The Energy Regulatory Commission (ERC) has stipulated that it will zero in investigations on generation companies (GenCos) that may have raked in “financial gains” from the series of price spikes in the Wholesale Electricity Spot Market (WESM) when Luzon grid supply had been extremely strained last month.
In a Senate hearing, ERC Chairperson Agnes T. Devanadera noted that they are waiting for the submission of data on settlement prices from the Independent Electricity Market Operator of the Philippines (IEMOP) so the regulatory body can pore over the power companies that may have fetched massive revenues despite the rotating brownouts that distressed consumers at the peak of summer months.
“Every end of the month and that was yesterday (June 30), they (WESM operator) have included settlements and that will be very, very important and crucial for the evaluation of ERC,” Devanadera stated.
The ERC chief qualified that aside from closely examining the ‘market gainers’, they will also look at the linkage of these with the various power plants that had been on ‘forced outages’ during those critical periods in the grid.
It is worth noting that in the ‘perfect storm’ episode of the Luzon grid in 2013 -- when simultaneous plant outages also happened, the spot market operator then (the Philippine Electricity Market Corporation or PEMC) had apprised media that there were GenCos with settlement claims ranging from hundreds of millions and the highest calculated settlement to a conglomerate had been pegged at more than P4.0 billion.
However, those GenCo-claims were not paid by PEMC because of the Supreme Court ruling stopping the pass-on of the rate hikes precipitated by the surging prices in the WESM at the time; and there was also a decision of the ERC then enforcing administered pricing on the questioned WESM price spikes.
In this year’s another wave of ominous rate hikes in the WESM, Devanadera emphasized that their analysis shall weigh “inputs or data as to which (plants) are affiliated with one another.”
She said establishing the correlation of the plants on outage and if their affiliate companies have earned hefty revenues from the spot market will be the important data or information that the ERC shall fiercely scrutinize relative to allegations of anti-competitive market behavior or what most industry critics would refer to as ‘collusion’ or market-gaming.
“I cannot just say that okay, there are anti-competitive practices. We really have to go into these details, so that’s why we are waiting for more data,” Devanadera stressed.
She reiterated that the major GenCos under investigation have been those served with show-cause orders (SCOs) relative to their reported breaches on allowable forced outages of their power facilities.
“We issued a notice to explain to all those on outages. And so, we already evaluated their explanations. However, their explanations to our mind, are just mere allegations and these are not supported by any documents, so ERC has issued the show cause orders on June 22 -- requiring these Gencos that went on outages to support their allegations,” the ERC chief indicated.
Devanadera expounded that the regulatory body is “looking on how they (GenCos) complied or did not comply with the performance indices that our rule had already set out.”