ERC approves competition rules for electricity sector

The Energy Regulatory Commission (ERC) has approved competition rules for the electricity sector that will favor market development while providing more options for customers.

"The rules will hopefully result in a fair trade practice among the industry players. Consumers stand to be protected by these rules," ERC Chairman Rodolfo B. Albano Jr. said.

The rules center on anti-competitive agreements, arrangements or understandings among industry participants or their affiliates. It also addresses issues on price fixing, misuse of market power, and anti-competitive acquisitions, mergers and consolidations.

The ERC said the rules, approved last Wednesday, create an environment conducive to healthy competition and that should spur greater competition among industry players.

On the other hand, it also penalizes anti-competitive or discriminatory practices and the abuse of market power.

The ERC finally completed the rules which is part of its mandate under the Electric Power Industry Reform Act (EPIRA) to create rules and regulations that promote true market competition, prevent monopoly and thwart abusive practices.

In another development, Albano said the ERC will shortly issue its ruling on the joint application for approval of the settlement agreement between the National Power Corp. (Napocor) and the Manila Electric Co. (Meralco).

"We are working on this. If it’s true that this settlement agreement would result in lower power rates then we will approve it but we are looking at the 12-centavo per kilowatt-hour pass-on cost, Albano said.

Under the settlement agreement signed last year, Meralco should pay Napocor P27.515 billion for reneging on its obligation to buy power from the state-run power firm.

At the same time, Napocor will pay Meralco P7.465 billion for the delayed completion of transmission facilities as well as the energy corresponding to Napococor’s sales to directly connected customers of Meralco.

Thus, the net amount payable by Meralco to Napocor is P20.05 billion, which would be passed-on to customers for a period of five to six years.

This will be reflected in a 12-centavo per kilowatt-hour (kwh) increase in customer’s electricity bills.

The ERC is now carefully studying a provision in the settlement agreement that allows Meralco’s independent power producers (IPPs)to operate at their contracted levels or minimum energy quantities (MEQ).

Such provision effectively reduces Meralco’s purchased power cost by about 25 centavos per kwh.

This in turn, should redound to a 13-centavo per kwh reduction in the bills of Meralco customers.

"We are still working on a formula that the ERC has set up a long time ago. We are eager to finish this because there is a good chance that if the agreement is approved, there will be a lowering of electricity rates," Albano said.