Voiding power rate hike won’t stop DOJ probe

MANILA, Philippines—Despite the decision of the Energy Regulatory Commission (ERC) to void the electricity price hike in the fourth quarter last year, the Department of Justice on Friday said it would continue its investigation into the alleged price manipulation and anticompetitive behavior of power companies.

AFP FILE PHOTO

“This is no doubt the start of a new direction by regulators to protect consumers anchored on the basic tenets of the competition law and economic justice. Our Office for Competition will continue with its investigation bearing in mind its mandate to protect the interest of the consumers,” Justice Secretary Leila de Lima said in a statement.

On Tuesday, the ERC ordered the Philippine Electricity Market Corp., regulator of the Wholesale Electricity Spot Market (WESM), to recompute the generation charges imposed by power generation companies during the shutdown of the Malampaya gas to power project last year.

The spike in the generation rates caused the Manila Electric Co. (Meralco) to pass on to its consumers record-high charges for November last year. The resulting public uproar led to the filing of a suit in the Supreme Court, which stopped Meralco from collecting the increased rates.

Must-offer rule

The ERC said the increase in price of electricity was the result of the refusal of certain power plants to offer capacity in the WESM. It said the generation companies’ violation of the WESM “must-offer rule” contributed to the tightness in supply.

The commission also said the market was still dominated by only a few players or group of companies despite the government’s efforts to privatize its generation and transmission assets.

Such a high concentration in the market, it said, may have negatively affected electricity rates.

Assistant Justice Secretary Geronimo Sy, Office for Competition (OFC) chief, noted the ERC order did not clear Meralco, the generation companies and other market players for the controversial rate hike.

“It is clear from the ERC directive that there is still a need to determine whether there was an abuse of market power or any other form of anticompetitive behavior in the electricity market. We must ensure that there is genuine competition among the firms so that they cannot individually or collectively dictate the price at the expense of end-users,” Sy said.

Created in 2011, the OFC is the country’s first competition authority. The OFC is tasked with investigating and prosecuting cases involving violations of competition laws, as well as carry out market studies to guide industries and consumers.

Consumer groups had earlier filed a complaint against ERC Chair Zenaida Ducut for her failure to protect power consumers when she gave tacit approval to the record-high rate increase announced by Meralco in December.

Akbayan Representatives Walden Bello and Ibarra Gutierrez also called for Ducut’s resignation for not looking after the interest of consumers.

Critics also accused the country’s biggest power distributor and generating firms of colluding to jack up power rates.

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