Dimalanta warns: Higher electricity rates possible sans appointee

Energy Regulatory Commission (ERC) Chairperson and CEO Monalisa Dimalanta | PHOTO: Official Facebook page of ERC / Energy Regulatory Commission

Updated on September 20, 2024 at 6:32 p.m.

Power consumers from all over the country, particularly in the Visayas, may have to pay higher electricity bills next month if Malacañang fails to appoint a temporary head of the Energy Regulatory Commission (ERC), its embattled chief warned on Thursday.

Suspended ERC Chair Monalisa Dimalanta explained that at least 23 electric cooperatives (ECs) had pending cases with the commission, particularly power supply agreement (PSA) applications.

PSAs are signed between power distributors and generators in order to avoid having to purchase electricity from the Wholesale Electricity Spot Market (WESM), whose prices are volatile, as these depend largely on supply and demand.

READ: Dimalanta leaves ERC, says she will explore legal options

These high prices are passed on to consumers under generation charge, or the cost of power purchased from suppliers that accounts for more than half of a consumer’s monthly electricity bill.

But without an appointed head of the ERC, it will not be able to act on these cases, Dimalanta pointed out.

“We have 23 ECs that have an exposure to WESM by more than 50 percent, and that’s big,” she said during a forum.

Data from the Independent Electricity Market Operator of the Philippines show that as of Thursday afternoon, prices at WESM, the country’s trading floor for large-scale power buyers and sellers, averaged P3.19 per kilowatt-hour (kWh). In contrast, PSAs entered into by distributors and generators often have fixed prices that need to be lower than the WESM average.

Dimalanta’s warning came nearly two weeks after she vacated her post as head of the energy sector regulator following a six-month preventive suspension order from the Office of the Ombudsman.

The antigraft body mandated the Office of the Executive Secretary to appoint an officer in charge, but Malacañang has yet to name a temporary ERC chief.

In an Aug. 20 decision, the Ombudsman said the case stemmed from a complaint of the National Association of Electricity Consumers for Reforms Inc. (Nasecore) that the ERC had failed “to recalculate the rate of Meralco (Manila Electric Co.) that protects the interest of the public” due to regulatory delays.

READ: BIZ BUZZ: Dimalanta out. Now what?

Dimalanta filed a motion for reconsideration on Sept. 11 and clarified that the ERC already decided on Meralco’s case on Aug. 21, or a day after the Ombudsman’s suspension order. Ombudsman Samuel Martires signed the order on Aug. 27.

Meralco sought the ERC’s approval of its annual revenue requirement and spending scheme for the fifth regulatory period (5RP) covering July 2022 to June 2026.

During this period, a regulated entity such as Meralco needs to submit its expected spending and proposed projects, while the ERC will evaluate how much of it should be passed on to consumers.

Nasecore argued that delays on the part of the ERC were detrimental to the electricity end-users.

Dimalanta explained that in a 3-2 vote of its commissioners, the ERC ruled that Meralco’s current P1.35-per-kWh distribution charge will be in effect until 2026, or the end of the 5RP.

Meralco had applied for an average price of P1.57 per kWh for the period.

According to Dimalanta, three of the five commissioners voted to consider the 5RP lapsed, therefore allowing Meralco to apply its existing rate.

But in dissenting, Dimalanta argued that the period had not technically ended yet, and that a lower distribution charge could have been possible if the ERC had reviewed the Manuel Pangilinan-led distributor’s rates.

“We have not reset rates for 10 years, so why would we opt not to reset rates again?” Dimalanta said. “We could have still done it … consumer groups and intervenors have told us that it (distribution rates) should be lower.”

The ERC has yet to release its decision on Meralco’s case, which had been delayed since 2021.

In a separate statement, Meralco said it had yet to receive a copy of the ERC’s decision, adding that the regulator should have decided on its filing before the beginning of 5RP on July 1, 2022.

“Just like for other distribution utilities, rate reset applications are necessary for Meralco to be able to implement projects and programs that will ensure fulfillment of our mandate to deliver stable and reliable service to our customers,” it said.

Various business and power groups–including the Management Association of the Philippines and the Philippine Independent Power Producers Association–have expressed their support for Dimalanta, saying that the claims against the suspended official were “unfounded.”

In a statement on Friday, the Federation of Filipino-Chinese Chambers of Commerce and Industry Inc. (FFCCCII) also pointed out that leaving the ERC chair seat empty for six months “conveys a period of institutional uncertainty and economic weakness in the foreseeable future.”

“We respect the authority of the Ombudsman and believe an impartial and objective investigation and resolution on the matter,” FFCCCII president Cecilio Pedro said. “We are concerned, however, that the leadership vacuum would result in possible delays in ERC decisions on pending applications and cases as new rules are adopted, which will affect energy supply and power rates in the country.”