DOE Department Circular No. DC 2015-07-0013 ADOPTING FURTHER AMENDMENTS TO THE WESM RULES (PROCEDURE FOR CHANGES TO THE WESM RULES AND MARKET MANUALS) June 29, 2015

Adopted: 29 June 2015
Date Filed: 28 July 2015
WHEREAS,Section 37 of the Electric Power Industry Reform Act (EPIRA) provides that the DOE, jointly with the electric power industry participants, shall establish the Wholesale Electricity Spot Market (WESM) and formulate the detailed rules governing the operations thereof;

WHEREAS,on 28 June 2002, the DOE, upon the joint endorsement of the electric power industry participants, promulgated the WESM Rules through Department Circular No. 2002-06-003;

WHEREAS,any changes, amendments, and modifications to the WESM Rules shall be undertaken in accordance with the provisions of Chapter 8 thereof;

WHEREAS,on 30 September 2014, the Philippine Electricity Market Corporation (PEMC) submitted to the Rules Change Committee (RCC) its proposed amendments to the WESM Rules, particularly on the procedure for changes to the WESM Rules and Market Manuals in order to clearly spell out the approval for changes to the WESM Rules;

WHEREAS,on 05 November 2014, the proposal was presented by PEMC to the RCC during the 94^thRCC Meeting, which thereafter approved its publication in the WESM website to solicit comments from market participants and other interested parties;

WHEREAS,on 14 January 2015, the RCC during its 96^thRCC Meeting deliberated on the proposal, with inputs from the DOE, and after giving due course to the matter, finalized and approved the said proposal for endorsement to the PEM Board;

WHEREAS,on 10 March 2015, after due evaluation and deliberation, the PEM Board has resolved to approve for endorsement to the DOE the above stated RCC proposed amendments to the WESM Rules;

WHEREAS,on 18 March 2015, the above stated amendments to the WESM Rules were submitted to the DOE for final approval, in compliance with Chapter 8 of the WESM Rules;

WHEREAS,the DOE thoroughly reviewed the PEM Board-approved amendments to the WESM Rules and deemed it consistent with the objectives of the WESM Rules;

WHEREAS,the DOE deemed it necessary to amend certain provisions of the WESM Rules to include the final approval of the Market Manuals by the DOE to address the issues on inconsistencies between the WESM Rules and Market Manuals and to promote transparency and efficient electricity market;

NOW THEREFORE,pursuant to lo authority under the WESM Rules, the DOE hereby adopts; issues, and promulgates the following amendment' to the WESM Rules:

Section 1. Amendments to the WESM Rules.

