Yoshiko Zoe Aban BSEE - 3A

Assignment
Using the classification proposed by Hunt and Shuttleworth, determine the level of competition that exists in
your region or country or in another area for which you have access to sufficient information. Discuss any
difference that you observe between the basic model and the electricity market implementation in this area.
Answer
In the Philippines, the current electricity market primarily reflects the Wholesale Competition Model. The
Wholesale Electricity Spot Market (WESM) allows multiple generation companies to sell electricity based on
real-time supply and demand dynamics. This competitive framework aims to promote efficiency and drive
down costs, ultimately benefiting consumers.
One of the most significant differences between the basic model and the implementation in the
Philippines is the monopolistic nature of the distribution sector. In an ideal competitive market, consumers
would have the freedom to choose their electricity suppliers, fostering a dynamic environment where
providers complete for customers. However, in the Philippines, each disco operates within a specific
geographic area, creating a monopoly over the distribution network. This lack of competition at the retail level
restricts consumer options and undermines the potential benefits of a fully competitive market. Moreover,
the limited engagement of the consumers in the electricity market further distinguishes the Philippine
implementation from the basic model.

Identify the companies that participate in the electricity market in the area that you chose for Problem
Map the basic functions defined in this chapter with these companies and discuss any difference that you
observe. Identify clearly the companies that enjoy a monopoly status in some or all their activities.
Answer
Companies
National Power Corporation, National Transmission Corporation, Manila Electric Company, Retail
Electricity Suppliers

GENERATION TRANSMISSION
Company National Power Company National
Corporation Transmission Corporation
Function Produce electricity Function Transport electricity
from various energy from generation facilities to
sources. distribution networks.

DISTRIBUTION RETAILING
Company Manila Electric Company Retail Electricity
Company Suppliers
Function Deliver electricity to Function Sell electricity
end-users. directly to consumers.

Companies that enjoy monopoly status

Manila Electric Company holds monopoly on electricity distribution in its service area.
National Transmission Corporation operates as the sole entity responsible for electricity transmission
across national grid.

Identify the regulatory agencies that oversee the electricity supply industry in the area that you chose
for Problem
Answer
Department of Energy, Energy Regulatory Commission, National Electrification Administration, Power
Sector Assets and Liabilities Management Corporation, and National Grid Corporation of the Philippines
Identify the organizations that fulfill the functions of market operator and system operator in the area that
you chose for Problem
Answer
Market Operator Independent Electricity Market Operator of the Philippines
System Operator National Grid Corporation of the Philippines

The reasons invoked for implementing a competitive electricity market or a certain model of electricity
market depend on local circumstances. Identify and discuss the reasons that were invoked in the region
that you chose for Problem
Answer
High Electricity Prices
The Philippines has historically faced some of the highest electricity prices in Southeast Asia. The need to
reduce these costs was a significant motivation for market reforms. The Electric Power Industry Reform
Act (EPIRA) of 2001 aimed to enhance competition in the generation sector, which was expected to lead to
lower prices for consumers by fostering a more efficient market environment
Improving Supply and Demand Balance
The establishment of the Wholesale Electricity Spot Market (WESM) in 2006 was intended to improve the
balance between electricity supply and demand. By allowing market participants to trade electricity in real
time, the WESM enhances economic signals for energy trading, which helps in better managing generation
schedules and optimizing resource allocation
Attracting Investment
A competitive market structure is designed to attract both domestic and foreign investments in the energy
sector. The liberalization of the market and the introduction of retail competition were seen as essential
steps to encourage new entrants and investments in generation capacity, particularly in renewable energy
sources
Enhancing Consumer Choice
The introduction of Retail Competition and Open Access (RCOA) allows larger consumers to choose their
electricity suppliers. This shift aims to empower consumers by providing them with options and promoting
competition among retail electricity suppliers, which can lead to better service and pricing for end-users
Encouraging Sustainable Energy Development
The reforms also focus on promoting sustainable energy development by facilitating the entry of
renewable energy sources into the market. With the Philippines' commitment to increasing its renewable
energy capacity, a competitive market structure supports the integration of diverse energy sources,
including solar, wind, and geothermal
Addressing Regulatory and Structural Issues
The transition to a competitive market was also a response to the inefficiencies and regulatory challenges
of a vertically integrated system. By unbundling the functions of generation, transmission, and distribution,
the reforms aimed to create a more transparent and accountable energy sector, which is essential for
effective regulation and oversight