THE Independent Electricity Market Operator of the Philippines (IEMOP), the operator of the Wholesale Electricity Spot Market (WESM), said it is enforcing the rules against market participants that fail to meet their financial obligations.
“IEMOP has religiously enforced the rules of the WESM, including the timely issuance of default and suspension notices, and imposition of financial penalties,” the WESM operator said in a statement on Tuesday.
IEMOP said it is authorized by WESM rules and market manuals to impose appropriate sanctions, including suspension and deregistration, as warranted.
“These measures protect the interests of compliant participants and preserve market discipline,” it said.
The WESM is a centralized venue where energy companies can buy power when their long-term contracted supply is insufficient for customer demand.
The Philippine Chamber of Commerce Industry (PCCI) has urged IEMOP and the Energy Regulatory Commission to address the issue of WESM members defaulting on payments for their transactions.
“These defaults distort market signals and expose law-abiding market players to significant financial risk. Imposing the burden on compliant WESM members effectively penalizes those who fulfill their financial obligations while relieving delinquent members of their responsibility,” the PCCI said in a statement.
“Ultimately, the costs resulting from defaults are passed on to consumers through higher electricity prices or market fees,” the business group added.
The PCCI called on the IEMOP to fully exercise its authority under WESM rules “to protect market integrity and prevent the undue subsidization of noncompliant members by those in good standing.”
“IEMOP should implement a policy framework that ensures defaulters are held accountable and that compliant members are protected from bearing the cost of others’ failures,” the group said.
IEMOP said that it shares the same view with PCCI that all WESM participants must satisfy all their financial obligations on time.
It clarified, however, that any amount unpaid by defaulting WESM customers is not passed on to consumers nor delinquencies subsidized by consumers. These remain receivables borne by generation companies and other WESM sellers.
For noncompliant market participants, IEMOP said it collected penalties consistent with WESM Penalty Manual (Issue 3.0). These penalties are returned to consumers through their respective distribution utilities, electric cooperatives, and electricity suppliers.
“We likewise support PCCI’s call for transparency in the billing practices of Retail Electricity Suppliers (RES),” IEMOP said. “We remain steadfast in our commitment to uphold the principles of transparency, competition, and efficiency in the operation of the WESM — ensuring a fair and reliable marketplace for all.” — Sheldeen Joy Talavera