ERC exercises authority over spot market to lower rates
The Energy Regulatory Commission (ERC) on June 15, 2006 issued an Order that stressed its authority, as provided for in Section 45 of the Electric Power Industry Reform Act of 2001 (EPIRA), to monitor and penalize any market abuse and to stop and redress the same. As such, the ERC reiterates the imposition of corrective measures including the power to direct the adjustment of settlement prices in the Wholesale Electricity Spot Market (WESM) and rendered the Philippine Electricity Market (PEM) Board’s act of adjusting the settlement prices in the WESM invalid and without force and effect. In the said Order, the ERC directed the implementation of the NPC-TOU (Time-of-Use) rates for the third and fourth billing periods of WESM, instead of the market settlement prices, which are higher.
“Nowhere in the EPIRA and its Implementing Rules and Regulations (IRR) is it provided that the PEM Board has the power to adjust the settlement prices in the WESM,” ERC Chairman and CEO Rodolfo B. Albano, Jr. said. “In the particular subject case, the adjustment on the WESM prices was appropriately made using the ERC-approved NPC-TOU generation rates as benchmark, the same having passed the “reasonableness” test and have been subjected to the usual public hearing and evaluation by the ERC,” Chairman Albano added.
The subject Order clarified that the functions of the PEM Board are administrative in nature and merely comprise the governance of the WESM. The EPIRA grants the ERC the authority, in case of market power abuse situations, to fix the prices in the market consistent with its monitoring and surveillance powers under the WESM Rules and Section 43 (c), in relation to Section 45 of the EPIRA.
“The
success of the electric power industry restructuring rests not only on the ERC
but on everybody’s concerted effort. Let us all work hand in hand to make
the power industry and this nation move towards a brighter future,”
Chairman Albano concluded.
July 4, 2008