Lawmaker seeks clear delineation of powers between ERC and PCC

By Lenie Lectura – 
from Business Mirror

The Senate Committee on Energy is urging  the Energy Regulatory Commission (ERC) and the Philippine Competition Commission (PCC) to clearly define their respective roles involving competition matters in the energy sector.

Committee Chairman Sen. Sherwin T. Gatchalian said there has to be a clear delineation of powers between the two.

The Electric Power Industry Reform Act  (Epira), the lawmaker said, gives ERC the power to enforce safeguards and promulgate rules and regulations to ensure and promote competition, encourage market development and customer choice, and discourage or penalize abuse of market power, cartelization, and any anticompetitive or discriminatory behavior.

The Philippine Competition Act, on the other hand, gives PCC the power to enforce and regulate all competition-related issues. The enactment of Republic Act (RA) 10667, or the Philippine Competition Act specifies kinds of anti-competitive agreements and situations of abuse of dominant position.

“Given these two regulatory bodies with seemingly overlapping mandates, stakeholders are in a quandary as to which agency to approach when it comes to competition matters in the energy sector.

As such, the ERC and PCC must come together to clarify matters of jurisdiction, which, in the future, prevent inconsistency in rulings,” Gatchalian said.

This is first on the committee’s list of reforms meant to further enhance competition in the energy industry, as it noted that the Epira still remains to be fully implemented.

“The Senate Committee on Energy recognizes gaps and limitations that can be addressed through legislation and oversight to attain Epira’s objectives of competition leading to reliable, secure and affordable supply of electricity,” Gatchalian added.

Earlier, the senator called on a review of the market-share limitation under the Epira to reflect the true state and foster competition in the power-generation industry.

He said the metric used to determine market-share limitations should be reviewed.

Under the Epira, market-share limitations prohibit generation companies from owning more than 30 percent of the installed capacity of a grid and more than 25 percent of the installed capacity of the national grid.

The law specifies installed generating capacity as the measure in computing market shares. However, Gatchalian noted that this is not reflective of the true market power of a company since the installed capacity is different from the power generated and injected into the grid.

In illustrating his point, the lawmaker said the share of coal in the country’s total installed capacity is approximately 35 percent, but its share in actual generation is 48 percent. For natural gas, its installed capacity is only 16 percent but its actual generation is 22 percent.

“As a consequence, the use of installed generating capacity underestimates the true market share of a company, especially if its plants have comparatively higher capacity factors,” Gatchalian said.

He added that almost 60 percent of the installed energy capacity is controlled only by three firms. In his presentation, the lawmaker said First Gen Corp. of the Lopez Group corners 19.63 percent market share, the San Miguel Group with 18.73 percent share and the Aboitiz Group with 17.48 percent, totaling 55.84 percent for the three firms.