A guide to the Philippines’ Wholesale Electricity Spot Market (WESM)

(from http://balitangsanrafael.files.wordpress.com)

(from http://balitangsanrafael.files.wordpress.com)

(This has been submitted by a concerned citizen about the WESM.) 

Cheaper electricity is the benefit that was supposed to result from the establishment of the Philippines’ Wholesale Electricity Spot Market (WESM).

Launched in June 2006, the WESM provided a platform that allowed the sale and purchase of electricity supplies everyday for every given hour.

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Up there in Baguio City

Thanks, Nikka Corsino for this photo.

You just can’t please everyone.
Ask residents of Baguio City, the Philippines’ summer capital.
Everytime a couple of hicks from Manila come up and visit, the locals get complaints about the weather.
It’s either too warm or too cold.
If it’s too warm, they rant about congestion — vehicular and otherwise — and how Baguio’s weather, which attracts more tourists than it can handle, has become the city’s very enemy.
If it’s too cold, they complain about coming down with the flu and how people who live in the tropics aren’t really acclimatized to temperate weather.
If you believe these people, it’s never just right, up there in Baguio City.
Of course, I have a different opinion, having gotten parts of my formal and informal education in one of my favorite cities.
When I arrived last month, everything was perfect.
The weather was cool, the air was crisp, and my accommodations were — how do I put this? — on someone else’s tab.
I stayed in a standard hotel that offered a bathtub, hot water, cable television, and enough coffee to keep me awake for fourscore and seven years.
To what do I owe this undeserved privilege?
I was lucky enough to be chosen to participate in an energy conference organized by a non-government organization.
And no, it was far from being a summer junket.
It was — to use the term of my reporter friends — a nosebleed; one that lasted two days and temporarily stanched only by ice-cold alcoholic beverages.
All throughout the 48 hours, resource persons talked about ancillary charges* and indexation** as though these were widely understood by everyone.
The whole weekend allowed me to grasp these two concepts, however superficially.
Unfortunately, since discussions lasted until after supper, I was unable to hang out with my Baguio-based friends unlike last time.
It may have been all for the better.
After all, I had experienced enough misadventures to fill up a slapstick comedy movie a few hours before.
To reach the venue in time, I had to endure the Victory Liner Bus’s ticket lines.
It wasn’t pleasant.
It had the heavy flavor of a train queue during rush hour, complete with the stench of sweat and the stale air of impatience.
After finally being seated two hours later, I had to deal with a passenger who snored like a diesel engine.
And, upon arriving at three in the morning, tired, sleepy and irritable, I lost my notebook. Apparently, it slipped off my pants’ backpocket and fell onto someone else’s seat.
Good thing the bus conductor had the sense to keep it, failing to rid the world of the notes of an unrepentant blogger. [See: Picture of Conductor]
That single act of honesty made my weekend.
As a result, I was filled with good cheer all throughout the conference, helping create another fond memory of the City of Pines.
Up there in Baguio City, it’s always just right, if you ask me.

———————
From the Credit is Good but Her No-Good Friends are Too Cheap to Pay For Anything Dept. Photograph above was taken by Pauline Nikka Corsino. For more of her photos, visit her website. Thanks, Nikka.

From the Nosebleed Dept.

*Ancillary fees
These are collected by the National Grid Corp. of the Philippines (NGCP), the private entity now controlled by Henry Sy Jr. that manages the country’s electricity superhighway. These fees are for costs incurred in keeping contingency power reserves. These reserves are used to ensure that electricity service all across the country remains stable and uninterrupted, even in case of unexpected power plant shutdowns.
There are two kinds of contingency reserves — the first is the spinning reserve, which come from plants already turned on, ready to provide spare electricity at a moment’s notice should service be interrupted. The other, called a stand-by reserve, is expected to be ready to become a spinning reserve should the first be commissioned into service.

**Indexation
Since commodity prices go up due to inflation, companies also pay more for their maintenance and operating expenses, among others. As a result, they are allowed to increase rates to ensure a reasonable return on its investments, a practice known as indexing rates to inflation, a standard business procedure.
However, in certain power supply contracts, generation companies have based — or indexed — energy prices on costs of oil and coal — not inflation — even if there are no valid reasons for doing so.
In one case, a company pegged its local geothermal steam prices to world coal prices when the former, an indigenous energy resource, has no connection at all to the latter.
As a result, whenever coal costs in the world market went up, so did its geothermal steam prices. Result? Higher generation costs — and therefore increased electricity prices — for consumers.

