ERC sets audit on WESM market operator

by Myrna Velasco January 4, 2016

http://www.mb.com.ph/erc-sets-audit-on-wesm-market-operator/

The budgetary process and expenditures of the operator of the Wholesale Electricity Spot Market (WESM) will be under fresh scrutiny as the Energy Regulatory Commission (ERC) calls for an audit of the Philippine Electricity Market Corporation.

According to ERC Chairman Jose Vicente B. Salazar, the bids and awards committee of the Commission “already published the request for expression of interest – and the process is now ongoing for the procurement of an auditing firm that will conduct the audit of PEMC.”

He noted that previous audits were already done on the electricity spot market operator, but due to concerns raised by some sectors, the ERC will have to carry out a new round of evaluation that may also validate earlier findings.

“Just to address the concerns of some sectors, the audit will be undertaken by the ERC side by side with the audit that has already been undertaken by the external auditor,” Salazar said.

He indicated that the Sycip Gorres Velayo & Co. (SGV), which is PEMC’s external auditor, has been doing yearly audit on the WESM operator and the regulatory body had purportedly been apprised already on the outcomes.

“There was external auditor engaged by PEMC and their reports were submitted to us – its SGV.  So far, they’re doing very well,” Salazar said.

He added that PEMC’s budget “is actually submitted to us for approval every year. So we know exactly what is happening there on the financial side.”

“Now, whether the expenses are actually in accordance with the budget that they have submitted to us – if the appropriations that were made have been correct– it is something that has to be settled by this audit,” Salazar has emphasized.

On the side, the corporate classification of PEMC is also on question after the Governance Commission for Government-Owned and Controlled Corporations (GCG) categorized it to be a state-run company.

Salazar has noted that on ERC’s part, it recognizes PEMC as a private entity; but it is sui generis or one that is unique on its own – because while it is being run like a private corporation it is still chaired by the Secretary of the Department of Energy.

The ultimate privatization of the WESM operator will only happen once it shifts fully into having an independent market operator (IMO) running its affairs.

“Our perspective is that: It is a private corporation which is sui generis because the Chair happens to be the Secretary of Energy… that’s why some sectors are lobbying for the complete transformation into an independent market operator,” Salazar has reiterated.