The reinstatement of Energy Regulatory Commission (ERC) Chair Monalisa Dimalanta — after she had served partially a six-month preventive suspension ordered by the Office of the Ombudsman — provides an opportunity to reassess the current state of affairs in the governance of the electric power industry.
It may be recalled that the suspension arose from a case filed by the National Association of Electricity Consumers for Reforms Incorporated (Nasecore) over the alleged inaction of the ERC on the recalculation of Meralco power rates that were deemed detrimental to the public.
Nasecore alleged that the ERC violated the Electric Power Industry Reform Act (EPIRA) that was enacted in 1993. It may also be recalled that massive brownouts hit the country and that these were attributed to the National Power Corporation’s inability to address the significant increase in electric power demand.
This latest scenario could best be understood in the context of Nasecore’s previous lawsuit against Meralco, which resulted in a Supreme Court order for the utility company to refund consumers ₱29 billion in excess charges. That case took nearly a decade to be resolved. It was filed in 1994 before the Energy Regulatory Board (ERB), precursor of the ERC, and decided with finality by the Supreme Court in 2003.
In a recent media interview, the ERC Chair acknowledged that expediting action on private sector applications is a tall order. She explained: “From just regulating one national power corporation, we are now overseeing nearly 300 power producers with over 600 power plants across the Philippines.” Previously, the ERC “regulated only 35 independent power producers and private companies under the National Power Corporation.” Thus, she observed further: “We’ve gone from a small universe to this gigantic galaxy that we are regulating, but we are not fit for that purpose.”
Perhaps, the Department of Budget and Management (DBM) can step in and initiate the restructuring and upgrading of the ERC’s staffing levels. The hefty task of regulating both the system operator and some 142 distribution utilities is lodged in one major unit, the Regulatory Operations Service. Moreover, as in many government offices, contractual employees make up a big portion of its existing personnel complement.
On a broader scale, it may be well for Congress to enact legislation that would revise the parameters of the Philippine model of regulating the power industry that is based on rules promulgated more than three decades ago.
According to a doctoral dissertation submitted to the University of the Philippines’ National College of Public Administration and Governance, the present regulatory model “is similar to the US system in the sense that it is characterized by legal and procedural complexity, detailed statutes, formal rule making procedures, requirements for elaborate economic and scientific analyses and a great deal of legislative and judicial supervision.”
It has been suggested that the United Kingdom (UK) system appears to be more pragmatic as “regulatory agencies take a case-to-case approach that demands a great deal of discretion; they prosecute firms far less often than their US counterparts.”
Our legislators’ mission is clear: Craft a new law that enables the ERC to do a better job of ensuring fair regulation of electric power rates for the benefit of millions of citizen-consumers.