(a)	Clause 1.4.5.2 under Obligations of the PEM Board is amended to read –
	"1.4.5.2	The following are the powers and duties of thePEM Board:
		xxx     xxx     xxx
		(f)	Review and recommend changes to theWESM RulesandMarket Manuals,as well as the adoption of newMarket Manuals;and
		xxx     xxx     xxx”
(b)	Clause 8.1 under Chapter 8 Rules Change is amended to read –
	"8.1	SCOPE OF CHAPTER 8
	Proposals for changes, amendments, and modifications of theWESM RulesandMarket Manuals,as well as the adoption of newMarket Manualsshall be undertaken in accordance with the provisions of this chapter.
	This chapter 8 sets out:
	(a)	The composition and manner of appointment of theRules Change Committee;
	(b)	The procedure for effecting a change to theWESM RulesandMarket Manuals; and
	(c)	The procedure for approval of a change to theWESM RulesandMarket Manuals, including proposals that will result in an amendment to theWESM Price Determination Methodologyand adoption of newMarket Manuals.”
(c)	Clause 8.2 under Rules Change Committee is amended to read –
	"8.2	RULES CHANGE COMMITTEE
	8.2.1 Establishment of a Rules Change Committee
	ThePEM Boardshall establish aRules Change Committeein consultation with industry participants.
	8.2.2 Composition of Rules Change Committee
	8.2.2.1 TheRules Change Committeeshall be comprised in a manner that is consistent with the composition of thePEM Board, provided that the persons representing each of the sectors and other members of theRules Change Committeeshall not be the same persons as those who areDirectorsof the PEM Board.
	8.2.2.2 The principles applicable to the composition and operation of thePEM Boardas set out inWESM RulesClause 1.4.2 apply also to the composition of theRules Change Committee.
	8.2.3 Membership requirements - Rules Change Committee
	Each member of theRules Change Committeeshall:
	(a)	be appointed by thePEM Boardin consultation with industry participants; and
	(b)	not be a member of thePEM Board.
	8.2.4 Termination
	ThePEM Boardmay terminate the appointment of any member of theRules Change Committeeat any time if:
	xxx    xxx     xxx
	8.2.5 Appointment for Vacated Positions
	If thePEM Boarddecides to terminate the appointment of any member of theRules Change Committeein accordance withWESM RulesClause 8.2.4, thePEM Boardshall appoint another representative from the same membership category to fill the vacancy in theRules Change Committeeas soon as practicable.
	8.2.6 Resignation
	A member of theRules Change Committeemay resign by giving a written notice to thePEM Boardthirty (30) working days before the effectivity of resignation.
	8.2.7 Conduct of meetings
	TheRules Change Committeeshall meet and regulate its meetings and conduct its business in a manner that is consistent with the provisions of theWESM Rules.
	8.2.8 Advice and assistance
	TheRules Change Committeemay obtain such advice or any other assistance as it deems appropriate, including, without limitation, advice or assistance from persons with experience relevant to any proposal to change theWESM RulesorMarket Manuals, or to adopt a newMarket Manual, which theRules Change Committeeis considering; and fromWESM memberswho are likely to be affected by any proposal.”
(d)	Clause 8.3 under Referral of Matters to the Rules Change Committee is amended to read –
	"8.3	REFERRAL OF MATTERS TO THE RULES CHANGE COMMITTEE
	8.3.1 Proposals for Changes to theWESM RulesorMarket Manuals, or Adoption of NewMarket Manuals
	TheMarket Operator, the Government, anyWESM memberor other interested parties may submit proposals for changes to theWESM RulesorMarket Manuals, or for the adoption of a newMarket Manualto theRules Change Committee.
	8.3.2 Form of submission
	Proposals for a change or changes to theWESM RulesorMarket Manuals, or the adoption of newMarket Manualsshall:
	(a)	be in writing and addressed to theRules Change Committee;
	(b)	include the name and address of the applicant;
	(c)	demonstrate that the change to theWESM RulesorMarket Manual, or the proposed newMarket Manualis:
		(1)	consistent with theWESMobjectives;
		(2)	feasible;
		(3)	not unreasonably costly to implement; and
		(4)	aimed at providing a more appropriate or better means of achieving the criteria set out inWESM RulesClauses 8.3.2 (c) (1) to (c) (3), by replacing an existing provision of theWESM Rulesor aMarket Manual, or adopt a newMarket Manual;
	(d)	provide the reasons why a change to theWESM RulesorMarket Manual,or the adoption of a proposed newMarket Manualis necessary or desirable; and,
	(e)	contain sufficient information to permit a proper consideration by theRules Change Committeeof those reasons, including the public benefit (if any) of making the change to theWESM RulesorMarket Manual, or adopting a newMarket Manual.
	8.3.3 Rules Change Committee obligations
	The RulesChange Committee shall:
