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TOPIC TITLE 2
GUIDELINES
TRAINING
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TOPIC TITLE 3
GUIDELINES
TRAINING
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information in confidence. complete the course.
I. INTRODUCTION TO
WESM
27-28 June 2024 | Microsoft Teams
INTRODUCTION TO WESM 05
OUTLINE
01 WESM ESTABLISHMENT AND LEGAL BASIS
02 MARKET STRUCTURE
03 MEMBERSHIP AND PARTICIPATION IN WESM
04 WESM GUIDING PRINCIPLES
01 WESM ESTABLISHMENT
AND LEGAL BASIS
Wholesale: Pertains to large quantities / volumes.
WESM
Electricity: Unique commodity being traded.
Spot: Transactions settled are only those that are not covered by contracts.
Market: A venue for buying and selling (trading) electricity.
WESM OVERVIEW 08
WHAT IS THE WESM?
Centralized venue for trading of large-scale buyers and sellers of
electricity where price is based on the interaction of demand and supply
Established pursuant to Republic Act 9136 or the Electric Power Industry
Reform Act (EPIRA)
WESM OVERVIEW 09
RA 9136 (EPIRA) Establishment of WESM
Competitive
Generation
Privatization of NPC’s assets
Electric Power Industry Reform Act Regulated
Transmission
Provides for the restructuring of the Unbundling of Electricity
Rates for Transparency and Distribution
Electric Power Industry
Privatization of assets of the Opening-up of high-voltage
National Power Corporation (NPC) transmission lines for easy Competitive Retail
access of distributors and Electricity Providers
Transition to the desired large consumers
competitive structure
Open Access of
distribution lines for End-users
competitive consumers
EPIRA Section 30
Within one (1) year from the effectivity of this Act, the
DOE shall establish a wholesale electricity spot market
composed of the wholesale electricity spot market
participants.
ESTABLISHMENT Not later than one (1) year after the implementation of
the wholesale electricity spot market, an independent
OF WESM AND entity shall be formed and the functions, assets and
liabilities of the market operator shall be transferred to
such entity with the joint endorsement of the DOE and
FORMATION OF the electric power industry participants.
AN IMO EPIRA-IRR Rule 9, Section 6(a)
A Market Operator in accordance with the WESM Rules
shall implement the WESM. Not later than one (1) year
after the implementation of the WESM, an independent
entity, the IMO, shall be formed and the functions,
assets and liabilities of the AGMO shall be transferred
to such entity with the joint endorsement of the DOE
and the Electric Power Industry Participants.
WESM OVERVIEW 11
MARKET OPERATOR
The MARKET OPERATOR (MO) was created pursuant to Section 30 of the EPIRA which provides for
the establishment of the Wholesale Electricity Spot Market (WESM) by which competitive
market forces would establish generation prices and make costs more transparent.
WESM Rules Clause 1.3.1.1 WESM Rules Clause 1.2.5
Market Operator’s Duties & Responsibilities WESM Objectives
Administer the operation of the WESM in • A level playing field exists among WESM
accordance with the WESM Rules Participants (Competition)
Determine the dispatch schedule of all • Prices are governed as far as practicable
facilities in accordance with the WESM Rules. by commercial and market forces
Such schedule shall be submitted to the • Trading of electricity is facilitated among
System Operator WESM Participant within the spot market
Monitor daily trading activities in the market (Transparency)
Oversee transaction billing and settlement • Third Parties are granted access to the power
procedures system (Accessibility)
• Efficiency is encouraged
INDEPENDENT ELECTRICITY MARKET OPERATOR OF THE PHILIPPINES
ROLES AND RESPONSIBILITIES
CENTRAL REGISTRATION BODY
MARKET RETAIL MARKET
TRADING (Luzon & Visayas)
NODE
WHOLESALE ELECTRICITY SPOT MARKET REGISTRATION
CO-OPTIMIZED ENERGY and RESERVE MARKET
(Luzon, Visayas, and Mindanao)
CUSTOMER SWITCHING
GE P
REGISTRATION
Wholesale
DEMAND FORECASTING, Electricity METERING AND SETTLEMENT
PRICING AND SCHEDULING Spot Market
METERING AND SETTLEMENT
INTRODUCTION TO WESM 013
WESM ESTABLISHMENT
BEFORE 2001 Generation Companies Independent Power Producers
Transmission System Operator • Scheduling
• Pricing
• Dispatch
• Settlement
Distribution Utilities /
Directly-Connected
Customers (DCC)
- regulated Note: Lists of IPPs and DUs are non-exhaustive.
