Meralco denies ERC’s claims

by Alena Mae S. Flores – July 10, 2016 at 11:20 pm

from Manila Standard Today

Manila Electric Co. has sought dismissal of the anti-competition complaint filed by the Energy Regulatory Commission’s investigatory unit, saying it has no reason to restrict competition in the market and increase prices as a distribution firm.

Meralco, in a filing submitted to the regulator, cited the withholding of capacity by other power generators that caused the spike in power rates at the Wholesale Electricity Spot Market in November to December 2013.

The electricity retailer said the company’s bidding procedure as contained in a power supply agreement with Therma Mobile Inc. owned by the Aboitiz Group, “was not for the purpose of competing and did not result in restricting competition in any market for electricity.”

ERC is set to start hearings on the violations of the Electric Power Industry Reform Act of 2001, especially on anti-competitive behavior case in August.

“Neither did Meralco’s nomination and bidding procedure constitute an abuse of market power or an attempted monopolization of any market for electricity,” it said.

Meralco said it contracted the capacity from Therma Mobile to serve the requirements of customers and its nomination and bidding procedure did not unduly limit the participation of a generation unit.

“Meralco’s nomination and bidding procedure was not intended to cause significant increase in market prices. The increase in market prices is due to the violations of the WESM rules by other plants,” it said.

Meralco said far from engaging in anti-competitive behavior, it even sought to lessen the impact of the price spike through several mitigating measures. “This, by itself is evidence that Meralco did not commit any anti-competitive behavior,” it said.

Meralco said Therma Mobile’s decision to bid at P62 per kilowatt-hour was with the expectation that it will not be cleared or dispatched.

ERC’s investigating unit claimed that Therma Mobile’s bidding strategy caused the market to clear above P60 per kWh for 45 times from November to December 2013.

Meralco, however, said Therma Mobile’s supply was dispatched because of the violations of the WESM rules by other plants and overlapping plant outages, which set the stage for clearing the P62 per kWh offer prices.

“In the instances that Therma Mobile cleared at P62 per kWh, several plants did not offer or offered but did not dispatch their declared capacities or were already running but did not run their full capacity for no justifiable reason—all contrary to the WESM rules,” it said.

Meralco said one such plant is the 620-MW Malaya diesel power plant operated by  Power Sector Assets and Liabilities Management Corp.

“The reason for the WESM clearing at P62 per kWh was PSALM’s violation of the WESM rules, which created certain conditions that led to the P62 per kWh cleating price,” it said.