THE DEPARTMENT of Energy (DoE) is targeting to introduce futures and capacity markets as part of innovations in the electricity market next year, its secretary said.
“At the end of this year, we will see a reserve market in place. Next year, we are working on a futures market and then we will have a capacity market that will also be in place by next year,” Energy Secretary Raphael P.M. Lotilla said during an economic briefing in San Francisco, California on Thursday.
Mr. Lotilla said the move is part of the agency’s reforms to attract investors and to ensure “a level playing field” for them in the Philippines. He did not discuss further details about the proposals.
As described by the Independent Electricity Market Operator of the Philippines (IEMOP), a commodity futures contract “prescribes the delivery of a particular commodity; can be settled by the delivery of such commodity or payment of the cash thereof; and usually offset before delivery data; and usually has standardized terms.”
In September, the DoE greenlit the commercial operations of the reserve market through Department Circular 2023-09-0026, which is targeted to start on Dec. 26.
The joint application was filed by the IEMOP and the Philippine Electricity Market Corp. in October 2022 for the implementation of the co-optimized energy and reserve market at the Wholesale Electricity Spot Market.
The reserve market will facilitate the trading of ancillary services or power reserves needed to support the transmission system.
According to the circular, the IEMOP is directed to complete preparations and start limited live dispatch operations by Dec. 25.
The Energy Regulatory Commission (ERC) granted preliminary approval to the application for amendments to the price determination methodology (PDM). Asked for an update, the ERC said that the final determination of PDM is still under evaluation. — Sheldeen Joy Talavera