ERC orders refund of market fees

By Jordeene B. Lagare – July 4, 2020
from The Manila Times

THE Energy Regulatory Commission (ERC) has ordered the refund of market fees that were overcollected from Luzon and Visayas trading participants at the Wholesale Electricity Spot Market (WESM), the venue for trading electricity as a commodity.

In a statement, ERC Chairman and Chief Executive Officer Agnes Devanadera said the refund of the market transaction fee shall be implemented over 12 months beginning in the next billing month upon the receipt of the order.

It shall also be reflected as a separate line item in the WESM monthly billing statement.

The Philippine Electricity Market Corp. (PEMC) was also directed to submit its plan of action for the implementation of the refund scheme, and the corresponding adjustment to the market transaction fee within 10 days upon receipt of its decision.

The ERC slashed PEMC’s proposed market transaction fees by nearly half to P447.470 million from P896.410 million for trading participants in the two regions covering calendar year 2015.

The amount covers the following funding requirements of PEMC: personnel services, maintenance and other operating expenses, capital expenditures and provision for the Department of Energy (DoE)/ERC monitoring facilities.

“In our evaluation, the commission found that there are certain market transaction fee components that are unnecessary and unreasonable and there are those that PEMC failed to provide supporting documents that would justify the reasonableness thereof,” Devanadera said.

The ERC also found that PEMC’s actual budget utilization of certain items is lower than the proposed budget for the same. Therefore, the regulator approved certain components of the market transaction fees based on the actual expenses incurred by PEMC.

In its 78-page order dated May 20, 2020, the ERC has established that PEMC is a government-owned and controlled corporation (GOCC), within a purview of Section 16, Article XII of the 1987 Constitution.

It also regards PEMC as a non-stock, non-profit corporation and that its functions are impressed with public interest.

“As such, we have evaluated PEMC’s application on the basis of such GOCC classification,” Devanadera said.

The market operator is allowed by law to recover the cost of administering and operating the WESM through a charge imposed on all its members, subject to the ERC’s approval, as per Republic Act 9136, or the “Electric Power Industry Reform Act of 2001” (Epira).

PEMC was the former operator of the country’s power spot market until it was handed over to the Independent Electricity Market Operator of the Philippines Inc. (IEMOP) through an operating agreement signed in September 2018.|

The relegation of WESM operations was pursuant to Section 30 of the Epira law that states that WESM shall be run independently.