ERC to prioritize probe of 11 gencos that raised power rates in December 2013

by Lenie Lectura – February 15, 2016

from Business Mirror

THE Energy Regulatory Commission (ERC) has put on its priority list the probe involving 11 generation companies (gencos) found to have engaged in anticompetitive behavior that led to record-high increases in power rates in December 2013.

ERC Commissioner Jose Vicente Salazar said the commission will revisit the case “before end of this quarter,” and, hopefully, come up with a decision anytime this year.

“This is a priority. Definitely, it will start before end of this quarter and, hopefully, depending on the schedule of the members of the commission, we will be able to finish it within the year,” Salazar said in a news briefing last week.

Prior to the appointment of Salazar as the new ERC chief in August last year, the ERC’s Investigating Unit (IU) released a report in June.

The 11 gencos identified in the report are the Power Sector Assets and Liabilities Management Corp., Pan-Asia Energy Holdings, Therma Mobile (TMO), CIP II Power Corp., Trans-Asia Power Generation Corp., 1590 Bauang, AP Renewables Inc., Udenna Management Resources Corp., Strategic Power Development Corp., GNPower Mariveles Coal Plant Ltd. and SEM-Calaca.

The country’s largest power-distribution utility firm Manila Electric Co. (Meralco) was also found to have committed “market abuse” during the November and December 2013 supply months.

Based on the report, Meralco was included because of its agreement with TMO and the manner by which its supply deal with the power producer was carried out.

Upon release of the report, the IU was supposed to file formal complaints against the 12 firms before the commission.

But the ERC restarted the probe with prehearing conferences in August last year, following the appointment of Salazar, a former justice undersecretary. In December last year Salazar said the commission has tapped the Office of the Solictor General “to allow for an independent prosecution” on the case.

“Solicitors will conduct prosecution and they will present evidence before us. The other side can present controverting evidence. We can consolidate all these,” Salazar said. “We will finish the probe on the administrative component, the violation of the anticompetitive behavior visions of the Constitution and of our laws.”

The case stemmed from the P4.15-per-kilowatt-hour (kWh) rate hike that Meralco was supposed to collect in December 2013 and the P5.33-per-kWh rate increase that was supposed to be collected in January 2014. The implementation of this, however, was prevented by the Supreme Court (SC).

Prior to the release of the report conducted by the ERC IU, the Philippine Electricity Market Corp. (PEMC) also identified the same players that breached the Wholesale Electricity Spot Market Rule on the must offer.

Under the must-offer rule, gencos registered in the WESM must declare and offer the maximum-generating capacities of their power facilities in the spot market.

PEMC has transmitted its report to the ERC.

PEMC President Melinda Ocampo said her office only investigates breaches of the WESM rules. Any act of anticompetitive behavior is under the jurisdiction of the ERC.

“When it comes to PEMC our concern is only breaches in WESM rules. When it comes to anticompetitive rules, this is for ERC to find out. It’s beyond our jurisdiction,”Ocampo said.

The SC earlier ordered the ERC to investigate anticompetitive behavior and abuse of market power allegedly committed by some WESM participants. As such, PEMC conducted the investigations under the “must-run” and “must-offer” rules of the WESM.

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