	(a)	keep a register of all proposals for a change in theWESM RulesorMarket Manualsas well as proposals for newMarket Manualssubmitted to it; and
	(b)	give due course to the proposal in theRules Change Committeemeeting immediately following theRules Change CommitteeSecretariat’s receipt of a proposal or as soon as practicable.”
(e)	Clause 8.4 under Consideration of Proposed Rules Change by the Rules Change Committee is amended to read –
	"8.4	CONSIDERATION OF PROPOSALS TO CHANGE THE WESM RULES OR MARKET MANUALS OR TO ADOPT NEW MARKET MANUALS BY THE RULES CHANGE COMMITTEE
	8.4.1 Rules Change Classification Procedures
	8.4.1.1 Rules change proposals shall be classified as follows:
	a)	Urgent Proposals refer to proposals for amendments to the WESM Rules and Market Manuals or the adoption of new Market Manuals, which require immediate action to –
		i.	Avoid, reduce the risk of or mitigate the adverse effects of certain conditions on the ability of the power system to function normally;
		ii.	Avoid, reduce the risk of or mitigate the effects of the abuse of market power or anti-competitive behavior;
		iii.	Avoid, reduce the risk of or mitigate the unintended adverse effect of aWESM Rule(or any of its amendments) or a provision in aMarket Manual;
		iv.	Facilitate the implementation of any regulation, circular, order or issuance of the DOE or ERC pursuant to the EPIRA, or of any issuance of thePEM Board.
	b)	Minor Proposals are proposals for amendments to theWESM RulesorMarket Manuals, which are corrections as to form such as typographical or grammatical changes, or those which are of a non-material procedural or a non-substantive nature. A proposal will not qualify as a Minor Proposal if it entails any of the following –
		i.	A WESM member or the Market Operator would incur material additional costs in order to effect the change or to be compliant with the change brought about by the amendment;
		ii.	The determination of timetable (including bid and offer submission schedules, auction schedules, etc.) or prices in any of the physical or financial markets would be changed;
		iii.	The means of procurement of, and prices paid for, an ancillary service would be changed; The level or timing of information released to the WESM would be changed;
		iv.	The proposal would result in a change to the conditions for participation such that any currently authorized WESM member would no longer be authorized;
		v.	The proposal would make it unreasonably difficult for a WESM member to comply with the law, or would render an otherwise compliant WESM member non-compliant with law, or would deprive a WESM member of any right under existing law; and
		vi.	The change would introduce additional risks to the Market Operator of not being able to direct the operation of the spot market or to the System Operator of not being able to maintain system reliability in accordance with the applicable standards.
	c)	General Proposals refer to proposed amendments to theWESM RulesorMarket Manuals, or newMarket Manuals, which do not otherwise qualify as either Minor Proposals or Urgent Proposals.
	8.4.1.2 The proposed amendments to theWESM Rules,Market Manuals,and any amendment and/or adoption of a newMarket Manualsshall take effect upon approval and promulgation by the DOE.
	In cases of changes to theWESM Rules, Market Manualsor the adoption of newMarket Manuals, implemented pursuant toWESM RulesClause 8.4.1.1 (a) prior to DOE’s approval, shall be processed and submitted to the DOE for final approval; otherwise, the effectivity of suchWESM Ruleschanges shall be no more than six (6) months from thePEM Boardapproval.
	8.4.1.3 Subject to approval by thePEM Board, theRules Change Committeeshall develop and publish detailed, guidelines and procedures to be employed in the consideration, approval, publication and effectivity of any proposed change to theWESM RulesandMarket Manuals,as well as for the adoption of newMarket Manuals.These guidelines and procedures will, as far as practicable, be consistent with the provisions of this Chapter 8, provided, however, that the Committee may establish procedures, time periods and manner of publication and effectivity other than as stated in this Chapter 8 depending on the classification of the proposed change.
	8.4.2 Assessment of proposals
	Pursuant toWESM RulesClause 8.3.3 (b), theRules Change Committeeshall assess whether the proposed change to theWESM RulesorMarket Manual, or the proposal for a newMarket Manualis:
	(a)	consistent with theWESMobjectives
	(b)	feasible;
	(c)	not unreasonably costly to implement; and
	(d)	aimed at providing a more appropriate or better means of achieving the criteria set out in Clauses 8.4.1 (a) to (c).
	8.4.3 Discretions when assessing a proposal
