ERC wants ‘single entity’ to oversee WESM

By Myrna M. Velasco – June 12, 2022, 8:30 PM
from Manila Bulletin

The Energy Regulatory Commission (ERC) indicated that it prefers just having one entity to manage and oversee the Wholesale Electricity Spot Market (WESM) so the industry as well as the Filipino consumers can save on costs.

According to ERC Chairperson Agnes T. Devanadera, the current set-up of having two entities involved in the operations of the spot market tends to complicate the bureaucracy with duplication of functions in the management as well as the board of directors of the two firms. These two entities are the Philippine Electricity Market Corporation (PEMC) as governing body and the Independent Electricity Market Operator of the Philippines (IEMOP) as market operator.

“There should only be one entity – call it IEMOP, call it PEMC, call it WESM, call it anything – but there should just be only one,” she stressed.

The ERC chief opined it has been counterproductive that the operations of the WESM had to be catered to by separate board of directors in the two companies, which two different sets of executives exercising almost the same function when it comes to the operations of the spot market.

“Can you imagine the cost? There are two sets of board of directors, two sets of officers working on the same things? So if we are talking about cost reduction, that shouldn’t be the case,” Devanadera noted.

The chief industry regulator similarly cited the legal question hurled against the creation of IEMOP, which has so far been elevated to the Supreme Court for resolution.

Until this point, the ERC is not formally acknowledging non-profit IEMOP as the proper entity that shall be lodging application for WESM market fees, mainly because of the pending case questioning its legal standing as operator of the spot market.

There had likewise been questions on the qualifications of key executives and board directors designated at IEMOP with some quarters complaining that the entity turned out to be an “employment haven” for some relatives or individuals closely affiliated with key energy officials even if they don’t have solid professional background or expertise on energy.

At this stage, PEMC is the legal entity being recognized by the ERC that can collect the market fees from the WESM trading participants.

It is also PEMC that can remit or bestow the budgetary requirement of IEMOP on its operation of the WESM although, such arrangement of budget sharing has been raising legal concerns because PEMC’s current stature as government owned and controlled corporation (GOCC), it cannot just allocate funds especially to an entity managed by private citizens.

PEMC’s classification as a GOCC had been anchored on an Executive Order that was issued under the administration of the late President Benigno Aquino III.

As propounded, PEMC as a GOCC entity is not legally authorized to remit or pass-on any budget or financial support to IEMOP without going through acceptable legal processes – like a competitive bidding for the engagement of an independent market operator (IMO) for the WESM or a remedial measure like a new EO or Presidential order that could have re-classified PEMC first from its GOCC stature.