Nearly 5,500 MW power contracts stalled amid ERC vacuum

Danessa Rivera (The Philippine Star) - January 17, 2018 - 12:00am

http://beta.philstar.com/business/2018/01/17/1778409/nearly-5500-mw-power-contracts-stalled-amid-erc-vacuum

MANILA, Philippines — Nearly 5,500 megawatts (MW) of contracts need immediate regulatory action amid the ongoing crisis in the Energy Regulatory Commission (ERC), its chairperson said yesterday.

During the Senate energy committee hearing yesterday, ERC chairperson Agnes Devanadera said the regulator is unable to decide on contracts covering 5,493.38 megawatts (MW) in supply due to lack of quorum.

The pending contracts include 43 new certificates of commerciality (COC) equivalent to 2,977.89 MW, renewal of 47 expired COCs worth 1,971.49 MW, and 29 expired power supply agreements (PSAs) which cover 544 MW in supply.

Philippine Independent Power Producers Association Inc. (PIPPA) said there is an urgent need to address this issue on COCs, PSAs and connection agreements.

“Of current urgency is the pending new COCs and renewal of COCs without which new and old plants cannot operate. COCs are also needed for registration in the WESM (wholesale electricity spot market) to transact in the market,” it said.

As a collegial body, the presence of at least three members of the commission is needed to constitute a quorum to enable the ERC to adopt any ruling, order, resolution, decision or other acts in the exercise of its quasi-judicial and quasi-legislative functions.

Devanadera said she submitted documents, including a list of pending cases, to the Office of the President earlier this month after seeking guidance from President Duterte following the Office of the Ombudsman’s suspension order on commissioners Alfredo Non, Gloria Yap-Taruc, Josefina Patricia Magpale-Asirit and Geronimo Sta. Ana for one year without pay in December.

Sen. Sherwin Gatchalian, who chairs the Senate energy committee, said the impasse is a big problem for the power industry since it would definitely affect the power supply especially in the next six months.

“According to the DOE (Department of Energy) earlier, there is now a surplus in supply. The problem is where is the surplus of supply because we have to match the location and the surplus,” he said.

“We are asking for the contingency measures from the DOE on how to go about the critical six months especially during the summer season when demand rises by almost 20 to 30 percent,” he said.

However, the DOE downplayed the impact of the suspension order on ERC commissioners.

In a statement, DOE Secretary Alfonso Cusi assured all stakeholders that the suspension will not cause any debilitating effect to the power supply and services in the Philippines.

“The suspension may cause further delays in power projects which require approval from a collegial commission.  However, we will see to it that this will not have any significant impact in the short and medium term. The execution of the Power Development Plan covering the medium and long-term up to 2040 will continue unhindered,” he said.

Cusi also said the agency has requested for the designation of acting commissioners so that ERC could continue its functions.

But to resolve the crisis in ERC, Gatchalian said the most practical really is to appoint temporary officials and look at the legal basis.

“The Office of the President will appoint but should be in compliance with minimum requirements set forth by EPIRA (Electric Power Industry Reform Act),” the lawmaker said.

During the hearing, PIPPA also reiterated its position  that the country needs an independent fully functional commission.

“Without a working commission and putting a pause on the important work of the ERC, we will find ourselves without the needed approvals for PSAs, connection agreements, price determination regulation, compliance certificates and licenses,” it said.

ERC’s inaction on pending cases would negatively impact everyone from the generators, distribution utilities and ultimately to the consumers, the group said.

“As such, we cannot afford any delay on these activities as it will be detrimental not only to the industry, but also to each and every consumer who relies on energy security,” PIPPA said.

“Accordingly, we express our sincere hope that this matter can be resolved quickly and fairly, and so that the entire industry can move forward and work to achieve energy security, reliability, accessibility and affordability for all consumers,” it said.

Gatchalian has also filed a bill titled Energy Regulatory Commission Governance Act of 2017 to reform the power regulator and ensure the check-and-balance, transparency and consumer-centric position of the agency.

The bill proposes to remove the executive functions from the chairperson and transfer it to all the commissioners. It also enumerates administrative offenses and penalties for refusal to comply with transparency and accountability clauses.

Under the proposed reform, the chairman will have to consult with commissioners regarding meeting schedules and agenda; secure that the commission avoid acts which unduly influence, impede or hamper the executive director or any employee; and establish good corporate governance practices and procedures.