Solons probe spot market operator’s accord with PEMC for irregularities

By Lenie Lectura -February 10, 2020
from Business Mirror

LAWMAKERS are looking into the irregularities within the Independent Electricity Market Operator of the Philippines (Iemop), operator of the Wholesale Electricity Spot Market (WESM).

Rep. Jericho Nograles of Puwersa ng Bayaning Atleta Party-list, also the vice chairman of the House Energy Committee, questioned Iemop’s role and the operating agreement with the Philippine Electricity Market Corp. (PEMC).

PEMC used to be the WESM operator.

“Looking at the operating agreement between Iemop and PEMC, I find it highly irregular that the incorporators are also the signatories [of the operating agreement],” Nograles said at a recent House hearing.

He said the selection for an Independent Market Operator (IMO) to manage the WESM was conducted without any competitive selection process. Moreover, Iemop grew “from a P7,000 capitalization to become a multimillion-peso outfit with a total declared income of more than P100 million for the end of 2018.”

Nueva Ejica Rep. Rosanna Vergara said Congress should have been involved in the creation of the Iemop, and should have undergone public bidding.

“Do a public bidding, transparent and accountable, so that the Filipino consumers know that there is no such thing as lutong macao [the local lingo for a crooked deal] happening in our industry,” Vergara said.

Vergara observed the conflict of interest involving Iemop President and Chief Executive Officer Richard Nethercott, who was appointed at the start of the year.

Nethercott admitted during the hearing that he is married to an assistant secretary of the Department of Energy (DOE), but claimed that there is no conflict of interest, saying a legal opinion from Iemop was sought on the matter.

He also admitted that National Transmission Corp. President Melvin Matibag was also married to one of the incorporators of Iemop, but has since resigned.

However, Vergara, said the relationships cast doubts on Iemop’s independence and could be in violation of the RA 3019, or the anti-graft law. “The independence is already subject to question, whatever you say,” Vergara told Nethercott.

The DOE, PEMC and Iemop earlier said that the latter was created by virtue of the enactment of DOE Department Circular 2018-01-0002 dated January 17, 2020, and, consequently, the IMO Transition Plan, which are based on Section 30 of the Electric Power Industry Reform Act (Epira), which were jointly approved by the DOE and the Electric Power Participants.

Also, the DOE said a competitive bidding was required only for foreign participants as an option under the Epira if the IMO was created in 2007.