ERC meeting energy players on PSA ruling

Last updated on May 7th, 2019 at 12:24 am

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.

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.