Twitter, an electric company’s “noble cause”

(From lonewolflibrarian.wordpress.com)

Twitter makes many things possible.

It provides tips to clean your coffeemaker [See: Three things I learned from Twitter] or a link to a catalog featuring a series of Mercedes Benz cars — and their specs — produced for the American market in the 1960s (which I got from the person managing Donald Draper’s Twitter account.)

This latest blog piece — which includes what may well be my third  attempt at podcasting — was similarly brought about by Twitter.

In a tweet posted at around four in the afternoon of October 19, my Twitter friend @nicknich3 said:

No, it's not the lanzones we're talking about here. It's the tweet before that, my friend.

His tweet’s shortened link, in turn, brought this:

This reminded me of portions of the interview I held last June with some executives of Meralco, the Philippines’ largest electric company, regarding the firm’s Twitter strategy. [See: How Meralco got its Twitter name back]

During the interview, Kirk Campos, the company’s corporate communications staff, said that he once attended an internet convention in Manila which dealt with social media, including Facebook and Twitter.

According to Campos, a speaker in the event said that Meralco’s foray into Twitter was “a noble cause” since it was going to open the floodgates of complaints from its customers. However, the speaker said that without knowing that Campos, and his supervisor, Joe R. Zaldarriaga, the company’s media relations manager, was in attendance.

For more, you can listen to a three-minute portion of the interview, which lasted more than one and a half hours.

Twitter, Meralco\’s noble cause

———————

From the Give Credit Where Its Due Dept.
As indicated in podomatic.com, the website where the podcast was uploaded, the interview was held last June 22, 2010 at the Meralco headquarters on Ortigas Avenue, Pasig City, Philippines. [See: Podomatic.com] Among those in attendance included Campos, Zaldarriaga, and Ernesto A. Fraginal, senior manager of the company’s call center operations. No credit goes to yours truly for failing to embed podcast. What the $%#@*&^+~!

Three things I’ve learned on Twitter so far

1) Vinegar is good for cleaning the coffee machine.

Or so says @FrankAdMan, a US-based Twitter user who, for some reason, decided to follow me (and I was prompted to follow him as well, introducing me to the Twitter accounts of Donald Draper, Roger Sterling, and Steve Martin etc.) [See: Donald Draper, Roger Sterling, and Steve Martin]
Run through about a mugful of vinegar to clear the gunk in the machine’s innards, he told me in a tweet. I did that just now, a warm Sunday afternoon, a year after I received the advice. Guess what? Coffee I just made tastes crispier, cleaner, all because of tips shared by users of a platform that uses no more than 140 characters.

2) “What fresh hell is this?” was an original quote from Dorothy Parker

While writing a review of Californication — which was later uploaded in hotmanila.ph in exchange for a hearty lunch — I had the mistaken assumption that the quote was first uttered by Kathleen Turner, who played Barbara Rose, in the War of the Roses. [See: Californication Review]
At that time, I had just bought old Rolling Stone magazines from a neighborhood garage sale. One of those issues featured a review of the movie in which the writer quoted Barbara Rose as saying exactly that, without referring to the feisty female of the Algonquin Round Table. [See: Dorothy Parker, Algonquin Round Table]
In Californication, Hank Moody — played by David Duchovny — uttered that same quote, referring to the cantankerous Sue Collini, also played by Kathleen Turner, the new boss of Moody’s agent, Charlie Runckle. [See: Californication]
I was about to point out that Turner ORIGINALLY uttered the same quote that was later used to describe her in another role.
Fortunately, the oversight was caught in time by @hotmanila and @sleeplessgirl while exchanging various Tweets. So much for my background in literature.

3) Last but not least, Twitter users can teach you a lot more about the world.

You just have to be patient.
Through this microblogging platform, I learned that @meralco — currently the Twitter handle of the Philippines’ largest electric company — was initially held and controlled by @nicknich3, an American electricity price analyst based in Cagayan de Oro by the name of Nick Nichols. [See: Nick Nichols’ blog.]
Nichols later agreed to “return” the handle to Meralco during the height of typhoon Ondoy last year. [See: How Meralco got its Twitter name back]
Through his various blog entries — links of which were posted on Twitter — and direct message exchanges on the same platform, I was able to get an idea — however vaguely — of what the term “stranded costs” meant in the arcane world of the Philippine power industry. “Stranded costs” represent the portion of an electric bill that is used to pay for investments of companies that built power plants especially after the value of these generation assets may have changed due to a shift in government policy. [See: Stranded Costs in Energy Dictionary]
See? I’m learning something.

