WESM... a potential for energy generation efficiency

WESM… Wholesale Electricity Spot Market, an entity created under R.A. 9136, the "Electric Power Industry Reform Act of 2001 or also more commonly known as the EPIRA Law. WESM is like a stock market where seller- IPPs (Independent Power Plants) trade in their generated electricity to the buyer-distributors who search for power generators to fill in their quota for electricity distribution. In this virtual spot market, electricity is treated as a commodity and is supposedly traded in real time. Trading IPPs submit in their bids and the lowest bidder usually gets to be initially dispatched to satisfy the demand provided by the Market Operator. With the privatization of the industry of the electricity & power generation & transmission to end consumers, WESM was created to establish a more competitive & efficient electricity market.

Designed to provide private entities with an efficient venue for trade and investment in the power industry, the WESM aims to: 1) provide incentives for the cost-efficient dispatch of power plants through an economic merit order, 2) create reliable price signals to assist participants in weighing investment options, and 3) protect a fair and level playing field for suppliers and buyers of electricity, wherein prices are driven by market forces. (http://www.wesm.ph/overview.wesm/).

With WESM, a virtual online trading hub, with IPPs submitting their lowest bids in order to be sell their generated power, and an independent market operator who dispatches the generators in accordance to their bids, one would think that this would reform our country’s highly controlled energy line and create a fair, transparent and efficient trading environment that would engage new investors and encourage healthy competition among the players. Aside from this, it would hopefully benefit the end consumers as the players in power generation & transmission would try to be competitive not only as to the prices but also with their services. The entire concept of the online spot market shows very high potential if only the entire process would be ensued. In reality, the bidding and the dispatching is done online but the payments are done outside of this online market. With this arrangement, the IPPs already awarded with the dispatch for generation, would enter into a different contract price with the distributor. The distributor would agree to this set up as it would not really affect its profit margin, as the value paid to the IPPs are merely treated as costs-expenses in its books. In the end, we, the end-consumers, are really the ones suffering the burden. The online energy market shows potential. But then again as always, the Filipinos found a way to circumvent the it.