Republic of the Philippines

ENERGY REGULATORY COMMISSION

A world class and independent electric power industry regulator that equitably promotes and protects the interests of consumers and other stakeholders, to enable the delivery of long-term benefits that contribute to sustained economic growth and an improved quality of life.


ERC Strengthens Market Surveillance and Monitoring

Cognizant of the evolving landscape of the electricity market, new regulatory methodologies and the need for radical improvements on market monitoring to be developed and undertaken, the Energy Regulatory Commission (ERC) awarded the contract for the technical assistance for the Creation of Market Analysis Framework for the Surveillance and Monitoring of the Wholesale Electricity Spot Market (WESM) to Potomac Economics, Ltd./PE Software Analytics. The engagement with Potomac will ensure that abuse of market power or anti-competitive behavior will be adequately addressed.

“Having the contract for the WESM monitoring and surveillance awarded to Potomac, the ERC will be able to cope with the unique behaviors and sophisticated bidding and supply strategies of spot market participants. This is also in preparation for the forthcoming commencement of the trading for ancillary services or the Reserve Market,” ERC Chairperson and CEO Agnes VST Devanadera stated.     
    
The ERC has been implementing trainings for its technical staff in market surveillance and monitoring, but noted that due to the dynamic nature of the electricity market, the staff has continuously experienced situations not anticipated and discussed in the trainings.
       
With the engagement of Potomac, it is expected that the ERC’s technical staff will be able to prepare monthly, quarterly, and annual state of the market reports including but not limited to price outcomes and bidding behavior containing information drawn from the market monitoring analysis framework and monitoring tools to be developed by the consultant. This will enhance the staffs’ monitoring and analytical capability relative to the results of market operations and power system conditions. The market reports are expected to provide information on the state of competition and efficiency of the WESM.
       
“We recognized the need to continuously capacitate our technical personnel to effectively perform our mandate of monitoring the electricity market and enforce applicable rules and regulations.” Chairperson and CEO Agnes VST Devandera emphasized.  
        
Potomac Economics, Ltd./PE Software Analytics bagged the contract for the WESM monitoring as its offering was adjudged as the Lowest Calculated and Responsive Bid.  Potomac is a corporation duly organized and existing under the laws of the Philippines with principal business address in Makati City.

Potomac shall assist the ERC develop a market monitoring analysis framework for the Energy and Reserve Market through the preparation of a detailed Market Monitoring and Surveillance Manual (MMSM), including establishment of market analysis database and market indices calculators.  The MMSM which shall serve as guideline to strengthen the monitoring and surveillance functions of the ERC over the WESM, is expected to address the following areas: (1) the guiding principles used to evaluate market efficiency and competitive performance, and (2) specific monitoring criteria that will be used to initiate investigations on the behavior of generators. Further, Potomac will also develop and recommend policy guidelines such as, but not limited to:  (1) Mitigating measures to prevent anti-competitive behavior and/or misuse of market power; and (2) Parameters in defining and determining anti-competitive acts.

 


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