ERC scored for postponing process to lower power rate

Published March 14, 2017, 10:01 PM By Ben R. Rosario

http://www.news.mb.com.ph/2017/03/14/erc-scored-for-postponing-process-to-lower-power-rate/

Lawmakers yesterday demanded an explanation on the decision of the Energy Regulatory Commission to postpone the implementation of the competitive bidding, a process aimed at lowering power rates.

Bagong Henerasyon Partylist Rep. Bernadette Herrera-Dy chided ERC officials for postponing the competitive selection process (CSP) under which power supply contracts should have gone through competitive biddings.

Herrera-Dy warned that this ERC decision allowed Meralco to enter into power supply agreements with its sister generation companies and affiliates, thus, may result in predatory power rates for up to 25 years that is grossly disadvantageous to consumers.

‘The CSP requirement was designed to lower power rates by subjecting power supply contracting to competitive bidding,” said Herrera-Dy.

“But when the ERC postponed the competitive selection process for power supplies in December, 2015, it effectively allowed Meralco to lock consumers into self-dealing contracts with its sister companies for up to 25 years,” she stated.

Deputy Speaker Gwendolyn Garcia agreed with Herrera-Dy’s views.

During the joint hearing conducted by the House Committees on Good Government, Public Accountability and Energy last Monday, it was gathered that on November 6, 2015, the Department of Energy (DOE) and the ERC ordered distribution utilities to conduct competitive biddings to prevent the charging of self-negotiated generation rates and thus lower power costs to benefit consumers.

ERC allegedly delayed the implementation of the DOE circular for at least five months, giving Meralco the chance of cornering the lion’s share of 3,551MW out of the 4,500MW in aggregate supply covered by all the 93 PSA (power supply agreement) applications filed with the ERC during the extension period.

Reports have indicated that Meralco was able to secure the 3,551MW supply through just seven agreements it negotiated with its own power generation companies and affiliates. The remaining 86 PSAs covered less than 1,000MW, triggering suspicions that the Meralco contracts were sweetheart deals.

Meanwhile, Bayan Muna Rep. Carlos Zarate said the ERC move to extend the implementation of the competitive bidding circular denied consumers the benefit of competition and exposed them to potentially overpriced contracts between Meralco and its own generation companies.

Zarate said the seven contracts entered into by Meralco and its affiliated generation companies are clearly “midnight contracts” since they were signed only four days before the new deadline set by the ERC on April 30, 2016 to conduct competitive supply biddings.