By
Lenie Lectura - May 7, 2019
The Energy Regulatory
Commission (ERC) will convene industry stakeholders this week to discuss the
implications of the Supreme Court ruling mandating a competitive selection
process (CSP) for power-supply agreements (PSAs).
Although the commission
has not received a copy of the decision, the agency said it will “take the
necessary plans and measures to preempt and mitigate possible implications of
the Supreme Court decision.”
Meetings to jointly
address the issues at hand will be scheduled with the Department of Energy
(DOE), distribution utilities (DUs)—of which the Manila Electric Co. is the
biggest—as well as gencos (generation companies) and other power industry
stakeholders.
“We assure the public
that the Commission will be doing everything within its legal mandate to
protect the consumers relative to the impact of the recent SC decision,” said
the ERC.
Energy Secretary
Alfonso Cusi, in a text message, said the concerned agencies must respect the
decision of the SC. “Projects can now move forward. These projects will be an
addition to the capacity needed by the country.”
Semirara Mining and
Power Corp. Chairman Isidro Consunji said the company would abide by the SC
decision. “Of course, the perception when they applied prior to CSP
is that they worked hard on the bilateral contract. Now, if it’s CSP, then we
can’t do anything about it. We have to abide. If that’s the SC decision, then
all must comply,” said Consunji after the annual stockholders’ meeting of
subsidiary Sem-Calaca Power Corp.
Aboitiz Power Corp.
Chief Operating Officer Emmanuel Rubio said, in a text message, that the
company is “carefully reviewing the nuances of the decision considering its
far-reaching implications.” Laban Konsyumer Inc. (LKI) President Victor
Dimagiba said the ERC must now act on the pending PSAs. “The rules are clear
now and the ERC should fast-track all pending PSAs and reject or approve
accordingly. There is no more excuse for ERC for any delay in deciding all
covered PSAs.”
Meanwhile, the National
Association of Electricity Consumers for Reforms Inc. (Nasecore) welcomed the
SC decision. “We hail the SC for its decision upholding consumer interest and
for validating the great abuse committed by for the former ERC commissioners.”
Other concerned
industry stakeholders have yet to comment on the SC ruling, which held that
ERC committed grave abuse of discretion amounting to lack or excess of
jurisdiction when it unilaterally postponed the effectivity of the competitive
selection process (CSP) requirement by issuing ERC Resolution 13 and
ERC Resolution 1.
This postponement of
the deadline for complying with CSP requirements, according to critics and the
petitioners who filed the case at the SC, effectively gave due preference to
Meralco, allowing it to deal bilaterally with
power suppliers that have allied interests with it—thus, negating the principle of competition.
power suppliers that have allied interests with it—thus, negating the principle of competition.
The ERC had reset the
CSP’s effectivity date from November 6, 2015, to April 30, 2016, exempting the
PSAs from undergoing transparent and public bidding ordained in the CSP.
ERC Chairman Agnes
Devanadera said earlier that if no case had been filed at the High
Tribunal, then the commission would have long issued a resolution on Meralco’s
PSA applications. “Out of deference, both to Congress and to the Supreme
Court, we have not acted on Meralco’s PSAs,” said the ERC chief.
“The commission is a
collegial body so the consensus, right now, the sense of the commission is to
wait because the case in the SC has been included in the calendar several times
already. It’s moving so we are hoping SC will dispose of that,” she commented
earlier.
Delays in investment decisions
Meralco and its
power-generation arm, Meralco PowerGen (MGen), have been awaiting the
long-delayed approval by the ERC of seven PSAs filed three years ago and which
have already undergone all the necessary ERC processes and public hearings.
In a text message, MGen
President Rogelio Singson sees further delays in the power projects. “We
have no choice but to follow CSP rules, which are still to be issued by the
ERC. This means further delays by six to nine months for investment decision
for any new power plants.”
The ERC is expected to
come out with an amended CSP rules. This time, it will incorporate the views of
the DOE on CSP.
The CSP requires
DUs to hold competitive bidding for their supply requirements as against
securing power deals via bilateral contracts. One of the requirements is
for a DU like Meralco to openly call for and receive at least two
qualified bids from gencos. Direct negotiations with other power suppliers
could be entered into only after at least two failed CSPs.
The SC pointed out
that the ERC’s authority was limited only to the implementation of the CSP, and
that the ERC had no power and authority to postpone the CSP’s application.
As a consequence of the
SC ruling, all PSA applications submitted by the DUs on or after June 30,
2015, were required to comply with the CSP in accordance with 2015 circular
issued by the DOE.
The 2015 DOE Circular,
which became effective on June 30, 2015, mandated all DUs to undergo CSP in
securing PSAs.
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