An electricity tower by any other name

Of the many things I learned from television — nip slips, sex video scandals, and lotto — nothing proved more informative than the time I first encountered a fancier term for an electricity tower.
It’s a pylon, the same structure that Andy Pipkin, a Little Britain character who faked his disability, threw his frisbee into.
When Pipkin realized that his companion wasn’t about to fetch his toy, he decided to take matters in his own hands.
He climbed the tower, getting burned and electrocuted in the process, although he did manage to get his frisbee and return to his wheelchair.
While he was being fried, his caretaker, Lou Todd, was chatting someone up, none the wiser.

That slapstick sketch gave me a good laugh and added to my little storehouse of technical knowledge.
But it only proved useful three years and two jobs later.
Someone in the office — a person fondly called by a single letter (sadly, she’s no longer with us now) — was writing a news story about electricity and she wanted to know if an electricity tower could be called by any other name.
This was my chance, I told myself.
Knowing that my fifteen minutes of fame was about to begin, I stood up and proclaimed to one and all that I — and only I — knew the exact answer to her question.
“Another term for electricity tower?” I said in a loud, commanding voice.
Temporarily distracted by my booming baritone, my co-workers turned to look at me, curious as to what new trick I had in my sleeve.
When I knew that I held their attention, I was sure I would savor the benefits of my genius.
However, I never got around to enjoy it.
At the exact moment I was about to utter the word, a mysterious occurrence took place. It can only be described by two words: senior moment.
I was caught standing and tongue-tied, unable to remember what exactly I was referring to.
Some of my coworkers, known for never having suffered fools, laughed.
And from then on, most of them never believed a thing I said again.
I can’t exactly blame them — I was only able to remember the word “pylon” after about half an hour.
This now brings me, however haphazardly, to the subject of this blog entry — pylons.
I recently became curious about pylons after having read The Pleasures and Sorrows of Work by Alain de Botton.
The book, which discusses various kinds of professions, talks about transmission engineering, which involve — you guessed it — electricity towers.
These structures transmit electricity to substations so that these can be distributed by utilities (such as the Manila Electric Co.) to their customers.
To get a clearer explanation, here’s what de Botton says:

Along its subterranean course, the line would dissolve into ever smaller forces, from a prodigious 400 kilovolts to a more moderate 275 and thence, in the residential streets, to a placid 132, until it emerged from sockets, shorn of all impetuousness, at a mere 240 volts.

In the same book, de Botton relates his adventures with a founding member of the UK-based Pylon Appreciation Society and cites a book entitled The Beauty of Electricity Pylons in the Dutch Landscape by Anne Mieke Backer and Arij de Boode.

Published by Rotterdam University, the book makes the case for pylons’ aesthetics. Or so de Botton says.
Meanwhile, in the Philippines, which supposedly has the second-most expensive electricity in Asia next to Japan, we also have our own pylons.
These electric towers are connected to a grid that covers Luzon and Visayas islands.
As a result, the grid can dispatch electricity produced by a power plant in Luzon to an area in the Visayas. This partly explains the electricity shortage in Mindanao, the country’s second-largest island.
Since the island’s connection to the main grid is still being put up, Mindanao is unable to access the spare electricity capacities of power plants in Luzon and the Visayas.
However, no fan clubs nor appreciation societies for pylons in the Philippines may be founded soon.
Besides the general lack of interest in them, pylons now fall under the country’s power grid which have been leased for 25 years starting in 2007 to a consortium.
The consortium runs the National Grid Corp. of the Philippines (NGCP), formerly known as the TransCo., or the National Transmission Corp., formerly a government-led corporation.
According to the Freedom from Debt Coalition (FDC), the auction for the 25-year lease to run the country’s power grid was marred by among others, the lack of transparency.
This later prompted some entities that participated in the bidding to file a case at the Supreme Court, the FDC said in the November 2009 issue of its publication, People Against Immoral Debt.
However, this didn’t prevent the NGCP from securing the P3.95 billion contract — ten times bigger than the P329 million NBN-ZTE deal — because its owners reportedly had close ties to President Gloria Macapagal-Arroyo and First Gentleman Mike Arroyo.
The consortium’s senior executives included Walter Brown, who is closely linked to Diosdado “Buboy” Arroyo, the President’s brother, and Enrique Razon, a key Arroyo supporter. (Razon, who controls the International Container Terminal Services Inc. (ICTSI), the Philippines’ largest privately-controlled port operator, has sold his NGCP stake to an entity privately-held by Henry Sy Jr., son and namesake of the country’s mall tycoon.)
This questionable transaction has been raised at the Senate by Senator Jamby Madrigal but no significant action has been taken by any government agency so far.
As a result, the government has given up on its last defense against power sector privatization, letting its pylons be bygones.