INTRODUCTION TO WESM 014
WESM ESTABLISHMENT
TRANSITION TO COMPETITIVE REGIME
RA 9136 (EPIRA of 2001) Restructured the industry to separate competitive and regulated monopoly sectors
Privatization create a Open access to Allow consumers
competitive generation transmission and to choose their
sector distribution lines suppliers
WESM
ESTABLISHMENT OF WESM
GENERATION TRANSMISSION DISTRIBUTION SUPPLY
-Contestable Customers-
INTRODUCTION TO WESM 015
WESM ESTABLISHMENT
AFTER 2001 Generation Companies
• Scheduling
Market Operator • Pricing
• Settlement
Transmission System Operator
• Dispatch
Distribution Utilities / DCCs Retail Electricity Suppliers
- regulated - competitive Note: Lists of GenCos, DUs, and RESs are non-exhaustive.
WESM FUNDAMENTALS 15
WESM ESTABLISHMENT
IMPLEMENTATION TIMELINE
Central Scheduling of
Energy and Reserves
WESM Enhanced WESM
Integration of
Variable Renewable
Design and
WESM Central
WESM
EPIRA Visayas WESM Energy Resources Scheduling in
EPIRA-IRR Commercial Mindanao
WESM Rules Operations Enhanced WESM GEOP
PEMC Incorporation Design Amendments Commencement
2010
2002-03 2015-16 2021 2023
WESM
2001 2004 / 2013 2018 2022 2024
Electric Power 2006 Retail
Competition and Transition to the Reserve
Industry Reform Act Open Independent WESM Market
WESM Market
(RA 9136) Access for Luzon Market Operator Mindanao
Management
System (MMS) and Visayas (IMO) Commercial
Philippine Grid Code Operations
Project
Luzon WESM
Commercial
Operations
WESM FUNDAMENTALS 19
LEGAL BASIS
System Operations
• In the EPIRA, the systems operations functions resides in an
entity different from the market operator.
National Grid Corporation of the Philippines (NGCP)
• Private corporation awarded concession to operate and
maintain the Philippine transmission system.
• Serves as Network Service Provider, System Operator and
wholesale Metering Services Provider – all functions
assumed from the National Transmission Corporation.
WESM FUNDAMENTALS 20
LEGAL BASIS
System Operations
• Shall provide central dispatch of all generation facilities
connected, directly or indirectly, to the transmission system
in accordance with the dispatch schedule submitted by the
market operator, taking into account outstanding bilateral
contracts
EPIRA Sec 9
02 MARKET STRUCTURE
INTRODUCTION TO WESM 23
MARKET STRUCTURE
WHAT IS WESM?
The wholesale electricity spot market (WESM) is a venue for trading of
electricity as a commodity.
• WESM facilitates the centralized scheduling of all available
capacities including contracted and spot quantities.
• Determining prices of un-contracted quantities (i.e., spot market
transactions)
• Settlement of spot market transactions (billing, payment and
collections)
WESM provides another option for sourcing electricity requirements
or selling capacities, other than through bilateral contracts.
