The Energy Regulatory Commission has been a subject of criticism for the past year due to several controversies that it has been involved in.
Late last year, President Rodrigo Duterte demanded the resignation of ERC officials after receiving reports of rampant corruption within the agency. This followed the suicide of the ERC Bid and Awards Committee Chairperson, Francisco Jose Villa Jr., which was allegedly due to 22 corruption issues, such as rigged selection process in favor of ERC Chairman Jose Vicente Salazar. According to President Duterte, he directed a comprehensive review of all legal remedies to overhaul and effect immediate changes to the agency, including its officials. The ERC officials refused to resign; so the President, on November 2016, threatened to abolish the agency and deny it funding.
By virtue of Section 38 of the Republic Act No. 9136, or the EPIRA, ERC was established as an independent, quasi-judicial regulatory body. Under Section 43 of the EPIRA, it is mandated to promote competition, encourage market development, ensure customer choice, and penalize abuse of market power in the electricity industry. However, the series of controversies showed that ERC fails to fulfill its mandate; and it appeared to be doing merely a duplicate function of the Department of Energy. Hence, I think it is necessary to reorganize the agency.
On August 2017, I filed House Resolution No. 1161, a resolution calling for an investigation, in aid of legislation, on the immediate approval of the seven power supply agreements (PSAs) of Meralco by the ERC. Last year, Meralco applied for power supply agreements on the construction of seven coal-fired power plants: Redondo Peninsula Energy Inc. (225 MW); Atimonan One Energy Inc. (1,200 MW), St. Raphael Power Generation Corp. (400 MW); Central Luzon Premiere Power Corp. (528 MW), Mariveles Power Generation Corp. (528 MW); Panay Energy Development Corp. (70 MW), and Global Luzon Energy Development Corp. (600 MW). These agreements aim to reduce transmission congestion in Luzon that causes intermittent power outages and consequently interrupts business activities, dampening economic growth. To date, none of these PSAs has been approved yet; because according to ERC Officer-in-Charge Alfredo Non, they are still scrutinizing the cost components of the PSAs.
Scrutiny of these PSAs should be done meticulously, but on an expedited basis. In the first half of 2017, many provinces of Luzon experienced power interruption. The Luzon grid was placed, for a couple of times, in red and yellow alerts due to insufficiency of power related to unexpected shutdown and unscheduled maintenance operations. The Luzon grid has a maximum supply of 11,000 megawatts, while the current demand reaches 9,800 megawatts. Luzon’s power demand is projected to maintain an upward trend. The construction of new coal-fired power plants is necessary because the existing coal-fired power plants are outdated and insufficient, rendering them vulnerable to transmission failures. It would take seven to eight years to construct these before they become fully operational. Thus, the ERC should take immediate action on these PSAs.
Foreign exchange and the international prices of fuel are the two benchmarks for the costing of energy in our country. Both of these are beyond our government’s control. Hence, we can see the utter uselessness of a government agency like the ERC.
The ERC was initially given a P1,000 budget during the 2018 budget deliberations in the House; but its requested budget was eventually reinstated. Chairman Salazar was also relieved from his position. Now that the ERC has somehow stabilized after all the controversies it has been through, I hope we can soon see improvements in its performance.
The ERC is hopeful that they can approve at least three out of the seven PSAs before the year ends. Should these PSAs do not materialize, I will ask the leadership of the House to withhold its budget.