Power collusion still being probed

MANILA, Philippines - Voiding the hefty electricity rate increase does not stop the investigation into possible collusion among power generators that led to the sharp rate hike, officials said yesterday.

 By voiding the power rate hikes for December and January, the Energy Regulatory Commission has exposed weaknesses in the Wholesale Electricity Spot Market (WESM) and the Electric Power Industry Reform Act (EPIRA), Malacañang said as it called the ERC ruling “significant.”

The ERC, now composed mostly of President Aquino’s appointees, said “market failure” at WESM led to an artificial supply of power and eventually to higher rates. It noted that generating companies withheld a total of 2,035 megawatts from the WESM during the one-month maintenance shutdown of the Malampaya natural gas plant.

“This is the first time that this happened since EPIRA was passed,” Presidential Communications Operations Office Secretary Herminio Coloma Jr. said yesterday, referring to the ERC order.

Coloma stressed the importance of “free interplay of market forces” for the sake of public interest.

The ERC is investigating possible collusion among power generators to jack up electricity prices. The Department of Justice and the Department of Energy are conducting separate probes.

Coloma said that while sanctions against erring power companies can only be determined after completion of the investigations, ERC’s issuance of the order was a good start.

But he conceded that power generators could go to the courts and challenge any ruling against them.

“We will await ERC’s actions or the outcome of their ongoing inquiry on collusion and abuse of market power,” Coloma said.

In a press briefing, presidential spokesman Edwin Lacierda said the Supreme Court, now hearing the complaints against the power rate hikes in December and January, can take judicial notice of the ERC resolution, which “can help in their (justices) appreciation” of the other facts of the case.

He said even the responsibilities of power distributors like Manila Electric Co. were being looked into the by the ERC and the courts.

“Well, the best evidence is the (ERC) resolution itself,” Lacierda said. “All I can say is that the ERC ruled and, using the police power of the state, protected the general welfare of the people,” Lacierda said.

Explanation sought

For the ERC, generation companies should explain their failure or refusal to offer their full capacities at the WESM during the month-long maintenance shutdown of the Malampaya natural gas plant.

ERC executive director Saturnino Juan said those found guilty of violating anti-competitive behavior would be slapped with penalties.

In its March 3 order voiding WESM rates in November and December last year, the ERC also asked WESM operator Philippine Electricity Market Corp. (PEMC) to investigate within 90 days violations by several power plants of the trading floor’s “must-offer rule.” WESM is the country’s trading floor for electricity.

“Within a period of no less than 90 days from receipt of this order, PEMC is further directed to conduct an investigation on the possible breach of must-offer rule,” the ERC said.

ERC findings showed that the average capacity not offered during the Malampaya shutdown totaled 2,035.13 megawatts broken down as follows: 925.29 MW of hydropower, 608.9 MW of oil-fired capacity, 252.77 MW of coal-fired power, 173.1 MW of natural gas and 75.07 MW of geothermal power.

Hydropower plants that withheld capacities during the period were Kalayaan hydropower plant in Laguna, operated by CBK Power Co.; Casecnan hydroelectric power plant in Nueva Vizcaya of California Energy Casecnan Water and Energy Co; Pantabangan and Masiway hydropower plants of First Gen Hydro Power Corp.; Magat, Ambuklao and Binga hydroelectric power plants of SN Aboitiz in northern Luzon; San Roque Power Plant by San Roque Power Corp.; Angat power plant in Bulacan of K-Water, and Hedcor hydropower plant of the Aboitiz Group.

Among the oil-based power plants that did not offer full capacity during the period were the Malaya plant of the Power Sector Assets and Liabilities Management Corp. (PSALM); Limay power plant of San Miguel Corp., and Therma Mobile Inc. of the Aboitiz Group.

In its order, the ERC said Malaya withheld an average of 350 MW during the period.

“During its conference with the investigating unit, PSALM disclosed its standing policy to submit offers for Malaya in compliance with the must-offer rule even though the plant is on open-breaker status,” ERC said. “PSALM continued to implement this policy of putting Malaya on economic shutdown during the Malampaya shutdown,” it said. The ERC said the capacity withheld by Malaya was “equivalent to 57.48 percent of the total average capacity not offered by the oil plants.”

The Limay oil-fired power plant, the ERC said, followed Malaya to account for 20.80 percent of the total average capacity not offered by the oil power plants during the Malampaya shutdown.

The ERC also said that among the coal-fired plants that had withheld capacities, Calaca plant withheld the biggest at 157.06 MW or 62.14 percent of the total.

“Pagbilao registered an average capacity not offered in the market at 21.86 MW or 8.65 percent of the total average capacity not offered by coal plants during the Malampaya shutdown,” the ERC added.

In their discussions with the ERC, the power plants gave varying reasons for withholding capacities. “Water level was low and below the rule curve,” First Gen, for instance, noted in the case of the Pantabangan plant.

ERC lauded

Senators Antonio Trillanes IV and Senate President Pro Tempore Ralph Recto commended the ERC for its ruling.

“with Iris Gonzales, Marvin Sy, Rhodina Villanueva, Jose Rodel Clapanoo, Mayen Jaymalin, Jess Diaz