By
Lenie Lectura - February 24, 2020
THE operation of the
electricity spot market should be returned to the Philippine Electricity
Market Corp. (PEMC), at least for now, if the contract with Independent
Electricity Market Operator of the Philippines Inc. (Iemop) to run the
Wholesale Electricity Spot Market (WESM) is declared null and void.
“Let’s just go back to
PEMC. I don’t see a problem [returning to] PEMC because it is not about who is
running the market. It is the legality of the juridical entity that’s running
the market,” Puwersa ng Bayaning Atleta (PBA) Party-list Rep. Jericho
Nograles told reporters on Friday. “My issue here is plain and simple. Is
Iemop legally covered to run the WESM? The answer is no.”
He cited three major qualifications to run the WESM under Section 6A of the IRR
of Republic Act (RA) 9136 or the Electric Power Industry Reform Act (Epira).
“Very simple. Three
basic characteristics needed. No. 1, financial capability. Seven
thousand pesos is not financial capability,” he said, referring to Iemop’s
paid-up capital.
“No. 2, technical
capability. You can’t even buy a cell phone with P7,000 that can take [good]
pictures, right? So [right off you see there’s no] technical capability.
“And third, minimum two
years market operator of a similar or larger electricity spot market. No [such
record]. You can see it, it’s very simple,” said Nograles.
Lawmakers want the
Department of Energy (DOE) to declare null and void the contract between
the PEMC and Iemop. PEMC is the former operator of WESM.
Nograles said not even
the Philippine Stock Exchange is totally qualified to run the WESM. “PSE is a stock
market. They have experience and they have capability but as a market of
equities and not as electricity spot market. So, [even the] PSE [lacks
capability],” he said.
Nograles said he has
discussed with Energy Secretary Alfonso Cusi about revisiting the IRR as one
way to move forward in resolving the qualifications of an independent
electricity market operator. He cited the third requirement, which
requires two years of experience as a market operator.
“You can either go two
ways. No. 1, somebody will partner with a foreign electricity spot market
operator. So, that can be the Singapore spot market operator, any of the four
US stock market operators.
No. 2, which I told
Secretary Cusi, why don’t we revisit the IRR? If you don’t want to give it to
foreigners, because wala naman
talaga mag qualify sa
Philippines, then maybe we should revisit the IRR, together with Congress, and
make it as equitable, as competitive, and as independent as possible then that
would be a good alternative and to legitimize it,” said Nograles.
“Basta ang position ko, which I told Secretary
Cusi personally, is the manner of giving the contract to Iemop where, at the
very least, there are legal questions there. The way I see it, it
can be returned to PEMC and then Congress is willing to work together with him
and his department to fix whatever possible manner of resolution—which may or
may not include the full privatization of PEMC,” the congressman elaborated, in
a mix of English and Filipino.
Ombudsman
Nograles also raised
the possibility of the committee on energy forwarding its report to the Office
of the Ombudsman, detailing possible violations of Section 3G of Republic Act
3019.
He was referring
to Iemop President and Chief Executive Officer Richard Nethercott, who is
married to an assistant secretary of the DOE, and another Iemop official who is
married to the president of the National Transmission Corp. The
second Iemop official, who is one of the incorporators, has since resigned.
Nethercott, who was
appointed at the start of the year, earlier told a public hearing that there is
no conflict of interest, as a legal opinion from Iemop was sought on the
matter.
“When the committee
agrees to forward it to the Ombudsman then that is the time when we can forward
it to the Ombudsman as a committee. If the committee is not inclined to forward
it to the Ombudsman, there is nothing stopping any individual taxpayer from
forwarding it to the Ombudsman for the Ombudsman to motu propio investigate it.
He insisted the issue
“is violation of law” while acknowledging that “personality issues” are
intruding in the debate. “But I don’t care about personality issues, although I
believe that that is a violation…or possible violation.”
His cause, he stressed,
“is to protect the bigger picture, which is the consumers, the electric
consumers of the Republic of the Philippines. Because if our market operator is
operating on a contract that is void ab initio and collecting from the
electricity users without a valid ERC [Energy Regulatory Commission] approval,
then who’s next?”
Nograles added: “Who
will stop generators and distribution utilities and others from doing the same
thing?” if there is a “precedent” where the ERC, the Philippine Competition
Commission and the Governance Commission for GOCCs “are being disrespected.”
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