WESM lacks rules to indict GenCos of ‘collusion’

Published April 28, 2019, 12:00 AM

by manilabulletin_admin

By Myrna M. Velasco

After 13 years of existence, the country’s Wholesale Electricity Spot Market (WESM) said it does not have technical definition and parameters yet that shall guide them to indict generation companies (GenCos) that are habitually delinquent in the facilities’ operations and in abusing market power in the deregulated power industry.

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“We don’t have technical definition of anti-competitive behavior and what constitutes it,” said Philippine Electricity Market Corporation (PEMC) Chief Governance Officer Rauf A. Tan when quizzed on the alleged collusion being
committed by the GenCos that are having simultaneous forced outages in their power plants and wherein the naturally occurring consequence of tight supply have been triggering price spikes in the WESM.

In a hearing convened by the Senate committee on energy, PEMC has also initially hinted that it found “nothing unusual in the bidding behavior of the GenCos,” although the company later on admitted that the data for April has yet to be fully collated and that they have not seen yet which GenCos earned or which ones have massively profited from the price spikes.

It was also PEMC that presented the performance of WESM during the questioned period of yellow and red alerts in Luzon grid although it is not its very mandate because spot market operation is rightfully under the tutelage of the Independent Electricity Market Operator of the Philippines (IEMOP), the duly instituted body to manage and operate the spot market.

And in instances of “collusion” or anti-competitive behavior allegations, it should have been the Market Surveillance Committee (MSC), an independent body in the WESM that will be taking charge – not PEMC management because its board is mostly comprise of GenCo executives.

By edict, the MSC should be an independently manned entity comprising of experts in market operations, so they can apprehend any acts of market power abuse being done in the WESM – and then turn over the data or information to PEMC and then to the industry regulator with jurisdiction, which could either be the Energy Regulatory Commission (ERC) or the Philippine Competition Commission (PCC).

In the process of investigating the alleged market collusion, it had been the ERC and the PCC that had more careful pronouncements relative to the alleged acts of “collusion” in the market; while the Department of Energy, in contrast, calls for “collective action” and “shared responsibility” and was refraining from speculations.

In the actual technical validation of the plants’ forced outages, it was only the ERC that had sent its team so far, according to the GenCos.

ERC Director and Spokesperson Floresinda B. Digal said, “We can’t make a conclusion yet because April data will not be available until the end of the billing cycle which is April 26.”

PCC Executive Director Kenneth V. Tanate emphasized that they are still at “data gathering stage, to establish what will actually be the basis for us to investigate and assess the substantive competition issues.”

He added the PCC is “formulating a case theory relating to competition – and then from there, we have to see if there’s anti-competitive behavior or if there’s really a basis for it.”

Tanate said they are still waiting for the technical report to be submitted to them and PCC had also been coordinating with the ERC on the technical assessment of the power plants; and PEMC has likewise been coordinating with PCC to sort out the very technical definition of anti-competitive behavior.

On the legal question of jurisdiction between the two regulating bodies, ERC Chairperson Agnes T. Devanadera noted that they can work together with PCC on the aspect of investigation.

“I am just saying it because right now, what ERC has done was to call all those GenCos who are on outage so we have some data already. But PEMC is also pursuing its data gathering and when they turned it to us, that is the only time we can investigate together with PEMC whether or not there is an anti-competitive behavior,” she stressed.