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We cannot have a repeat of 2013 power rates surge

It has been four years since electric power rates surged in November and December, 2013, following a drop in the power supply in the Wholesale Electricity Spot Market (WESM) and the Energy Regulatory Commission (ERC) sought to hold the power rates down, but the legal issues that arose over that case remain unresolved to this day.

Households, offices, and factories remember how electric power rates surged to P9.10 per kilowatt hour (kwh) that November, then to P10.23 per kwh in December, as the Malampaya shutdown was compounded by the shutdown of other gas plants.

The ERC stepped in to void the high prices at WESM. It noted the withholding of capacity by some generation companies, resulting in what it believed to be a contrived supply shortage. The ERC intervened in accordance with its mandate to restore competitive market conditions. Without its intervention, it said, generation companies would be allowed to unduly benefit from a supply situation they themselves created. The generation companies went to court.

Last December 7, 2017, the Court of Appeals ruled against the ERC decision. It reinstated the higher charges at the WESM. It said ERC had committed errors of fact and law and had issued its order without due process.

The ERC has filed a motion for reconsideration, saying the CA decision could result in an increase in the generation charge that will be passed on to consumers. The court decision, it added, has effectively emasculated ERC in its effort to abate unwarranted increases in electricity rates.

The case will be decided on its legal merits. But we must voice our concern over the possibility that a situation such as that in 2013 may arise and electric power rates will surge once again.

The Philippines today has one of the highest power rates in Southeast Asia at P7.49 per kilowatt hour for commercial enterprises and R8.90 for households. We need to lower these rates to push the development of our commerce and industry. And we certainly cannot have another situation like the one in 2013 when electric power rates reached P10.23 per kwh.

The ERC, which is now headed by former Justice Secretary Agnes Devanadera, should be able to carry out its mandate to promote free and fair competition in the industry, penalize abuse of market power, and protect the rights of consumers.