ERC decides to make use of Napocor time-of-use rates during WESM’s 3rd and 4th month of operations

By Paul Anthony A. Isla

INSTEAD of having consumers pay for higher market settlement, the Energy Regulatory Commission (ERC) directed the implementation of the National Power Corp.’s (Napocor) time-of-use (TOU) rates for the third and fourth billing periods of the Wholesale Electricity Spot Market (WESM).

Rodolfo  Albano Jr., ERC chairman, told reporters the commission finally decided on the net settlement price of the Power Sector Assets and Liabilities Management Corp. (PSALM) to be based on the Napocor’s TOU rates.

“Using TOU, therefore, will lower in effect the price of collection from the WESM,” said the chief regulator.

Albano said the ERC issued the order on June 15, 2006, that emphasizes its authority, as provided for in Section 45 of the Electric Power Industry Reform Act of 2001 (Epira), to monitor and penalize any market abuse and to stop and redress the same.

In August and September, Albano recalled the Philippine Electricity Market Corp. (PEMC) claimed that there was an anticompetitive work of PSALM in the third and fourth month of operations of the WESM.

“We investigated and the investigation showed that there was no sufficient proof to establish a prima facie case against PSALM. But we have decided for PSALM to use the TOU instead,” he added.

Should PSALM wish to seek a reconsideration, Albano said it should file a motion for reconsideration with the ERC, and if the commission still rules in favor of the WESM, then forward the petition to the Court of Appeal or the Supreme Court.

The ERC reiterates the imposition of corrective measures, including the power to direct the adjustment of settlement prices in the WESM and rendered the Philippine Electricity Market (PEM) Board’s act of adjusting the settlement prices in the WESM invalid and without force and effect.

PEMC, in the aforementioned periods or months, had adjusted prices of power traded at the spot market, owing to price-manipulation raps against PSALM in September and October 2006, to a level that would match the TOU rates at P4.853 per kilowatt-hour for August 26-September 25, 2006, billing cycle and P6.77 per kilowatt-hour for September 26-October 25 billing cycle.

“Nowhere in the Epira and its implementing rules and regulations is it provided that the PEM Board has the power to adjust the settlement prices in the WESM,” Albano noted.

In the particular subject case, the chief regulator said the adjustment on the WESM prices was appropriately made using the ERC-approved Napocor-TOU generation rates as benchmark, the same having passed the “reasonableness” test and have been subjected to the usual public hearing and evaluation by the ERC.

The subject order clarified that the functions of the PEM Board are administrative in nature and merely comprise the governance of the WESM.

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INSTEAD of having consumers pay for higher market settlement, the Energy Regulatory Commission (ERC) directed the implementation of the National Power Corp.’s (Napocor) time-of-use (TOU) rates for the third and fourth billing periods of the Wholesale Electricity Spot Market (WESM).

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