ERC commissioners suspended for a year

MANILA, Philippines — The Office of the Ombudsman has ordered all four commissioners of the Energy Regulatory Commission (ERC) suspended for one year over alleged anomalous power supply deals with 38 companies, seven of which were affiliated with the Manila Electric Co. (Meralco).

In a decision dated Dec. 11 and approved by Deputy Ombudsman for Luzon Gerard Mosquera, ERC commissioners Gloria Yap-Taruc, Alfredo Non, Josefina Patricia Magpale-Asirit and Geronimo Sta. Ana were found administratively liable for “conduct prejudicial to the best interest of the service aggravated by simple misconduct and simple neglect of duty.”

Dismissed ERC chairman Jose Salazar was also found liable for the same offense but was only penalized with a fine equivalent to six months worth of his salary. President Duterte fired Salazar in October on corruption allegations.

In a separate decision also dated Dec. 11, the ombudsman ordered the filing of graft cases against Salazar and the four ERC commissioners on charges that they facilitated the grant of unwarranted benefit, advantage and preference to the 38 private companies, to the prejudice of the government.

The two ombudsman decisions stemmed from a complaint filed by Alyansa Para sa Bagong Pilipinas (APB) Inc. in November 2016.

In its complaint, the APB questioned the ERC’s postponement of the implementation of the competitive selection process (CSP) rule that was supposed to take effect on Nov. 6, 2015.

The CSP rule requires electric companies or utilities to hold public bidding in procuring their power supply to ensure reasonable rates for consumers.

The ruling stated that by “wrongfully denying the consumers the benefit of CSP, and allowing high valued and long-term” power agreements to be finalized without bidding, “respondents failed to do their duty to encourage market development, ensure customer choice, penalize abuse of market power in the restructured electricity industry and enforce the implementing rules and regulations of EPIRA,” it said. EPIRA stands for Electric Power Industry Reform Act.

Based on the ombudsman’s records, the ERC on March 15, 2016 allowed a 45-day deferment or until April 30, 2016 of CSP’s implementation, allowing the 38 firms to procure their power supply totaling 4,500 megawatts without competitive bidding.

“Respondents’ explanations for transgressing said government policy are not satisfactory... The numerous requests for clarification and/or exemption from CSP from numerous industry participants is not a sufficient reason,” the ombudsman’s resolution read.

The ombudsman said that as a result of the deferment of the CSP rule’s implementation, Meralco in particular was able to seal seven power supply agreements (PSAs) with its sister generating companies for a total supply of 3,551 megawatts (MW) without competitive bidding.

The ombudsman said its investigation proved that the ERC officials “gave unwarranted benefits to Meralco and other companies by exempting them from the coverage of the CSP requirement which was already in effect.”

“Respondents cannot feign ignorance that Meralco may take advantage of the period they would be providing to accept the filing of PSAs that do not have to comply with CSP requirement,” the ombudsman said.

“Prudence dictates that respondents should have been on the lookout for the possible consequences that may result from their actions,” the ombudsman said, pointing out that the contracts entered into by Meralco with its sister companies are effective for up to 20 years.