The Philippine Chamber of Commerce and Industry (PCCI) has urged the Independent Electricity Market Operator of the Philippines (IEMOP) to act decisively against members of the Wholesale Electricity Spot Market (WESM) who have allegedly defaulted on their financial obligations.
In a statement on Sunday, the PCCI said the costs resulting from defaults are passed on to consumers through higher electricity prices or market fees.
Non-payment of market dues undermines the integrity of the spot market and unfairly burdens compliant participants.
The PCCI said that in a recent meeting, IEMOP acknowledged the “challenges” posed by defaults of some WESM participants, which impact the full settlement of receivables of compliant WESM members.
It neither identified those challenges nor provided the names of the WESM members who were allegedly in default.
Settlement process
Minutes of the meeting held last month, a copy of which was obtained by Malaya Business Insight, showed that one of the PCCI members raised issues about the WESM settlement process, emphasizing the need for timely payments for both buyers and sellers in the contestable market.
The minutes showed that the PCCI noted that while collections occur on the 25th and payments to generators on the 26th, under-collection and defaults by some “electric cooperatives” hinder full payments to generators.
The current pro rata distribution of collected funds lack priority, leading to payment delays for some suppliers, the minutes stated.
The IEMOP declined to comment, adding that a statement would be issued on July 14.
“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,” PCCI said.
PCCI urged the IEMOP to fully exercise its authority under the WESM rules, which allow it to suspend and de-register defaulting members.
“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,” PCCI stressed.
Transparency in billing
In addition to enforcing default penalties, PCCI urged the Energy Regulatory Commission (ERC) to push for greater transparency in the billing systems of Retail Electricity Suppliers (RES), particularly regarding WESM-related charges for contestable customers.
PCCI said contestable customers are electricity end-users who can select their electricity supplier and may choose to switch from their existing provider, usually the local distribution utility (DU), to a RES to meet their power requirements.
RES offers contestable customers the option to choose between single-billing and dual/multiple-billing systems. In a dual or multiple billing system, the charges, which may come from the RES, the WESM, and the DU, are separated, whereas a single billing consolidates all these charges.
PCCI proposed that electricity bills issued by RES providers itemize WESM charges, including energy transactions, line rentals, feed-in tariff components, and net settlement surplus allocations. This would provide contestable customers—now encompassing a broader base under the expanded Retail Competition and Open Access —with a better understanding of how charges are computed.
“Contestable customers deserve clarity and fairness in their electricity billing. Transparent WESM-related charges will allow them to make informed decisions and promote greater competition in the energy sector,” PCCI said.
In a text message on Sunday, ERC Chair Monalisa Dimalanta said the Commission fully supports the call of PCCI.
Dimalanta stated that last year, the Commission issued the Omnibus Rules on Customer Choice Programs, which included, among others, the Magna Carta for Contestable Customers.
“The ERC will fully enforce the rights of contestable customers, and we will not countenance abusive behavior of erring retail suppliers,” Dimalanta said.
Malaya Business Insight on August 30, 2024, reported that the omnibus rules, among others, establish a Magna Carta for retail customers, outlining their rights, including the right to choose suppliers, access to transparent billing, and protection against premature contract terminations.
