ERC to rule on up to 90 pending cases before April 12

By Lenie Lectura - March 12, 2018

https://businessmirror.com.ph/erc-to-rule-on-up-to-90-pending-cases-before-april-12/

The Energy Regulatory Commission (ERC) is targeting to release 80 to 90 rulings on pending cases, including applications of power producers, before the lapse of the 60-day temporary restraining order (TRO) on the suspension of its commissioners on April 12.

Timely approval of power agreements, according to ERC Chairman Agnes VST Devanadera, will avert possible
power outages, especially these summer months.

Devanadera said they have raised the agency’s target ap-provals, from 61 to anywhere between “80 to 90.”

The 60-day TRO was issued by the Court of Appeals (CA) to halt the suspension order of the Office of the Ombudsman against four commissioners of the ERC released in December 2017.

“There are a lot more [rulings] that will come out very soon. We may issue 80 or 90 total in April,” Devanadera said.

Advocacy group Laban Konsyumer Inc. President Victorio A. Dimagiba, in an interview, said the  commissioners should use the 60-day reprieve to fulfill their mandate of enhancing consumer welfare. “Thus, they are given an extra time to show the Ombudsman erred in meting them a one-year suspension in the eyes of the electricity consumers,”
he said.

Devanadera earlier warned of a debilitating impact of the  suspension order, saying this will render the operations of the agency in severe paralysis. As a collegial body, the presence of at least three ERC commissioners is needed to constitute a quorum to enable the commission to adopt any ruling, order, resolution or decision in the exercise of its quasi-judicial and quasi-legislative functions.

Aboitiz Power Corp. President Antonio Moraza, when sought for comment, said the agency is a very important and necessary component of the power industry. “We need the institution to operate and perform its many functions daily.  Its structure is that it is a collegial body, where three commissioners are required to have a quorum and at least two to make decisions.  So an ERC  without commissioners will cease to function.”

The CA agreed. In its February order, it said it had to “look at the big picture and consider the interest of the public, the irreparable injury that it may suffer if a TRO is not issued.”

“This is because, as pointed out earlier, petitioners are public officials performing important duties and functions pertaining to the power sector. We hasten to add that what we give importance to, and is of utmost concern, is not the petitioners themselves but their office, and the public service that would be and currently is being jeopardized by reason of their present predicament.”

There are 162 petitions for approval of power-supply agreements pending at the agency. Of these, 132 cases involve electric cooperatives and 30 involve private distribution (PSAs) utilities (DUs). The total value of these pending applications for ERC approval is P1.6 trillion.

“This P1.588 trillion—not just millions, but trillions—include investments from both local and foreign entities. Without ERC action, the projects cannot proceed. The investors may get discouraged,” Devenadera had said.

Back to work

When the TRO was issued, the commissioners immediately resumed work. During its regular commission meeting held on February 13 and 27, the ERC approved the grant of Provisional Authorities to Operate (PAOs) and the issuance of Certificates of Compliance (COCs) to 15 generation companies (gencos).

The COCs are required to commercially operate a power plant or other facilities used in the generation of electricity pursuant to Section 6 of Republic Act RA 9136, or the Electric Power Industry Reform Act of 2001 (Epira) and Section 4 of the Implementing Rules and Regulations (IRR) of the Epira.

On the other hand, pending the issuance of the COC, the PAO may be issued by the ERC to enable a genco to operate its generation facility. The PAO shall be issued in the form of a notification to the genco and shall be valid for a period of six months from issuance thereof. The six-month validity period shall be included in the five-year term of the COC.

Devanadera said it is imperative for a genco to secure a COC or a PAO from the ERC prior to its commercial operation. The ERC, she stressed, recognizes the need for the immediate issuance of the COCs and PAOs to gencos to ensure a reliable and sustainable power supply, especially that there is an upsurge in power demand during the summer months.

“With the approvals of PAOs and COCs to gencos, power supply will be augmented, as additional power will be injected into the grid. This will keep a stable power supply, especially during the coming summer months, when the demand for electricity is expected to increase drastically.  That’s why we, at the ERC, are acting with dispatch to avert load shedding or brownouts,” Devanadera said.

‘Courtesy’

The ERC, according to the Ombudsman, favored the Manila Electric Co. (Meralco) by excluding the power distributor from the competitive selection process (CSP), which requires distribution utilities and power generation companies to subject their power supply agreements (PSAs) to price challenges.

This did not sit well with consumer groups and other sectors. Lawmakers conducted an inquiry into the alleged midnight deals for Meralco.

The agency denied this. The ERC extended the validity of the CSP policy mainly because it wanted to address the valid concerns raised by the DUs and gencos. “The extension of the CSP implementation was not intended to benefit any electric power industry participant, but to give time to those who have already completed their PSAs but failed to submit the same to the ERC prior to the effectivity of the CSP,” the agency said.

When asked if Meralco’s PSA applications will be included in the rulings that will be issued soon, Devenadera could not commit.

“The entire process involves evaluation, which has been ongoing. Now, there are other factors. With respect to the probe by Congress, if there is already a resolution on the probe then that will be considered, as well. It’s a courtesy, which is expected from national agencies though it is not dependent on our evaluation,” the ERC chief explained.

The agency’s spokesman, lawyer Rexie Digal, said in a separate interview that the processing of petitions, including Meralco’s seven PSA applications, did not stop because of the suspension order.

“As to whether it will be resolved during the TRO period, it will depend on whether the evaluation and procedures for said applications are completed,” Digal said, adding that the commission vowed to act on applications requiring immediate resolution.

‘Unfair’

Meralco’s PSAs applications cover a total of 3,551 megawatts (MW) with various gencos.

These are with Redondo Peninsula Energy Inc., St. Raphael Power Generation Corp., Atimonan One Energy Inc., Central Luzon Premiere Power Corp., Mariveles Power Generation Corp. of the San Miguel Group and Global
Luzon Energy Development Corp. of Global Business Power Corp.

Meralco President Oscar Reyes said these PSAs were entered into as early as April 2016. These underwent all the necessary due process, including documentation and  public hearings. “We can’t stress enough that these are very critical plants that will assure energy security. We don’t think there is any valid reason for further delay,” Reyes said.

The delay in the approval of these applications and the consequent delay in the financial close and subsequently the commercial-operations date of the power projects will adversely affect the utility firm’s ability to meet demand growth in its franchise and overall energy security in the Philippines.

“Their approval with urgency is needed, even as the passage of time since their filing in 2016 has already caused significant increases in the engineering, procurement and construction [EPC] costs and financing costs of these new power plants,” Reyes added.

The Meralco official pointed out that if the total costs of the projects were to balloon, then the financing cost would increase, as well. “It would be most unfair to Meralco customers.”  “Costs have been increasing. We negotiated very competitive EPC costs. We negotiated competitive costs and also financing terms.  I don’t think we can repeat it.”

He could not stress enough the importance of the PSAs. These, Reyes said, are meant to meet additional electricity demand. “We don’t want to create any sort of fears or concerns, but I think you just have to look at reality if you keep on delaying projects. Demand is not stopping.

For now, all Meralco could do is to “continue to make our case and appeal for timely action and decision.”  “Our option is to continue to hope,” Reyes said.