ERC to Seek Clarification In Implementing the SC Decision

The Energy Regulatory Commission (ERC) will seek clarification from the Supreme Court amidst reports that the latter has denied the ERC’s Motion for Reconsideration on its ruling which declared all PSAs filed on or before 30 June 2015 for ERC approval to comply with the 2018 DOE Circular.  

“We have not yet received a copy of the Supreme Court’s Resolution purportedly denying our Motion for Reconsideration. Nevertheless, should that be the case, we will comply with the directive of the Supreme Court.  We only need to seek guidance through a Motion for Clarification on how to implement their Decision particularly on the rates and the continued supply of electricity to the affected public utilities” said ERC Chairperson and CEO Agnes VST Devanadera.  

The High Court’s decision will result to the possible immediate termination of 99 affected PSA contracts which will result in the cessation of power supply to 52 Distribution Utilities (DUs) that are serving 13 Million electricity consumers composed of 9.371 Million from Luzon, 1.767 Million from Visayas, and 1.978 Million from Mindanao.  In the advent of the said scenario, a total of 743 megawatts (MW) will have to be sourced from the electricity spot market, particularly:  370 MW in Luzon, 86 MW in Visayas, and 287 MW in Mindanao.  Current prices in the Wholesale Electricity Spot Market (WESM) may range from PhP5.00 to PhP8.00 whereas some of the affected contracts were priced at PhP3.00 to PhP6.00.  Thus, increase in the Generation Charge may be inevitable.

For Mindanao, there is no electricity market yet that can serve as the default source of supply for the DUs.  Hence, without the PSAs, DUs will have no other means to provide enough supply to their consumers, resulting to brownouts.

“We will also need guidance on how prior settlements based on the affected contracts will be evaluated considering the rates that were implemented.  Our initial calculations disclosed that about PhP50 Billion worth of generated power is involved in the PSAs that were filed within the period covering June 30, 2015 to April 29, 2016, which we (the ERC) subsequently approved, and were implemented by the concerned parties in the PSAs.  Therefore, the PhP50 Billion will be translated to rate adjustments in the consumers’ electricity bill on top of the rate adjustment resulting from sourcing power from the electricity spot market,” Chair Devanadera concluded.