By
Ernesto Hilario -January 16, 2017
Recently, media was
flooded with news items regarding the suit filed by the Philippine Chamber
of Commerce and Industry (PCCI) and several other groups against the Energy
Regulatory Commission (ERC).
In a petition filed
before the Supreme Court, the PCCI-led group asked the High Court to stop the
ERC from implementing the so-called Retail Competition and Open Access (RCOA)
policy.
The group, in
particular, alleged that the ERC has “limited” the choice of retail power
suppliers from which the so-called contestable market can buy. This is that
segment of the overall electricity market whose power consumption is 1 megawatt
or more per month. Unlike those with lower requirements (called “captive
market”), these consumers can select who to buy power from under the concept of
the RCOA.
In its emotional plea
before the SC, the group accused the ERC of depriving consumers of “freedom of
choice”. They are being made to buy only from a list of some 23 suppliers, the
plea said.
We do not question
bases and the wisdom of the PCCI-led group’s petition. After all, the PCCI is
led by some of the country’s most respected business leaders.
There is just one thing
that puzzled many. Aren’t some of the 23 retail electricity
suppliers in the ERC list the very same affiliates registered by the country’s
big power-distribution utilities? Aren’t the rest of the power-generation
companies acting as retail electricity suppliers?
The way we understand
it, what the ERC did was to require the current distribution utilities to set
up and register an affiliate which is designated as the retail electricity
supplier (RES) under the RCOA policy. It is the RES which is allowed to compete
for the business of the contestable market.
We are puzzled as to
why the petitioners object to this list. Does the PCCI prefer that the likes of
Manila Electric Co. (Meralco) directly take part in the open competition?
Again, we can only
speculate on why the ERC prefers the round-about way with the RES. We can only
surmise that the ERC is preventing current distribution utilities from using
their own brand so as not to have an undue advantage within their current
service areas. But again, that is for the SC to look into and decide on.
Anyway, the point is
that everybody is doing their job.
Despite the controversy
generated by the petition, the ERC appears to be determined to push the reforms
prescribed under the Electric Power Industry Reform Act (EPIRA).
In fairness to ERC
Chairman Jose Vicente Salazar, these reforms— particularly RCOA—gained a lot of
headway under his watch. Salazar has been branded as too determined bordering
on being pushy. If he is using that trait to push for competition in the power
sector, then we don’t mind. At the end of the day, it’s reforms the public
wants and Salazar is clearly doing his job.
Salazar’s bid to push
for more intense competition in the power sector will benefit the public. After
all, when there is real competition, prices usually go down. Also, the quality
of service goes up. This is expected. That’s the way companies compete for
business in a contestable market.
The situation is
different in the captive market. Here, customers merely groan each time they
are saddled with rate increases. Somehow, Salazar’s bid to make sure RCOA is in
place creates the hope that larger portions of that captive market can soon be
part of the contestable category.
It is understandable
that certain major power distributors should be averse to Salazar’s policies.
First of all, a captive market is a lucrative bread and butter. Second, the
franchise area is a territory where they expect to have a natural
advantage. Any and all business entity wants and tries to create an advantage
over competition. They invest a lot in building that advantage.
We are not very clear
about the position of the Meralco on the RCOA and on the RES issue, in
particular. If we recall correctly, Meralco had initially opposed the
RES-related policy and had announced that it may consider taking the legal
route if ERC pushes it to comply.
But did not Meralco
recently apply for a license for its RES? If this is correct, then it may be
safe to assume that Meralco would have anything to do with the move by the PCCI
to haul the ERC to court over the RCOA and RES issues. This is contrary to
current speculation that Meralco may be behind PCCI on this particular
collision with the regulatory agency.
Such speculation may
have merely been fueled by the fact that it was also PCCI who came to Meralco’s
succor several years ago when the latter was under threat of a takeover by the
government. That time, the Government Service Insurance System, then headed by
Winston Garcia, was poised to use its vaunted financial resources to acquire
the majority share of the distribution giant.
The PCCI became the
voice of sobriety and wisdom as it took a firm stand against a government
takeover of Meralco.
PCCI is one of the
voices of the business sector. It did its job before, it is doing its job now.
So is the ERC.
The apparent head-on
collision between the two is expected and may after all be healthy.
Let’s wait for the High
Court to do its job, too. Only a ruling by the SC would prove whether Salazar
is on the right track or if changes need to be done with the policy reforms.
