Price control, and not necessarily real prices in the Wholesale Electricity Spot Market (WESM), had been the mechanism being thought out by government so they can bring down electricity rates during the questioned supply months of November and December.
The propounded “price control” and the “cost level” it should be set was reportedly under consideration by the Energy Regulatory Commission (ERC).
When pressed about the issue, ERC Executive Director Francis Saturnino Juan just gave a very careful answer that “it is still under study.”
Other sources from various entities in the energy sector, however, hinted that the ERC is under pressure to bring down the electricity costs on specified supply months because of the assertions on the alleged “zero offers” or withholding of capacity being brandished by Energy Secretary Carlos Jericho L. Petilla in the media.
When asked further if the investigations on the alleged collusion in the power industry had already been completed, sources said “not yet”; hence the price control proposal on WESM prices would not necessarily be anchored on an outcome of any investigation.
Petilla had dropped hints that electricity rates in November and December should have been lower because real competition did not happen on those periods.
He indicated that the Department of Energy (DOE) had its own investigation but never elaborated on the result. And he defers the calculation of the amount to the ERC for those supply months.
When counter-checked even with some WESM sources, the ‘price control’ proposal was acknowledged but they said even ERC is still struggling as to what legal basis such mechanism must be done.
Worries abound that price control impositions without it coming from the result of a probe might give wrong signal to the market and may also dissuade investor confidence. Worse, such might trigger bigger problems in the future if ‘desperate remedies’ will be resorted to by the market or the industry regulator.
It must be noted that the Manila Electric Company (Meralco) has been seeking for a recalculation of the November and December WESM prices noting the anti-competitive market behavior highlighted during the Congressional investigations as well as at the oral arguments in the Supreme Court on its rate hike.
But for the ERC to undertake this, especially for November supply month which covers the December billing of Meralco, it will need to secure first the go-signal of the high court. source
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