INTRODUCTION TO WESM 24
MARKET STRUCTURE
PARTICIPATION
• Trading Participants (Generation Companies and Customers)
• Ancillary Service Providers
OPERATIONS/SERVICES
• Market Operator (IEMOP)
• System Operator (NGCP)
• Network Service Provider (NGCP and DUs)
• Metering Services Provider (NGCP)
INTRODUCTION TO WESM 25
MARKET STRUCTURE
GOVERNANCE AND REGULATION
• PEM Board, WESM Governance Committees and PEMC governance units
• Department of Energy
• Energy Regulatory Commission
INTRODUCTION TO WESM 26
MARKET STRUCTURE
GOVERNANCE AND REGULATION
Governance
and Market Operations
PEM Audit Committee PEM Board Operating
Agreement
Rules Change Committee
IEMOP Board
Market Surveillance
Market Assessment Group
Committee Functions
Dispute Resolution
Enforcement and Compliance Personnel Market Operator
Administrator
Market Operator Assets
Technical Committee
Generators / Metering Services Providers Suppliers /
A/S Providers Customers
Network Service Providers Aggregators
INTRODUCTION TO WESM 27
MARKET STRUCTURE
MARKET TRANSACTION FLOWS
ELECTRICITY FLOW
INFORMATION FLOW
MONEY FLOW
WESM
03 MEMBERSHIP AND PARTICIPATION
IN WESM
INTRODUCTION TO WESM 29
MEMBERSHIP CATEGORIES
Trading Participants
Service Providers
Generation Companies System Operator Customers
Ancillary Service Provider Network Service Provider Ancillary Service Provider
Metering Service Provider • Distribution Utility
• Bulk User / End User
• Suppliers
• Contestable Customer
INTRODUCTION TO WESM 30
MEMBERSHIP TYPE
Note:
Direct Membership
All spot market transactions
are scheduled, priced and
calculated following the
same methodologies.
WESM
Directly-Connected Distribution
Customer Utility
Indirect Membership
WESM
Directly-Connected Distribution Generation
Customer Utility Company
Direct Member
04 WESM GUIDING PRINCIPLES
BACKGROUND 32
WHAT ARE THE GUIDING PRINCIPLES OF WESM?
Gross Pool
Locational Marginal Pricing (LMP)
Net Settlement
Energy and Reserve Co-optimization
Demand Side Bidding*
Self-Commitment
*Not yet implemented
BACKGROUND 33
GUIDING PRINCIPLES
OF WESM
GROSS POOL
All energy is traded through the WESM (i.e., mandatory
market) regardless of whether the trading participant is:
› Fully Contracted
GENERATOR ENERGY OFFER FOR GENERATOR
› Partially Contracted
TRADING FULL CAPACITIES DISPATCH
› Merchant PARTICIPANTS SCHEDULING
BACKGROUND 34
GUIDING PRINCIPLES
OF WESM
NET SETTLEMENT Spot Quantity
Settled based on
WESM prices
Only Spot Quantities are settled at market price
(i.e., LMP) Total Energy
Generated or Netted out of WESM
Consumed and settled outside
Bilateral
(based on by counterparties
Note: Contract
meter reading) based on their
Spot Quantities are the energy (in MWh) not Quantity
contract price
covered by bilateral contracts between generators
and customers.
BACKGROUND 35
GUIDING PRINCIPLES
OF WESM
LMP at Market Trading Node
(PhP/kWh)
3.639
As of billing
LOCATIONAL MARGINAL PRICING 3.645 month May, there
(LMP) are 1020 market
3.660
3.670 trading nodes in
Marginal price is computed at each node or
location in the power system to reflect cost of the WESM
transmission line loss or congestion, or both. 3.640
3.908
3.760
LOCATIONAL MARGINAL PRICE =
3.895 3.740
SYSTEM MARGINAL PRICE +
COST OF LOSS + 2.802
COST OF CONGESTION 3.207
4.005
3.208
3.125
3.005
BACKGROUND 36
GUIDING PRINCIPLES
OF WESM
Reserve With Co-Optimization
Capacities
ENERGY AND RESERVE CO-
OPTIMIZATION* Total
Energy and reserve schedules are jointly determined Capacities
(Energy + Reserve)
under a single solution
Advantages of Co-optimization:
› All available capacities can be seen by the WESM Co-optimization of
› Determination of optimal schedules and prices Energy and Reserve
between energy and reserves with the least Capacities
overall cost
› Mitigate artificial under-generation
*Started on Jan 26, 2024
BACKGROUND 37
GUIDING PRINCIPLES
OF WESM
(P/MWh)
Bids to Buy
DEMAND SIDE BIDDING
Market
Loads may submit maximum price that Clearing
they are willing to pay. Price
Offers to Sell
(MW)
Dispatch Schedule Unscheduled
**Not being exercised in the market
BACKGROUND 38
GUIDING PRINCIPLES
OF WESM
SELF-COMMITMENT
Trading participants are responsible for the
management of their technical operations, unit
commitment decisions and other market risks
through submission of offers to the WESM
TRADING
ENERGY OFFER
PARTICIPANT
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