More reasons for plunder rap seen in electricity ‘monopoly’

The new operator of the wholesale electricity spot market (WESM) earned P322,140,496 in three months from paid-up capital of P7,000. It paid only P324,587 income tax. The huge collections were made from electricity users without consent of the Energy Regulatory Commission. The operator is a virtual monopoly prohibited by the Plunder Act.

Those are among many issues the House energy committee will raise next week with the Independent Electricity Market Operator of the Philippines. Committee members question the legality of IEMOP’s entry. Some see plunder in the 2018 “spinoff” of IEMOP from the government-owned and -controlled Philippine Electricity Market Corp. (PEMC). Their review aims to improve WESM as the trading bourse of electricity generators and distributors.

R.A. 7080 deems as plunder the series or combination of crimes to abscond at least P50 million from the government. Section 1(d), on ill-gotten wealth forbids:

“(3) Illegal or fraudulent conveyance or disposition of assets belonging to the National Government or any of its subdivisions, agencies or instrumentalities or government-owned or -controlled corporations (GOCCs) and their subsidiaries;

“(5) Establishing agricultural, industrial or commercial monopolies or other combinations and/or implementation of decrees and orders intended to benefit particular persons or special interests; or

“(6) Taking undue advantage of official position, authority, relationship, connection or influence to unjustly enrich himself or themselves at the expense and to the damage and prejudice of the Filipino people and the Republic of the Philippines.”

Section 2, on penalties, covers “Any public officer who, by himself or in connivance with members of his family, relatives by affinity or consanguinity, business associates, subordinates or other persons, amasses, accumulates or acquires ill-gotten wealth through a combination or series of overt or criminal acts as described in Section 1(d) ... shall be punished by life imprisonment.”

Incorporated May 15, 2018, IEMOP took over as sole WESM operator four months later. Seven incorporators had paid up P1,000 each as capital. By an Operating Agreement on Sep. 19, 2018, it was “spun off” from PEMC, the Dept. of Energy stated last week. PEMC was the WESM operator, formed by the Electric Power Industry Reform Act of 2001.

Rep. Jericho Nograles, committee vice chairman, has questioned IEMOP’s takeover of PEMC’s role without any “competitive selection process.” Under the EPIRA law’s implementing rules and regulations, Rule 9, Section 6(a) requires the independent market operator to be “financially and technically capable, with proven experience and expertise of at least two (2) years as a leading independent operator of a similar or larger size electricity market.” He said P7,000 paid-up is “financially inadequate even for a siomai food cart franchise,” what more the multibillion-peso WESM. Technically, the capital cannot buy even a good computer or smartphone.

Nograles rejected DoE’s claim that IEMOP gained the two years experience and expertise by virtue of PEMC’s transfer of “system”, equipment and personnel to IEMOP. He said there are rules, including public bidding, on the disposition of state assets to a private firm.

PEMC is a GOCC, Nograles insisted. It is listed as No. 61 in the website of the Governance Commission for GOCCs: https://icrs.gcg.gov.ph/files/

From inception in May 2018 IEMOP knew it was later to become the WESM operator. Its Articles of Incorporation states its primary purpose: “Manage and operate the market for the wholesale purchase of electricity and ancillary services in the Philippines (the wholesale electricity spot market or WESM) and engage in services related to the same....”

IEMOP took over PEMC’s collection of 0.86¢ per kilowatt-hour of electricity paid for by consumers. But while PEMC had authority from the Energy Regulatory Commission to collect that amount, IEMOP had none, said Nograles. The cardinal rule in the energy industry is for all fees, rates, charges, and other exactions to first be publicly heard and approved by the ERC.

IEMOP’s collection of P322,140,496 from late Sep. to Dec. 31. 2018, gleaned from its audited financial statement, had no such ERC approval.

The National Transmission Corp. (TransCo) supervised the PEMC up to the transition into IEMOP. Yesterday it refuted Nograles, claiming that the EPIRA Law did not require any competitive selection process. Spokesman Andre de Jesus branded as “inaccurate” and “malicious” news items that implicate Transco president/CEO Atty. Melvin Matibag and his wife Ma. Rene Ann Lourdes A. Garcia-Matibag, head of corporate services of PEMC.

IEMOP’s Articles of Incorporation lists Mrs. Garcia-Matibag as its treasurer and one of seven incorporators.

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