	In considering whether a proposal for a change in theWESM Rulesor aMarket Manual, or for the adoption of a newMarket Manualsatisfies the criteria as set out isWESM RulesClause 8.4.1, theRules Change Committeemay:
	(a)	Take into account any information and documents that theRules Change Committeereasonably considers to be relevant to its consideration of the proposed change to theWESM RulesorMarket Manualor the proposed newMarket Manual;
	(b)	Consult with such persons whom theRules Change Committeereasonably considers will likely be affected by the proposal;
	(c)	Seek such information and views from any person as may be practicable under the circumstances; and
	(d)	Refer and delegate the proposal to any working group, comprised of persons having such expertise as the Committee, in theRules Change Committee’sabsolute discretion, whenever it considers reasonable or necessary or as it may consider practicable in the circumstances delegating to that working group any obligation or task of theRules Change Committeeas set out inWESM RulesClauses 8.4.3, and 845 other than thisWESM RulesClause 8.43 (d).
	8.4.4 Notification following failure to satisfy criteria
	If theRules Change Committeeconcludes that a proposal does not satisfy the criteria set out inWESM RulesClause 8.4.2, it shall notify the proponent and thePEM Boardwithin 10 working days after its decision on the non-adoption of the proposal, including the reason for its decision.
	8.4.5 Notification following satisfying criteria
	If theRules Change Committeeconcludes that a proposal satisfies the criteria as set out inWESM RulesClause 8.4.2, theRules ChangeCommitteeshall:
	(a)	Notify thePEM Board,allWESM membersand other interested parties of the proposal; and
	(b)	Invite such parties to make written submissions regarding the proposal within the next 30 working days after publication of the proposed change to theWESM RulesorMarket Manual,or newMarket Manualin the market information website.
	8.4.6 Submissions regarding proposed Rules change
	To be validly considered, a written submission made in response to a proposed change to theWESM Rules, Market Manual, or a proposal for the adoption of a new Market Manual, as provided under clause 8.4.5 (b), must be received by theRules Change Committeeno later than 30 working clays alter the notice and invitation referred to inWESM RulesClauses 8.4.5 (a) and (b) are issued.
	8.4.7 Approval of proposals
	If theRules Change Committee, upon deliberation of the proposal and having considered all valid submissions, concludes that it is necessary or desirable to give effect to the proposed change to theWESM Rulesor theMarket Manual, or adoption of a newMarket Manual, then it shall submit said proposal to thePEM Boardfor approval.”
(f)	Clause 8.5 under Consideration of Proposed Rules Changes by the PEM Board is amended to read –
	"8.5 CONSIDERATION OF PROPOSALS TO CHANGE THE WESM RULES OR MARKET MANUALS OR ADOPT NEW MARKET MANUALS BY THE PEM BOARD
	8.5.1 PEM Board assessment of proposals
	If theRules Change Committeesubmits a proposal to the PEM Board for thePEM Board’sapproval of any change to theWESM RulesorMarket Manual, or adoption of a newMarket Manual, in accordance withWESM RulesClause 8.4.7, thePEM Boardshall deliberate on the same in the nextPEM Boardmeeting immediately following its receipt thereof to assess whether:
	(a)	The proposal satisfies the criteria as set out inWESM RulesClause 8.4.2; and
	(b)	The processes and procedures set out inWESM RulesClause 8.4 have been duly followed.
	8.5.2PEM Boarddiscretions when assessing a proposal for a change in theWESM RulesorMarket Manuals, or for the adoption of newMarket Manuals.
	In considering whether a proposal for a change in theWESM RulesorMarket Manuals, or adoption of newMarket Manualssatisfies the criteria which are set out inWESM RulesClause 8.4.2, thePEM Boardmay:
	(a)	Take into account any information and documents, which thePEM Boardreasonably considers to be relevant to its consideration of the proposal;
	(b)	Consult with such persons as thePEM Boardreasonably considers will likely be affected by the proposal; and
	(c)	Seek such information and views from any person whom thePEM Boardconsiders relevant or as maybe practicable in the circumstances.
	8.5.3 Notification following unsuccessful proposal
	8.5.3.1 If thePEM Boardconcludes that a proposed change to theWESM Rulesor aMarket Manual, or proposal for a newMarket Manualdoes not satisfy the criteria set out inWESM RulesClause 8.4.2, thePEM Boardshall notify:
	(a)	TheRules Change Committee;
	(b)	Any party who made written submissions to theRules Change CommitteeunderWESM RulesClause 8.4.5; and
	(c)	The DOE and the ERC,
	within10 working daysafter reaching that conclusion, and shall provide reasons for its decision.
	8.5.3.2 If thePEM Boarddetermines that the processes and procedures set out inWESM RulesClause 8.4 have not been duly followed, thePEM Boardshall:
