ERC oks P24-M for Mindanao energy market

MANILA, Philippines – The Energy Regulatory Commission (ERC) approved a budget of P24.26 million for the Interim Mindanao Energy Market (IMEM), which aims to alleviate the power supply shortage in Mindanao.

The amount is lower than the P34.26 million that the Philippine Electricity Market Corp. (PEMC) applied for. PEMC said the budget would be spent for pre-operating expenses, capital expenditures and consultancy services.

“The ERC granted PEMC’s proposed budget, except the P20 million for consultancy services, which it reduced by half, pending submission of the supporting documents to justify this expenditure,” said the commission.

PEMC needs to secure ERC’s approval because it would source the amount from unused market fees, which, according to rules, must be given back to customers. These fees are collected from power generation firms, which trade in the wholesale electricity spot market (WESM).

The ERC said the budget for IMEM would be returned to Luzon and Visayas WESM participants once IMEM starts to earn from commercial operations.

IMEM was established to address the power shortage in Mindanao. It will provide a venue for generators and other entities with excess or unutilized generation capacities to sell these capacities. It is envisioned to reflect the “true cost of power” so generation companies will be enticed to enter or expand in Mindanao.

The Department of Energy and PEMC have yet to determine when IMEM will actually take off.

DOE Undersecretary Josefina Asirit said a pilot test of the market would take up to 3 months, which means that the power situation in Mindanao is unlikely to be resolved by summer.

Think tank Philippine Institute for Development Studies warned Mindanao might see a repeat of the 10-hour long brownouts experienced in 2010 this summer because no new capacity has come on stream in the region. – Rappler.com