The Energy Regulatory Commission (ERC) and the Securities and Exchange Commission (SEC) launched a program designed to encourage power sector players to go public and comply with the Electric Power Industry Reform Act of 2001 (EPIRA).
On Thursday, March 27, the ERC and SEC jointly launched SEC Powers, an initiative that aims to streamline the process and attract investments to support the country's energy security goals.
The SEC Powers initiative, which stands for “Securing and Expanding Capital for Power Generation Operators and Wholesale Electricity and Retail Services,” is a direct response to the challenges generation companies (GenCos) face in meeting the EPIRA requirements.
The law mandates that GenCos and distribution utilities (DUs) offer at least 15 percent of their common shares to the public.
ERC Chairperson Monalisa Dimalanta said non-compliance could lead to the revocation of operating licenses and compliance certificates, potentially removing 14 gigawatts (GW) of power from the system.
She added, “The consequence of not being able to comply is that they don’t fulfill all the requirements of their certificate of compliance. That means their license to operate, their certificate of compliance (COC) will not be renewed or cannot be extended.”
Dimalanta noted that the process of going public is often perceived as “quite intensive” and costly, involving underwriters and issuers.
She added, “It’s also costly. You have to engage underwriters, issuers, and all that. It’s costly, for example, for a power company that owns one plant operating at one megawatt. Then you have to go through all this trouble, right? So that’s one. It’s very costly, it’s intimidating, [and] it’s also not foolproof.”
She also emphasized that there is no guarantee of investment success, as proper timing is crucial.
Despite the EPIRA mandate, only 15 percent of the 251 GenCos nationwide are compliant, with 54 percent still awaiting compliance. Dimalanta noted, “[This mandate is] in EPIRA. They have to list five years from their start of commercial operations.” The ERC and SEC are optimistic that SEC Powers will help list 100 companies within a year.
Oliver Leonardo, director of SEC markets and securities regulation department, assured that the commission is “bullish on helping out GenCos and its investments.”
He added, “There are a lot of possibilities and they have already approached some of our technical staff to possibly consider offering their shares to the public in compliance with the law. Of course, this is mandated by EPIRA and the commission is very much willing to assist, guide them, necessary hand-holding to realize the mandate of the law. And of course, we need to spur more investments in the power sector, particularly renewables.”
SEC Chief Executive Officer Emilio Benito Aquino, in his keynote speech, noted the necessity of raising significant investments to meet the country’s energy security goals.
He said, “It is estimated that around ₱67 trillion [amount of] investments are needed to meet the country’s energy requirement. With the issuance of SEC Powers, we aspire to usher in more substantial investments in power projects by streamlining the securities registration process.”