Arbitration with Aboitiz is ruled out

by Alena Mae S. Flores – February 01, 2016 at 11:35 pm

from Manila Standard

Philippine Electricity Market Corp., operator of the Wholesale Electricity Spot Market, said Monday it is not amenable to mediation and arbitration as a mode of resolving the anti-competitive behavior case against Therma Mobile Inc., a power unit of the Aboitiz group.

PEMC said in a statement said it filed a motion for reconsideration with the Court of Appeals, which earlier called for mediation and arbitration between the market operator and Therma Mobile, one of the power companies accused of anti-competitive behavior.

The CA’s special fifth division sustained the April 1, 2015 ruling issued by the Pasig City regional trial court granting Thermal Mobile’s petition for the issuance of an injunction stopping PEMC from demanding payment of P234.9 million, representing financial penalties for violation of the so-called must offer rule.

The must offer rule requires generation companies to offer all their registered capacity to WESM, the country’s trading floor of electricity.

PEMC said it found several violations of the must offer rule, with Therma Mobile found to be one of the biggest violators, liable for 3,578 counts of breach in 2013, resulting in P234.9-million fine.

The appellate court, however, rejected the bid of PEMC to collect the penalties from the Aboitiz subsidiary for alleged anti-competitive behavior in November to December 2013 during Malampaya gas field shutdown, which pushed up power rates.

The CA decision also “made a prima facie determination that an arbitration agreement exists between Therma Mobile and PEMC.”

The CA ruling also directed the parties to continue with the dispute resolution process under the WESM rules which had commenced with the negotiation meetings conducted by the parties.

“PEMC is always open to discuss any issue with the participants as long as it is consistent with its mandate under the WESM rules. We are committed to upholding the integrity of the WESM investigation process and we will remain true to our objective of creating a level-playing field among the WESM players,” said PEMC president Melinda Ocampo.

PEMC said in its motion the WESM investigation process of breaches of WESM rules and market manuals was not covered by mediation and arbitration.

It said the WESM rules clearly stated that the investigation process was not a commercial transaction and therefore not covered by the term “dispute” that should undergo mediation and arbitration if a participant disagreed with the results.

PEMC said pursuant to the Electric Power Industry Reform Act of 2001, “the proper course of action of a participant is to escalate the finding to the Energy Regulatory Commission via an original action.”

Section 45 of the Epira law states that the ERC, “provides the accused party with notice and an opportunity to be heard.”

PEMC officials said Therma Mobile had not filed any action at the ERC.

“We are pleased with the decision and will dialogue more with PEMC to reach a satisfactory settlement,” Aboitiz Power president and chief operating officer Antonio Moraza earlier said.