Via the "Visayas Supply Augmentation Auction (VSAA) Program," PEMC which is also the market operator of the Luzon Wholesale Electricity Spot Market (WESM) was mandated by the Department of Energy (DoE) to administer an auction process for capacity that shall augment supply in the Cebu, Negros and Panay islands.

PEMC explained that the VSAA functions as a "day-ahead market which would allow generators to sell their un-contracted capacity and customers to sell an interruptible portion of their loads through an auction process."

Prospective participants in the power supply auction process are grid-connected generation facilities who are willing to sell their un-contracted capacity or self-generation facilities (embedded generators) that are connected to a distribution network.

Even the contracted load of a distribution utility, which can be classified "interruptible" or loads resulting from voluntary curtailment, can be offered in the VSAA.

In running the program, the company is seeking to recoup from participants transaction fees amounting to P22.759 million this 2009.

PEMC said this shall "cover the budgetary requirements of PEMC for personnel expenses, maintenance and other operating expenses and capital expenses" in running the program.

For subsequent years, the market operator initially set the total transaction fees at the same level, but will have some "automatic adjustments to take into account escalation of costs based on consumer price index projections and annual escalation cost of contracts, as well as the projected or estimated costs of acquiring assets or implementing specific projects."

The pricing and cost recovery mechanisms applied with the ERC also include the guidelines, determination of schedules and prices; cost recovery by the distribution utilities, and the System Operator (National Grid Corporation of the Philippines).

The VSAA has been the consensus reached with stakeholders in the Visayas to finally mollify dilemmas of power interruptions that have been impeding economic activities in the region, and one that has also been causing inconvenience to consumers at all levels.

"The consumers in these regions are already threatened by the looming power shortage during peak hours in the region which could result in increasing incidents of outages until sufficient new base-load capacity is put online," PEMC noted. (MMV)