ERC issues provisional authority to Subic Enerzone Corporation

The Energy Regulatory Commission (ERC) issued an Order granting the Subic Enerzone Corporation (SEZ) a Provisional Authority (PA) to charge the power rate agreed upon in the Distribution Management Service Agreement (DMSA) with the Subic Bay Metropolitan Authority (SBMA). The grant of the Provisional Authority to SEZ by the Commission significantly reduced the power disctribution charge at the Subic Freeport Zone from P1.00/kWh to P0.5975/kWh.

“ERC acted right away on the application of SEZ to pave the way for a more efficient and reliable electric service at a reasonable price to boost the economic activities at the Freeport Zone,” ERC Chairman Manuel R. Sanchez said. “We realize that this will redound to substantial socio-economic benefits to the country,” he added.

“The Electric Power Industry Reform Act (EPIRA) mandates ERC to regulate and promote the development of the electric power industry. All acts undertaken by the ERC involving electric distribution utilities within the SBMA are well within the bounds of law,” the chief regulator explained.

Section 22 of the EPIRA provides that the distribution of electricity to end-users shall be a regulated common carrier business requiring a national franchise. Distribution of electric power to all end-users may be undertaken by private distribution utilities, cooperatives, local government units presently undertaking this function and other duly authorized entities, subject to regulation of the ERC.

ERC’s immediate action on the application of SEZ to charge the power rate specified in its DMSA with the Subic Freeport authorities will benefit around 640 locators/investors with a total investment of P4.164 billion.

The granting of the Provisional Authority by the Commission to SEZ cleared the way for the said power company to fulfill its mandate to invest P68 million within the next five (5) years to rehabilitate the existing electric power system. It will also be able to realize its obligation to bring down the system loss which currently stands at a high of 14.1% to 9.5% as prescribed in R.A. 9136.

The ERC Chairman hopes that “the recent issuance of the PA to SEZ will send a positive signal to investors that the Commission is diligently performing its mandate to promote reforms in the Philippine electric power industry while protecting the interest and welfare of consumers.” He added that “ERC is here to help build the economy by providing an electricity market environment conducive to business.”

November 05, 2003