Competitive market ‘greatest shield’ against high power prices—Juan

Energy Regulatory Commission (ERC) chairman Francis Saturnino Juan said Thursday a competitive power market is the “greatest shield against high prices,” amid criticism of his stance on the competitive selection process (CSP).

Juan’s comments came in response to a statement from the P4P Coalition, which claimed his first act as the new ERC chief was “to cede ground to power players, enabling them to raise prices as they please at the expense of ordinary Filipinos.”

The coalition’s statement followed the ERC’s decision to uphold power supply agreements (PSAs) and their resulting contract prices that had been subject to a CSP, or bidding process.

“The greatest shield against high prices is not the discretionary power of a regulator to cut a single contract, but the relentless, ongoing pressure of a competitive market where suppliers must constantly offer their best price to win a supply contract,” Juan said in a statement.

He said the CSP and a recent Supreme Court ruling protect this system. “The law is certain. Let the ERC be the steadfast guardian of the competitive process,” he said. “Let it validate the integrity of the auction, and then let it uphold the results. In doing so, we will secure a future of affordable, reliable and sustainable power for all Filipinos.”

Juan said the ERC is entering a “new era” marked by two developments: the Department of Energy’s (DOE) CSP policy and the Supreme Court’s decision in Alyansa ng Bagong Pilipinas vs. ERC.

“These are not merely procedural changes; rather, they represent a significant transformation, a compelling call to re-embrace the competitive principles that are fundamental to the Electric Power Industry Reform Act [EPIRA],” he said. “In this new era, the role of the ERC is not diminished; it is transformed.”

According to Juan, the ERC’s mandate is to be the “guardian of the competitive process and the guarantor of its integrity.”

He called the CSP “the engineered mechanism designed by the DOE to fulfill EPIRA’s pro-competitive mandate,” adding that it’s a “transparent, public, and competitive bidding where distribution utilities seek the least-cost power supply to serve their captive consumers.”

Juan said the CSP is designed to discover the “true, fair market price through the forces of supply and demand, not through closed-door negotiations.”

“Therefore, the ERC’s primary duty in its rate-setting function must be to uphold the outcomes of a genuinely competitive CSP,” he said.

“When a CSP has been conducted properly—transparently, fairly, and with robust competition—the resulting price is not just a number offered by a generator. It is the market’s definitive answer to the question, ‘What is the least-cost power available today?” he said.

Juan warned that second-guessing the outcome and unilaterally reducing the contracted rate “risks undermining the entire foundation of the competitive market.”

“It creates regulatory uncertainty that discourages the very investment we need. It tells investors: ‘You competed and won fairly, but the goalposts may still move during the PSA review process at ERC,'” Juan said.

“This does not protect consumers; it ultimately harms them by chilling investment, threatening future supply, and jeopardizing the long-term reliability and affordability of our power,” he said.

He clarified this does not mean the ERC should “rubber-stamp” every PSA. “The commission should vigorously ensure that the CSP process itself was truly competitive and compliant. It must scrutinize the terms for prudence, ensure the costs pass through the filters of reasonableness, and disallow any illicit or anti-competitive behavior,” he said.

Once the process is deemed fair and the costs are “just and prudent,” Juan said the regulator should “have the courage to trust the market it was mandated to create and promote.”

“Upholding a competitively derived price is the highest form of consumer protection—it protects consumers from the hidden costs of uncertainty, underinvestment, and the return of negotiated monopolistic rates,” he said. “By upholding the results of a fair CSP, we ensure that investors who take massive risks can recover their just and prudent costs, securing a reliable and modern grid for our future.”