ERC denies staff recommendation to consolidate cases against Meralco, TMO, and 1590 Energy

By Lenie Lectura – June 27, 2017

from Business Mirror

THE Energy Regulatory Commission (ERC) denied the recommendation of a former investigating staff to consolidate the cases involving anticompetitive behavior and market abuse against the Manila Electric Co. (Meralco) and Therma Mobile Inc. (TMO) and another similar case against 1590 Energy Corp. (1590EC).

The move to consolidate these two cases was sought by Isabelo Joseph Tomas II, former investigating officer of the investigating unit established by the ERC. He has since resigned from the ERC.

In his motion, Tomas sought the consolidation of the two cases alleging there are common questions of law in all of them since respondents’ acts pertained to identical violations of the Electric Power Industry Reform Act (Epira) and its rules, specifically noncompliance with the Must-Offer Rule.

Tomas said the consolidation of the cases “would avoid unnecessary costs of delay and facilitate the resolution of the cases and avoid different or contradicting findings.”

In its eight-page order, the ERC agreed with the respondents that there were no common questions of fact in the two cases to merit consolidation.

“The cases do not involve the same parties. While the complainant may be the same for all cases, respondents are different and distinct,” the ERC said.

Also, the commission said the cases filed against the respondents did not arise from the same act or transaction as the alleged violations occurred during different trading intervals.

TMO and Meralco were charged for employing a bidding strategy, through their power-supply agreement (PSA), that resulted to the former’s power plant being the marginal clearing plant for a total of 78 times during the period October 26, 2013, to December 2013.

1590 EC was charged, meanwhile, for consistently offering the price of P62,000 per megawatt (MW) during delivery hours of 1 to 7 which became the clearing price for 11 times.

The ERC said that, while all respondents were charged with anti-competitive behavior, the acts imputed to them were different and not, in any way, connected.

The imputation against TMO and Meralco arose from their PSA. In contrast, the charge against 1590 EC referred to its conduct of consistently bidding at P62,000 per MW during trading intervals of 1 to 7.

“Verily, there is no allegation in any of these cases that there has been collusion or conspiracy between or among two or more respondents. Each respondent has been charged individually,” the ERC said.

Since the respondents were not similarly situated and the imputed acts were different and pertained to different trading intervals, the issues against respondents were different, the ERC said.

“As each case is different from one another, complainant’s apprehension of an incomplete, incomprehensive and inconsistent determination of all related issues was unfounded. One case was not dependent on another and the decision in one naturally depended on the distinct factual circumstances of that case and the evidence presented.”

The Philippine Electricity Market Corp. (PEMC), operator of the Wholesale Electricity Spot Market, found 11 companies (12 power plants) that breached the must-offer rule during the October 25 to December 25, 2013, supply month when power prices shot up due to the Malampaya natural-gas facility shutdown.

The PEMC’s Enforcement and Compliance Office confirmed “finding of breached and approved the imposition of penalties” on the following companies due to breach of the must-offer rule.

The companies are 1590 Energy Corp. (Bauang diesel plant), AP Renewables Inc. (Makban geothermal power plant), Therma Mobile Inc. (Therma Mobile diesel plant), CIP II Power Corp. (CIP diesel plant), Trans-Asia Power Generating Corp. (Trans-Asia diesel power plant), Udenna Mgt. and Resources Corp. (Subic diesel-power plant), Strategic Power Development Corp. (San Roque hydropower plant), Power Sector Assets and Liabilities Management Corp. (Casecnan hydropower plant), PSALM (Malaya diesel power plant), Panasia Energy Inc. (Limay diesel-power plant), GN Power (Mariveles coal plant) and Sem-Calaca Power Corp. (Batangas coal plant).