ERC: 13 firms caused 2013 power rate hike

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At least 13 power-generating companies were found to have colluded with each other to force a spike in electricity rates in December 2013, according to investigators from the Energy Regulatory Commission (ERC).

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ERC Executive Director Francis Saturnino Juan on Tuesday said the companies, including the state-run Power Sector Assets and Liabilities Management Corp. (PSALM), were charged with violating anti-competitive behavior regulations. The ERC en banc will hear cases against the 13 companies.

“Cases will be filed with the ERC. Respondents will be accorded due process, after which ERC will decide on the imposition of penalties, if warranted, and grant of other reliefs,” Juan said.

Aside from PSALM, which operates the Malaya and Casecnan plants, the companies named in the complaint were Pan-Asia, operator of Limay Power plant; ThermaMobile;
Manila Electric Co. (Meralco);

1590 Bauang; CIP2; TransAsia; Aboitiz Power Renewables, the operator of Makban Geothermal; Udenna, the operator of Subic diesel plant; Strategic Power Development.

Corp, the operator of San Roque; GNPower, the operator of Mariveles coal fired plant; and SEM-Calaca.

Juan said Meralco was included because it influenced Therma Mobile to withhold supply based on its contract with the firm.

He explained that respondents’ violations stem mainly from their acts that amounted to physical or economic withholding, which is considered anti-competitive or a form of market abuse.

Juan said the ERC will only determine if there is basis to levy a fine against the power firms.

“Upon receipt of these complaints, it shall forthwith issue the orders for respondents to file their respective answers,” he added.

The range of imposable fines under the Electric Power Industry Reform Act (EPIRA) of 2001 is from P50,000 to P50 million.

Prices at the Wholesale Electricity Spot Market (WESM) increased in November and December 2013 because of insufficiency in supply.

This led to higher generation charge for Meralco’s December bill.

“Meralco maintains in its assertion, which it had articulated before the ERC, Congress and the Supreme Court, that it had acted strictly in accordance with the decision of the ERC approving the Power Supply Agreement with TMO [Therma Mobile] which took into account Meralco’s least cost obligation to its consumers. The records will bear that Meralco complied with applicable market rules and did not engage in any anti-competitive behavior in its supply contract with TMO,” lawyer William Pamintuan said.

In December 2013, ERC allowed Meralco to increase electricity rates by P4.15 per kilowatt-hour (kWh) in three tranches from December 2013 to March 2014 on the back of higher generation costs incurred from buying higher-priced electricity at the spot market.

But the power rate hike was eventually stopped by a temporary restraining order issued by the Supreme Court.

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