ERC inks guidelines on the determination of ownership and market share limitation of power gencos
The Energy Regulatory Commission (ERC) published on February 7, 2006, the Guidelines which provides determination of the installed generating capacity in a Grid and the national generating installed capacity. The said Guidelines also includes enforcement of the limits on concentration of ownership, operation or control of the installed generating capacity.
“Under the said Guidelines, the ERC will issue a separate document initially setting the installed capacity and the market share limitations per Grid and national Grid,” ERC Chairman Rodolfo B. Albano, Jr. announced. “Further, the ERC will adjust the installed capacity, per Grid and national Grid, not later than March 15 of every year based on the reported maximum load carrying capability of the power plants. However, the generating capacity of a generating unit will be deemed to be zero when it is temporarily shut down and cannot be reasonably energized and connected to the grid for a period longer than twelve (12) months. The generating capacity of a generating unit will be deemed reduced to the extent of any permanent reduction in its maximum load carrying capability,” Chairman Albano added.
Rule 11
of the Implementing Rules and Regulations (IRR) of Republic Act No. 9136 or
the Electric Power Industry Reform Act (EPIRA) in relation to Section 45 of
the Act provides that no company, related group or IPP Administrator, singly
or in combination, can own, operate or control more than thirty percent (30%)
of the installed generating capacity in a Grid and/or twenty-five percent (25%)
of the national installed generating capacity. However, the said market limits
will not apply: to the National Power Corporation (NPC) and its Independent
Power Producers (IPPs) during the time that their assets are being privatized;
and to assets located in isolated grids that are not connected to the high voltage
transmission system.
Crediting of generating capacity of a plant to one or more persons or entities
depends on who owns or control the generation facility. In the case of NPC and
its IPPs, however, it is the control of the power plants and not ownership that
determines crediting of the total capacity. On the other hand, Distribution
Utilities (DUs) which have bilateral supply contracts with generation companies
for the purpose of serving their customers are not considered in control of
the capacity, provided that such contracted capacity is not unreasonably excessive.
Presently,
generation companies and other self generating entities are required, pursuant
to their Certificates of Compliance (COCs) issued by the ERC, to immediately
disclose any change in operation, rehabilitation, or shut down of their generation
facilities in order for the ERC to determine their compliance with the said
installed capacity and limitations. Any arrangements that would violate ownership
limits or control of installed generating capacity or circumvent the provisions
of the Competition Rules will result to crediting of capacity to the parties
privy to the contract, administrative sanctions, or revocation of COC.
“We have to safeguard the interests of the industry stakeholders to promote
competition, prevent market abuse and achieve greater operational and economic
efficiency,” the Chief regulator emphasized.
February 17, 2006