ERC wraps up probe vs erring gencos–Salazar

by Lenie LecturaSeptember 7, 2016

from Business Mirror

THE Energy Regulatory Commission (ERC) is set to wrap up its probe into the alleged anticompetitive practices of generation companies (gencos) whose power plants in Luzon went offline last month.

“We are already close to completing our inquiry on this,” ERC Chairman Jose Vicente Salazar said in a text message.

The probe of the gencos was prompted by the recent forced outages that resulted in rotational brownouts in Metro Manila and nearby provinces between July 26 and August 5.

There were a total of 20 plants that failed to deliver optimum power on those days, because these were either on scheduled maintenance shutdown or forced outage. Of the 20 plants, 12 were placed on maintenance shutdown, while eight went on forced outage.

These 20 plants were unable to deliver more than 4,000 megawatts of electricity. This prompted the ERC to require power-generation firms to submit a report on the causes behind these outages. The firms are also being investigated by the commission if they were engaged in anticompetitive behavior.

“In our analysis, we have considered parameters, such as the reasons for the outages, the resulting spot-market rates, and bidding behavior of the generation companies. A determination will also be made on whether there are compelling reasons for the commission to conduct further investigation,” Salazar said in an interview.

He also clarified that the present inquiry is focused only on whether anticompetitive behavior was committed.

But the commission vowed to take action so as to prevent similar incidents in the future. Salazar said the commission will also closely monitor changes in the schedule of power plant-maintenance shutdown.

“On the issue of reliability, steps will be taken by the ERC, which will hopefully reduce the occurrence of red/yellow alerts through the enhancement of our monitoring mechanism for outage events, as well as the establishment of means to sanction unwarranted or unreasonable deviations from the schedule of planned outages by gencos periodically submitted to the system operator. This will most likely be done through a resolution by the commission en banc,” he said.

Meantime, the ERC will collaborate with the Philippine Competition Commission (PCC) on the investigation.

“The ERC will work hand in hand with the Philippine Competition Commission to determine whether there was, indeed, market power abuse or anticompetitive or discriminatory acts committed by some gencos during the recent forced outages.

“ERC and PCC will formalize our partnership soon, so we could define our specific roles to competently execute and fulfill our respective mandates,” Salazar said.

The Electric Power Industry Reform Act (Epira) of 2001 mandates the ERC to monitor and penalize motu proprio any act that constitutes market power abuse and/or anticompetitive or discriminatory behavior by any electric power-industry participant.

The Philippine Competition Act (PCA) of 2015, or Republic Act  10667, on the other hand, mandates the PCC to implement and enforce the said national competition policy in order to ensure the promotion and protection of the competitive market by prohibiting anticompetitive agreements, abuse of dominant position, and anticompetitive mergers and acquisitions.

“Having the PCC as an ally of the ERC will facilitate the investigation and adjudication of alleged collusion among gencos.

We will champion and work for the benefit of Filipino consumers, whose best interests we are mandated to promote and safeguard,” the ERC chair said.