Asian Energy Advisors

PEMC “Doing the Right Thing”

Nick Nichols — Fri, 03 Jul 2009 23:51:24 +0000

The Philippine Electricity Market Corporation gets the open web and open foundations. And they are doing it right. We – as a private sector public – are falling down on this one.

PEMC is posting tons of data to the web regarding the Wholesale Electricity Spot Market (WESM). You can go to this page

and click through to bunches and bunches of market data regarding bids and offers and clearing prices and marginal generator units. It’s somewhat obscure to the uninformed. It’s in generally raw form. Very simplified. But it’s text format which means it’s open.

It is up to us, the public, and some enterprising individual or company to swoop in, write the code to access this data, massage it, and present it back in an easy-to-consume format. It’s a business opportunity waiting to happen!

It’s not PEMC’s obligation to do that. They are doing the right thing. We – as a public – have to get our act together and ride this EPIRA horse the way it was meant to be rode.

Any coders out there want to collaborate?

Hokus Pokus … Ratebase!

Nick Nichols — Sat, 20 Jun 2009 00:52:13 +0000

Here’s the official asset valuation study for Meralco as of June 30, 2006.

Go to page 4 and you can clearly see that the “Historical Depreciated Cost” of their assets is P48.8 billion.

And you can see that the “Optimized Depreciated Replacement Costs,” which is essentially what they are permitted to earn on – or their rate base – is about twice that value at P96.6 billion.

The first number is rooted in reality. It’s reflective of what is actually out in the field and reflects the investments they actually made but not yet compensated for through rates.

The second number is an accounting fiction. It represents not a single additional dollar spent or invested by Meralco. Nevertheless, ERC permits the utilities to earn a return on this fictitious number.

This magic process applies to all private utilities and to Transco (pardon me, NGCP). Except electric cooperatives.

Interesting. No?

Nick’s Posts

Nick Nichols — Fri, 19 Jun 2009 01:44:03 +0000

I’m moving more and more of my Philippine Energy Sector discussions to here on Friendfeed.

I haven’t totally worked out how that space and this blog will relate. I may never totally work it out.

Renewable Energy IRRs

Nick Nichols — Wed, 03 Jun 2009 23:48:12 +0000

In the event you haven’t been able to get access to it yet, here is a copy of the Implementing Rules and Regulations for RA 9513 – the Philippine Renewable Energy Act of 2008 – as signed by the Secretary of Energy.

You can grab other energy sector laws here. If I’m missing some, send them to me and I’ll post.

Trends in Electricity Risk Management

Nick Nichols — Mon, 01 Jun 2009 05:07:04 +0000

Nice discussion here on some very current trends in risk management tools and practices.

I particularly liked this paragraph, though, because so much early risk management was superficially focus on VAR which used to flabbergast me to no end:

“The halo surrounding Value-at-Risk (VaR) as a standalone measure of risk has lost much of its luster. The electric power market’s enormous price moves led to questions about the ability of the underlying pricing models to accurately depict real-world markets. The collapse of Enron pointed to other risks, such as credit risk, that hadn’t been closely monitored at many firms.”