	(a)	Refer the proposal back to theRules Change Committeeso that the procedural error can be rectified within the earliest possible time in accordance withWESM RulesClause 8.4; and
	(b)	Take such steps as it considers reasonably necessary and appropriate in all the circumstances to ensure that theRules Change Committeeadheres to the processes and procedures set out inWESM RulesClause 8.4 in the future.
	8.5.4 Approving and submitting a proposal for approval
	If thePEM Boardconcludes that the proposal satisfies the criteria which are set out inWESM RulesClause 8.4.2 and that the processes and procedures set out inWESM RulesClause 8.4 have been duly followed, thePEM Board:
	a)	shall immediately submit the proposal to the DOE for final approval, except in the case of Urgent Proposal underWESM RulesClause 8.4.1.1 (a); and
	b)	shall cause publication of the approved proposal underWESM RulesClause 8.4.1.1 (a), which will become effective fifteen (15)working daysafter its publication or on such date and for such period as thePEM Board, determines; or upon such time that the amendment may be implemented taking into consideration the technical changes that need to be introduced to theMarket Management System(MMS) or to such other systems.”
(g)	Clause 8.6 under Approval of Proposed Rule Changes by the DOE is amended to read –
	"8.6 APPROVAL OF PROPOSAL FOR CHANGES TO THE WESM RULES OR MARKET MANUALS OR ADOPT NEW MARKET MANUALS
	8.6.1 DOE assessment of proposal
	If thePEM Boardsubmits a proposal to theDOEfor theDOE’sfinal approval of any change to theWESM RulesorMarket Manual, or adoption of a newMarket Manual,in accordance with theWESM RulesClause 8.5.4, the DOE shall assess whether the proposed change to theWESM Rulessatisfies the criteria which are set out in Clause 8.4.2.
	8.6.2 DOE discretions when assessing proposal for a change in the WESM Rules or Market Manuals, or for the Adoption of New Market Manuals
	In considering whether a proposal for a change in theWESM RulesorMarket Manuals, or adoption of newMarket Manualssatisfies, the criteria, which are set out inWESM RulesClause 8.4.2, the DOE, may:
	(a)	Take into account any information and documents which theDOEreasonably considers to be relevant to its consideration of the proposal;
	(b)	Consult with such persons as theDOE, reasonably considers will likely be affected by the proposal; and
	(c)	Seek such information and views from any person in relation to the proposal as may be practicable in the circumstances.
	8.6.3 Notification following failure to satisfy criteria
	If theDOEconcludes that a proposal does not satisfy the criteria, which are set out inWESM RulesClause 8.4.2, theDOE, shall notify:
	(a)	ThePEM Board;
	(b)	TheRules Change Committee; and
	(c)	The person who proposed the change to theWESM Rules,
	within 10working daysof reaching that conclusion and shall provide reasons for its decision.
	8.6.4 Approval of a proposal
	If theDOEconcludes that a proposal is consistent with the Act and the public interest and satisfies the criteria, which are set out inWESM RulesClause 8.4.2, it shall approve the proposal and cause its publication. The proposal approved by theDOEwill take effect within fifteen (15)working daysfrom its publication or on such later date as theDOE, determines or upon such time that the amendment may be implemented.
	8.6.5 Report by the Rules Change Committee
	TheRules Change Committeeand thePEM Boardshall develop and make available toWESM membersa periodic report, which sets out:
	(a)	All proposals to change theWESM RulesorMarket Manuals, or adopt newMarket Manuals, that have been made in the previous six-month period;
	(b)	The progress of those proposals in accordance with the procedures prescribed in this chapter 8,
	(c)	The reason for any delays in relation to the progress of those proposals and any action theRules Change Committee, thePEM Boardor theDOEhas taken to overcome those delays; and
	(d)	Any other matter which theRules Change Committee, thePEM Boardor theDOEreasonably considers to be relevant to the progress of proposals, including but not limited to any policies developed by theRules Change Committee, thePEM Boardor theDOEin relation to:
	xxx     xxx     xxx”

Section 3. Separability Clause.If for any reason, any section or provision of this Circular is declared unconstitutional or invalid, such parts not affected shall remain valid and subsisting.

Section 4. Effectivity.This Circular shall take into effect fifteen (15) days from its publication in at least two (2) newspapers of general circulation and shall remain in effect until otherwise revoked.

Issued this 29 June 2015 at the DOE, Energy Center, Rizal Drive, Bonifacio Global City, Taguig City, Metro Manila.

(SGD) CARLOS JERICHO L. PETILLA
Secretary