ERC set to release rules on public ownership of gencos

MANILA, Philippines - The Energy Regulatory Commission (ERC) is set to release the rules that will govern the public ownership of generation companies (gencos) and distribution utilities (DUs).

The ERC said it will be conducting a series of public consultations before the rules are approved.

The Electric Power Industry Reform Act (EPIRA) and its implementing rules and regulations direct the gencos and DUs that are not publicly listed to offer and sell at least 15 percent of their common shares of stock to the public.

The DUs that are required to make a public offering include privately-owned DUs, electric cooperatives (ECs) and distribution systems owned and operated by a local government unit (LGU).

In case the common shares of stock of a company are already fully subscribed, the company must increase its shares of stock by 15 percent, or sell or divest 15 percent of its capital stock and sell the same to the public.

Existing gencos and DUs are given five years from the effectivity of the ERC rules to comply with the public ownership directive under Sec. 43 of the EPIRA.

New companies, on the other hand, must implement their public offering within five years from the issuance of their certificate of compliance (COC).

The common shares of stock, the ERC said, must not only be offered but actually sold to the public within the prescribed periods for both existing and new companies.

But owners of self-generation facilities (SGF) and the holding companies of gencos and DUs listed with the Philippine Stock Exchange (PSE) are not required to make a public offering.

The modes of public offering include: listing of the common stocks in the PSE; registration of the common shares of stock in the Securities and Exchange Commission (SEC); and listing of the shares of stock in any accredited stock exchange or direct offer of a portion of the capital stock to the public or their employees.

Offering of the common stocks to employees of a genco or DU through an employee stock option plan (ESOP), or any similar plan, is not considered as a public offering.

“The electric power industry is a capital intensive-industry. Allowing the public to own part of gencos and DUs will broaden the ownership base in the generation and distribution sectors and facilitate the inflow of investments that are needed to achieve the expansion and modernization goals of the industry,” ERC chairperson Zenaida G. Cruz-Ducut said.