Gov’t to review ownership of power assets

The Department of Energy and the Energy Regulatory Commission will review the interests held by the country’s biggest power firms as they see emerging companies threatening to replace the government in its dominance in the power industry.

The 18th status report on the Epira (Electric Power Industry Reform Act) implementation pointed out the case of San Miguel Energy Corp., which has cornered the highest share of 21 percent of the national total generating capacity only after three years in the business.

“With San Miguel Energy having the biggest share in Luzon, it is only a matter of 202 MW to reach the designated limitations for 2011 in Luzon. With its status as the dominant generator, it is necessary for Power Sector Assets and Liabilities Management Corp. to evaluate its participation in the privatization of the [government’s] remaining assets and contracted capacities,” the report stated.

Data from the report showed that San Miguel Energy has a total of 3,148.48 megawatts in its power portfolio in the national grid (Luzon, Visayas and Mindanao); followed by the Aboitiz Power Corp. with 2,345.64 MW, and First Gen Corp. with 2,525.12 MW.

San Miguel Energy is only 4 percentage points away from breaching the 25-percent national grid market cap, or the limit on the power capacity that a single company or group can generate to protect electricity consumers from monopoly and market power abuse, it noted.

“Due to this aspect, there is a need for ERC and DOE to review the level of interest that these companies hold, specifically the amount of their control/ownership of the existing and additional capacity in the generation sector,” the report stated.

“There is also a need for PSALM as the entity mandated to privatize the government assets to observe what is required by the law by not just pursuing privatization but should also examine to the status of the intending buyer with regard to its market share,” it further said.

The report, which covered the period November 2010 to April 2011, noted that although the government monopoly in the power industry has been eliminated effectively due to the sale of its power assets and contracted capacities in the independent power producers, emerging companies seem to take over its dominance.