Energy Secretary Jericho Petilla on Tuesday fingered the State-owned Power Sector Assets and Liabilities Management Corp. (PSALM) in front of the justices of the Supreme Court en banc.
The Energy boss disclosed that PSALM violated the Wholesale Electricity Spot Market (Wesm) rules as a result of Malaya thermal power plant’s failure to distribute its required electricity load in November last year.
During the continuation of the oral arguments of the Meralco power rate hike, Petilla told the high court that PSALM is now under investigation and could be penalized after it committed anti-competitive behavior when one of its power plants failed to dispatch its energy load in the spot market, and thus resulting in the runaway hike in generation charges.
“They were penalized before and they can be penalized and investigated again,” Petilla told the SC after being questioned by Chief Justice Maria Lourdes Aranal-Sereno.
Petilla made the admission on the petitions seeking to stop the implementation P4.15/kWh power rate hike.
It was pointed out that the failure of Malaya to dispatch its energy load in the said spot market effectively resulted to the P62-per-kWh generation charge which then pushed Manila Electric Co. (Meralco) to charge an additional P4.15 per kWh in generation charges.
The DOE and ERC also insisted on Tuesday that generation companies and distribution companies are subject to the rules and regulations of the ERC.
Lawyer Francis Saturnino Juan, representing the ERC, and Asst. Solicitor General Vida San Vicente, representing the DOE, pointed out that they are presently investigating Meralco’s challenged rate adjustments.
Vicente said that “generation and supply companies are subject to ERC rules to prevent market abuse and an anti-competitive [climate]. . . and if found in violation of Epira or its IRR, appropriate sanctions [are meted.]”
She explained that they conduct reviews on all power supply contract agreements between distribution firms as well as their power suppliers.
Speaking for the ERC, Juan said that their office will conduct post-verification on Meralco’s questioned rate adjustment.
He pointed out that Meralco’s rate was based on automatic pass-through mechanism or the Automatic Generation Rate Adjustment (Agra) mechanism.
Juan confirmed that Meralco sent a letter to ERC on December 5, 2013 informing the commission for its staggered implementation of the P4.15 per KWH rate adjustment. But he said that it was “not a rate application.”
As to the ERC’s December 9 resolution, Juan explained that it was “not a rate approval.”
He added that the ERC is investigating into the allegations from petitioners and the public alike of a possible collusion among industry players that led to the unprecedented rate hike but their officer has yet to come up with its findings on the matter.
Juan told the high court that “[a]ll these allegations the ERC will be looking into, but on December 9 these allegations were not raised.”