THE Energy Regulatory Commission (ERC) said it is seeking to strike a balance between setting fair electricity prices and encouraging investment.
“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,” ERC Chairman and Chief Executive Officer Francis Saturnino C. Juan said in a statement on Thursday.
He was responding to a statement by consumer group Power for People Coalition (P4P), which objected to the proposed new rules to govern the competitive selection process (CSP) of power supply agreements (PSA) and transmission ancillary contracts.
“We are disappointed that Chair Saturnino Juan’s first order of business as new ERC chief is to cede ground to power players, enabling them to raise prices as they please at the expense of ordinary Filipinos,” P4P Convenor Gerry Arances said in a Sept. 19 statement.
“Protecting consumer interests is not an optional duty for the ERC. It is its primary mandate — and part of that responsibility is scrutinizing these contracts to prevent abuses and ensure least-cost electricity,” he added.
Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 tasks the ERC with promoting competition, encouraging market development, and expanding consumer choice in the electric power industry.
Distribution utilities conduct CSPs to procure power at a least-cost basis, a process which produces a PSA.
Mr. Juan has been proposing to amend the rules governing the PSAs of distribution utilities and power suppliers to streamline the approval process and shore up investor confidence.
The proposed changes are meant to expedite resolution of PSA applications and facilitate the entry of new generating capacity to support growing demand.
Mr. Juan said that the new regulatory framework is governed by the CSP policy of the Department of Energy (DoE) and the Supreme Court’s landmark decision in Alyansa ng Bagong Pilipinas vs. ERC.
“In this new era, the role of the ERC is not diminished; it is transformed. Its mandate is clearer and more critical than ever: to be the guardian of the competitive process and the guarantor of its integrity,” he said.
He said that the ERC’s primary duty in its rate-setting function is to uphold the outcomes of a “genuinely competitive CSP.”
Mr. Juan said doubting the outcome and unilaterally reducing the contracted rate “under the guise of regulatory review” undermines the entire foundation of the competitive market.
The DoE has said that the Commission must ensure that the CSP is truly competitive and compliant.
“Once it is established that the process was fair and the costs are just and prudent, the regulator must have the courage to trust the market it was mandated to create and promote,” Mr. Juan said.
“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.” — Sheldeen Joy Talavera