In most energy sector meetings and social gatherings, the usual power talk comes with an added juicy coffee shop conspiracy—that the Energy Regulatory Commission (ERC) would still be jolted with leadership changeover in due time.
If—and when—it happens, and the whys and hows of it—they remain a tangled web of speculations, generating more questions than answers at this point. But as Pinoy Big Brother famously puts it: malalaman n'yo ‘yan sa takdang panahon!
Despite the lifting of her six-month suspension that allowed her to return to office last November, ERC Chairperson Monalisa Dimalanta remains under the shadow of an unresolved case with the Office of the Ombudsman—a stark reminder that the storm over her tenure has merely paused, not passed.
The ‘whisper network’ is also buzzing that Chair Mona’s potential successor is none other than Energy Undersecretary Sharon Garin, who, beyond her track record as a former legislator, is seen as among the officials relied upon by Secretary Popo Lotilla to help push critical policies—including those for the gas industry, nuclear, the amendments to the Electric Power Industry Reform Act (EPIRA); and also a key force in securing the support of local government units and other relevant stakeholders in accelerating buildup of desperately-needed transmission facilities.
I directly asked Usec. Garin on this backchannel noise, and she didn’t deny hearing them herself—but even she seemed as puzzled as anyone else, admitting she had no clue where they were coming from or why they were spreading like wildfire.
Industry discontent?
ERC Chairperson Mona Dimalanta admits she’s perpetually on a tightrope walk—especially in the sphere of rate regulation, where every decision is a double-edged sword. Reduce rates to please consumers and investors cry foul over shrinking margins; keep them stable, and the public calls it a sellout. Suffice it to say that it’s a no-win battle for her—and the ERC is also forever trapped between a rock and a brutal ‘regulatory’ force.
If there’s a common thread on the mounting frustration of industry players. In that case, it’s the ERC’s sluggish regulatory pace—a grievance underscored by Chair Dimalanta’s suspension last year due to a delayed ruling on Manila Electric Company’s critical tariff adjustment application.
Regulatory lag—be it for tariff approvals of regulated entities or power supply agreements (PSAs)—is manifestly the industry’s never-ending sore point—an unspoken yet simmering disappointment that may not be aired in front of ERC officials but echoes loudly in backroom conversations where the real verdict is rendered.
Case in point: since 2022, the new ERC leadership has vowed to fast-track rate-setting approvals, especially the long-overdue tariff reset of the National Grid Corporation of the Philippines (NGCP). Yet nearly two years in, that promise remains lurking in bureaucratic purgatory—a commitment made but yet to be delivered.
Adding to industry jitters is the ERC’s looming regulatory realignment—from the future-focused performance-based regulation (PBR) model to a post-completion cost recovery scheme reminiscent of the outdated return on rate base (RORB) methodology—a move that could throw financial planning into uncharted territories and leaves regulated entities bracing again for many unknowns.
Shifting the rules mid-game, industry players caution is a surefire way to shatter investor confidence—wreaking havoc on balance sheet projections and casting a long shadow of ambiguity over fresh capital infusion for critical power projects.
The EPIRA’s mandate was clear: break free from the inefficiencies of the RORB model, which only approved cost recovery after project completion. In response, the ERC shifted to PBR, a forward-looking framework allowing regulated entities to adjust tariffs based on projected allowable revenues over a five-year rolling cycle. At its core, PBR was built to enforce efficiency, reliability, and cost discipline—ensuring that utility revenues were earned through performance, not just expense reimbursement.
In theory, this multi-year approach should bring much-needed regulatory certainty, spare the industry from an avalanche of rate cases, and lighten the burden of an ERC already drowning in a sea of tariff applications—all while ultimately steering power rates lower for consumers. But as always, execution is where the battle is won or lost.
Industry players are raising red flags over the ERC’s abrupt push to shift NGCP’s cost recovery to a post-completion paradigm—warning that this could bring critical infrastructure projects to a grinding halt and spook investors just when the grid needs urgent expansion. Worse, with the ERC still dragging its feet on multi-billion peso projects NGCP has already completed, the message is clear: uncertainty isn’t just lingering, it’s escalating.
And with NGCP’s concession clock ticking down to just nine years—and no assurance of an extension, the industry is quizzed: how can the grid operator justify pouring billions into new projects with five-to-seven-year timelines when cost recoveries would stretch beyond its remaining contract? At this rate, the risk isn’t just financial—it’s a potential standstill in grid expansion when the entire country can least afford it.
The real casualty here isn’t NGCP—it’s the country’s energy future. Suppose new power capacities, including the massive renewable energy capacities awarded under the Department of Energy’s (DOE) green energy auctions (GEAs)—can’t plug seamlessly into the grid. In that case, our energy transition bid and the promise of energy security will crumble before they gain traction.
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