ERC: Power supply agreements without ECCs to be dismissed

June 3, 2018 | 8:11 pm By Victor V. Saulon Sub-Editor

http://bworldonline.com/erc-power-supply-agreements-without-eccs-to-be-dismissed/

THE Energy Regulatory Commission (ERC) will dismiss applications for power supply agreements (PSA) between power generation companies and distribution utilities that fail to comply with the required environmental compliance certificate (ECC) despite the agency’s order.

This is the warning issued by Agnes T. Devanadera, ERC chairperson and chief executive officer, to the PSA applicants, including some of those jointly applied for by distribution utility Manila Electric Co. (Meralco) and power plant developers with which it had signed the contracts.

“We have issued an order for the cases without the ECC for them to comply within 60 days and the 60^th day will be in June,” she told reporters.

“[Ka]pag wala pa silang ECC, sa tagal na ng kanilang pagka-file noon — dismissed,” she added.

(If they still don’t have an ECC despite the length of time after the filing — [their PSA applications will be] dismissed).

Asked whether the order sent by the agency included those of Meralco, Ms. Devanadera said: “I think three or four [of the seven], otherwise we will have to deal with it . . . most likely dismissal.”

In May 2016, Meralco announced that it had sought regulatory approval for seven PSAs, covering 3,551 megawatts (MW) to meet the expected increase in power demand and number of customers. The company is also preparing for the impending expiration of existing PSAs in 2019 to 2020.

The contracts were forged on April 29, 2016, or just before the April 30, 2016, deadline set by the ERC. After that date, companies are required to first undergo a competitive selection process (CSP) before forging a PSA.

CSP requires these contracts between power generation companies and distribution utilities to be subjected to price challengers, a process that is aimed at lowering electricity costs.

The ERC promulgated the CSP in November 2015 but had to restate its effective date until April 30, 2016 through a resolution in March 2016. It said the move was prompted by letter-inquiries from distribution utilities and generation companies assailing the legal implication of the CSP on existing power supply deals.

Meralco’s PSAs are with two subsidiaries of its unit Meralco Powergen Corp. (MGen), which is constructing power plants under Redondo Peninsula Energy, Inc. and Atimonan One Energy, Inc. It also has a PSA with St. Raphael Power Generation Corp., its joint venture with Consunji-led Semirara Mining and Power Corp.

Meralco is also seeking approval for PSAs with Central Luzon Premiere Power Corp., Mariveles Power Generation Corp., Panay Energy Development Corp. and Global Luzon Energy Development Corp.

Meralco’s filings had encountered opposition and other issues, including the suspension of the four ERC commissioners and its former chairman for one year.

They were ordered suspended in December last year by the Office of the Ombudsman in connection with the revised implementation date of the CSP, which it said favored a few power supply contracts.

In November 2016, a consumer group asked the Supreme Court to block ERC approval of the PSAs. A decision has yet to be issued.

Ms. Devanadera said the complaints against the PSAs would not prevent the ERC from deciding on them. “Iyong complaints, lahat naman ’yan meron (The applications all have complaints). It’s a matter of evaluating, kasi kung ’yon ang ating benchmark, ’pag may reklamo tigil lahat, parang titigil na ang mundo (because if that will be our benchmark, a complaint will stall everything, as if the world will stop),” she said.

She said the recurring “yellow alert” issuances to indicate thinning power reserves “is not a good sign.”

“That means the supply, the reserve, is not ample and you can project that… in the next five years, we really have to have all these things, all the gencos (generation companies) that we can to be able to balance the supply. I’m not just talking of Meralco’s PSAs, but I’m talking of all the applications that we have,” she said.

Ms. Devanadera said the ERC had set a benchmark to resolve 75 pending cases in a month. “We’re addressing the backlog now,” she said.