Wednesday, March 12, 2014

ERC asked to fully void rate hike, suspend WESM operations


Labor groups under the Nagkaisa coalition is asking the Energy Regulatory Commission (ERC) to fully void all pending rate hikes in Luzon that were affected by ‘market failure’ during the maintenance shutdown of Malampaya gas platform from November to December last year. 

In addition the group is also calling for the suspension of the Wholesale Electricity Spot Market (WESM) operations to protect consumers from predatory pricing to one of the most essential of human needs – electricity. 

The call came after the ERC, invoking police powers, ordered the Philippine Electricity Market Corporation (PEMC) to ‘recalculate’ the WESM prices during the said period.

“Now that the ERC begins to invoke police powers in dealing with market failures we then demand that it utilizes them to the max.  If not then its order for recalculation of WESM prices in December can be viewed as mere publicity stunt,” said Wilson Fortaleza of Nagkaisa power team. 

The group is particularly cautious about a recalculation that may result to mere reduction in rate rather than in complete prohibition of the amount applied which in the case of Meralco totalled P4.15/kWh. ERC Executive Director Saturnino Juan has already indicated that the recalculation may result to the reduction of rates by more than half.  

Fortaleza, who is also the spokesperson of Partido ng Manggagawa (PM), reminded the ERC of the principle stated previously by Malacanang that unjust prices resulting from wrong commercial decisions or market failure cannot be passed on to or borne by the consumers.

“We are glad that at last the ERC has finally found the elements of market failure that it chooses to ignore during EPIRA’s 12 years of implementation,” said Fortaleza.

According to the group, WESM itself is a failure since it began operating in 2006.  By concept it is supposed to be at WESM where we can buy the cheapest electricity since the product is sold here at marginal cost of declared excess capacities of power plants. 

In July 2006 the inaugural price at WESM was P2.00/kWh.  During the Malampaya shutdown between November and December last year prices at WESM breached the maximum offer cap of P62.00/kWh.

Kung hindi ito krimen ano ang tawag dito?  The market is supposed to be ‘reasonable’, ‘rational’ and ‘competitive’, to borrow words from ERC.  But it is not. It never was under EPIRA,” said Fortaleza, explaining that a highly concentrated electricity market in the country can never be reasonable as trading is controlled by pivotal plants owned by certified predators in the power industry.

Tomorrow Nagkaisa is organizing a picket at the offices of the ERC in Ortigas Center to press for the full voiding of Meralco and other pending applications for rate hike within the Luzon grid.  It will also call for the suspension of WESM operations.

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