———————
From the Read The Fine Print Dept. In Britain, a pylon can also refer to what Americans call a traffic cone.

Picture of pylon in Sheung Shui — located at the north district of Hong Kong — was taken in August 2006 and later uploaded to the commons section of Wikipedia. Thanks, typhoonchaser.

Meralco, Twitter, and brownouts

Twitter is freaking amazing.
But don’t take my word for it.
After all, I’m just quoting @nicknich3, the Twitter username of a Cagayan de Oro-based electricity price analyst and founder of an Asian energy advisory group.
@nicknich3 was prompted to make the assertion after I expressed similar sentiments about Twitter, the microblogging platform that allows users to tweet, that is, to write and publish their thoughts online in just 140 characters.

Now why would I — a person who can’t shut his trap even if you paid him to do so — sing praises for an online app that offers a mode of communication shorter than a single text message?
Simple.
Its limitation is its advantage.
Twitter users are generally forced to express their ideas clearly and briefly when formulating tweets and/or communicating with their followers (which is to Twitter what friends are to Facebook).
Besides being amused by witty tweets from users with names of people dead and alive, real and imagined, Twitter users also gain a deeper understanding of subjects and issues — trivial, arcane, or both — with the help of their fellow Twitter addicts.
Take my exchange with @nicknich3.
It began with, of all things, an unscheduled, temporary, one-hour brownout a few weeks ago in the area where I live.
When the lights went out at about one in the morning, I sent a tweet using my cellphone to my Twitter account, a process explained by clicking here.
My tweet, which came out on Twitter’s public timeline, also mentioned the Twitter username of Meralco — @meralco — the Philippines’ largest electric company and the lone electricity distributor in Metro Manila. (I mistakenly tweeted NGPC, when it should be NGCP for National Grid Corp. of the Philippines that runs the country’s power grid.)

As a result, as soon as whoever handled @meralco checked its Twitter account, s/he would see that I mentioned the company and was awaiting a reply.
Early the next day, the company replied that a tripping occurred in my area.

When I realized that @meralco was eager and earnest in replying through tweets, I peppered it with more questions, some of which were inane.
I asked @meralco about its stock price forecast, a question I knew it was unwilling to answer.
I then asked whether costs of getting electricity from bunker fuel plants were lower or higher than getting them from coal plants.*
That was when @nicknich3 came in.
From the looks of it, @nicknich3 was a follower of Meralco’s Twitter account who saw that @meralco was talking to me on Twitter.
He then replied to me.

After that, things started becoming a bit more fun and frenzied.
Immediately after following each other on Twitter, @nicknich3 and I talked about the new pricing scheme — the performance-based rating (PBR) — that Meralco was allowed to implement.
The PBR formulation allows companies to charge higher rates — sometimes even at shorter periods — so that these firms will be able to recover their investments (i.e., in research and development and in capital equipment) that may already be in danger of being obsolete and worthless.
The PBR is useful especially in industries such as telecommunications where technologies change so quickly.
Unfortunately, these quick advancements do not occur regularly in electricity distribution, Meralco’s core business, @nicknich3 said.
Which is why he also told me — again via Twitter — that he remains confused about the Energy Regulatory Commission’s (ERC) decision that allowed Meralco to use PBR when charging customers.
Shortly after that, our Twitter exchange ended.
I was unable to formulate an intelligent question nor continue the discussion, being a pseudo-professional deadline beater.
But one thing’s for sure, next time I write about the power industry, I know whom to call and where to go.
Thanks, @nicknich3, Twitter, and yes, you too @meralco.
———————
*From the That’s A Fact, Jack Dept.
Consumers incurred higher power costs from March to April because of increased generation charges. Electricity used by Metro Manila is predominantly produced by power plants that burn coal, the cheapest yet dirtiest fuel. However, some coal plants were taken offline — these needed to be fixed for maintenance — and were therefore unable to produce electricity.
To make up for the shortfall, and to avoid brownouts, distributors such as Meralco bought power from plants that use bunker fuel to produce energy. Bunker fuel comes from oil, the price of which remains expensive. High costs of bunker fuel are then passed on to consumers, prompting them to pay more for electricity consumption. This was explained by me in a text message by Dean de la Paz, a consultant of the Joint Congressional Power Commission and a blogger for GMANews.TV, the website I work for.

From The Digital Credits Dept. Digital Art from www.twitterbacksnow.com.