ERC vows to avoid the California experience

The Energy Regulatory Commission (ERC) vowed to proactively set measures to avoid blackouts similar to the ones experienced by California in the early part of the decade. The assurance was made amid a news report in a major daily that the independent power producers are worried that the failure of the Manila Electric Company (Meralco) to pay its power suppliers may lead to massive blackouts similar to the ones that crippled California in 2001.

“The ERC will do its best to find avenues to prevent ‘buy high but sell low’ transactions and expeditiously act on application of distribution utilities (DUs) including Meralco for the collection of generation charges from their respective electricity consumers so as not to impair the financial viability of power distributors,” ERC Chairman Rodolfo B. Albano, Jr. said.

The generation rate adjustments that used to be automatically collected and eventually goes to the ERC for review and validation now undergo public hearings prior to implementation. This is in compliance with the Supreme Court’s ruling that any change in the charges that will affect the electricity bill of consumers should undergo public hearings. DUs normally advance the payment of the generation charges to their IPPs and the National Power Corporation (NPC). Some DUs have reportedly begun to feel financial difficulties in financing the generation charges.

“The ERC is only implementing the Electric Power Industry Reform Act’s Implementing Rules and Regulations (EPIRA’s IRR) as interpreted by the Supreme Court. The ERC is constrained to discontinue the automatic adjustments. For now, the only remedy it sees is for the IRR to be amended,” Chairman Albano said.

April 18 , 2007