ERC reviews cross-ownerships

by Alena Mae S. Flores – November 22, 2015 at 11:55 pm

from Manila Standard

The Energy Regulatory Commission is reviewing the rules on cross-ownership and market shares restrictions to prevent abuses.

ERC chairman Jose Vicente Salazar said the regulator was revisiting the provisions under the Electric Power Industry Reform Act of 2001 “in order to prevent anti-competitive behavior and market abuse by certain companies.”

The Epira said “no participant in the electricity industry may engage in any anti-competitive behavior including… cross-subsidization, price or market manipulation, or other unfair trade practices detrimental to the encouragement and protection of contestable markets.”

The law said no generation company or distribution utility engaged in generating and supplying electricity should be allowed to hold any interest National Transmission Corp. or its concessionaire.

The provision further stated that Transco or its concessionaire, or any of its stockholders or officials or relatives within the fourth civil degree of consanguinity or affinity should “not hold any interest, whether direct or indirect, in any generation company or distribution utility.”

“Except for government-appointed representatives, no person who is an officer or director of TransCo or its concessionaire shall be an officer or director of any generation company, distribution utility or supplier,” the Epira said.

The law also directed ERC to set the market share limitations annually to prevent any person, company or independent power generators to own, operate or control more than 30 percent of the installed generating capacity of a grid or 25 percent of the national installed generating capacity.

Several groups have raised its concerns on the cross-ownership provision of the EPIRA.

The National Association of Electricity Consumers for Reforms earlier said there must be absolute prohibition on cross ownership between and among owners and stockholders of a distribution utility and generation company.

“Absolute prohibition will allow a level playing field in the generation and supply sectors,” Nasecore said.

The National Electrification Administration, in a comment regarding the Epira amendments, earlier said the law barred cross-ownership between generation or distribution and transmission.

“Safeguards should therefore be strengthened against co-ownership and abuse of market power,” NEA said.

It proposed a possible restriction on firms of “vertical market power” from further acquisition of generation assets owned by National Power Corp. to avoid cartel.