Company
2nd quarter of 2022, IEMOP submitted the following proposal
that has been issued with a Final Certificate of Authority to
to the RCC:
Connect (Final CATC) may be allowed to continue to operate
and be compensated as price taker in the market, unless the Proposed Amendments to the WESM Manual on Billing
ERC issues an Order for the Generation Company’s immediate and Settlement on Additional Compensation (Reflect
disconnection from the grid. Further, the Department Circular Supplemental Audit Findings and Additional Condition
provides, among others, that Generation Companies with Final for Administered Price Eligible Amount)
CATC but with pending issuance of COC which submitted day
Amendments to the WESM Manual on Billing and
ahead projected output nomination shall be monitored by the
Settlement were proposed to:
Enforcement and Compliance Office and may be subject to
imposition of financial penalties. i. reflect the formula for the calculation of additional
compensation amount and specify the recovery
Below are the Resolutions promulgated by the ERC between
process for additional compensation across all
the months of April to June 2022, along with a brief overview
claim categories based on the External Auditor’s
of each issuance:
recommendations from the Supplemental Audit
ERC Resolution No. 4 Series of 2022, entitled “A Resolution of PDM-related Enhancements to the Market
Adopting the Rules for the Retail Aggregation Program”. The Management System and the Central Registration
Resolution establishes, among others, the standardized rules and Settlement System; and
and procedures governing the aggregation of electricity
ii. simplify the process in determining System
requirements of end-users in the retail competition and open
Operator dispatch instructions during market
access, the requirements for registration of retail aggregators
intervention/suspension and include further
and adoption of applicable provisions of the Retail Rules.
condition on the calculation of quantity eligible
ERC Resolution No. 03, Series of 2022, entitled “A Resolution for additional compensation during administered
Approving the Open Access Transmission Service (OATS) pricing.
Rules 2022 Edition”. The OATS Rules 2022 Edition amends
The proposed amendments were submitted to the
the provisions of the OATS Rules 2006 Edition on (1) Billing
RCC on 24 May 2022. Thereafter, RCC approved the
Determinant under Module F; (2) System Impact Studies
publication of the proposal for comments on 17 June
(SIS) under Module B; (3) Penalty Provisions; (4) Interruption
2022. As of writing, the RCC has yet to deliberate the
and Curtailment Billing Adjustment under Clause F (AV)1; and
proposal and the received comments.
(5) Force Majeure Adjustment under Clause F(AV)2. These
amendments intend to address various concerns of electric
power industry participants and clarify the responsibilities of
the Transmission Network Provider and the functions of the
System Operator in line with the Philippine Grid Code (PGC)
and the WESM Rules.

The IEMOP is committed to comply with its obligations under

the foregoing issuances.

2ND QUARTER OF 2022

14 IEMOP QUARTERLY REPORT

Updates on previously reported rules change proposals

The table below provides updates on the rules change proposals spearheaded by IEMOP that was reported in previous
quarterly reports:

2ND QUARTER OF 2022

 IEMOP QUARTERLY REPORT 15

GALLERY
01 02

03 04

05 06

IN PHOTO: 01-02. As part of its efforts to boost its relations with its stakeholders and participants, IEMOP conducted another Kumustahan session with the
officers and members of the Association of Mindanao Rural Electric Cooperatives (AMRECO) to address their concerns on the impending launch of WESM in
Mindanao. 03. IEMOP conducted another Kumustahan session with the officers and members of the Philippine Electric Plant Owners Association (PEPOA)
as part of its thrust to maintain a dynamic communication line with its participants and stakeholders. Through this venue, the Market Operator was able
to apprise the members of the WESM operational highlights for the past months. 04. With the impending implementation of the Reserve Market, IEMOP
conducted a brief forum on the Reserve Market Mock Operations Program (RM-MOP). This aims to apprise the participants of the updates on the RM-MOP
and the next activities in the pipeline for the implementation of the Reserve Market. 05-06. As a preparation for the impending launch of WESM in Mindanao.
IEMOP conducted a Special Meeting to assist the participants in completing their registration requirements. Representatives from relevant agencies were
also invited to help address remaining concerns in time for the WESM in Mindanao.

2ND QUARTER OF 2022

16 IEMOP QUARTERLY REPORT

07 08

09 10

11 12

13 14

IN PHOTO: 07-09. IEMOP joined the SN Aboitiz Power in their webinar about the trends, updates, and innovations ​in the Philippine Power Sector. In this
forum, the Market Operator discussed about the WESM operations, market drivers, and the market developments in the pipeline. 10-14. IEMOP participated
in the Tabletop Exercise on the National Energy Contingency Plan (NECP) for “The Big One” last 08 April 2022. This event is organized by the Department of
Energy in collaboration with the Philippine Disaster Resilience Foundation, Inc. and Project Management Office - Earthquake Resiliency of the Greater Metro
Manila Area.

2ND QUARTER OF 2022

 IEMOP QUARTERLY REPORT 17

15 16

17 18

19 20

IN PHOTO: 15-20. IEMOP joined the Organisation for Economic Co-operation and Development (OECD) in partnership with the Department of Energy
(DOE) launched the 1st Clean Energy Finance and Investment Consultation Workshop to discuss the country’s efforts to accelerate green financing and
climate-aligned investments for clean energy.

2ND QUARTER OF 2022

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