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ERC’s failure to regulate distribution utilities irks solon

March 25, 2023 Camille P. Balagtas 238 views

SENATOR Sherwin Gatchalian assailed the Energy Regulatory Commission (ERC) for its failure to “efficiently” regulate distribution utilities (DUs) and ensure affordability of electricity rates, to the detriment of consumers.

“A regulator is supposed to protect consumers, but if you’re saying our distribution utilities are operating without approved power supply agreements and are charging generation rates beyond what is allowed, how can we be confident of our own regulator? Submit to us an action plan on how to prevent this from happening again moving forward because it doesn’t say good things about our regulator,” Gatchalian told ERC officials at a recent Senate hearing conducted by the Committee on Energy.

The committee, for which Gatchalian serves as the vice-chair, tackled the case of San Fernando Electric Light and Power Company, Inc. (SFELAPCO) in Pampanga, which was recently ordered by the ERC to pay its consumers a P654.4-million refund for excess charges collected from January 2014 to December 2020. The ERC also imposed a P21.6 million penalty on SFELAPCO for passing on to consumers a generation rate that has not been approved by the ERC.

During the hearing, it was revealed that there are more than 20 DUs in the country operating without approved PSAs, prompting Gatchalian to call on ERC to resolve the situation and submit an appropriate action plan.

“Paano nakalagpas ito sa inyo?” Gatchalian asked the ERC, in reference to its Resolution No. 17 series of 2009, which requires all DUs to submit every month their calculations on generation rates, system loss rates, and mandated rate reduction, among others.

At the same hearing, Gatchalian asked the Department of Energy (DOE) to review its policy of allowing DUs to maintain indirect membership to the Wholesale Electricity Spot Market (WESM). In the case of SFELAPCO, its indirect membership in WESM prevented it from contracting power supply on the spot market, which resulted in higher distribution costs to the detriment of consumers in San Fernando, Pampanga.

“The problem is the indirect membership. I suggest that you review that policy because it can be a loophole moving forward,” Gatchalian told DOE Assistant Secretary Mario Marasigan.

Gatchalian emphasized that the indirect WESM membership also gave SFELAPCO a reason to ask for an exemption from the Competitive Selection Process (CSP). “You tied your own hands since if you don’t give SFELAPCO an exemption from CSP, magbabrownout doon,” said Gatchalian, noting that all DUs should be reminded that they should strictly follow the rules because, in this case, it was SFELAPCO that was remiss in its responsibility.