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LKI 2020-042 PRESS STATEMENT
July 16, 2020
LABAN KONSYUMER LAUDS SUPREME COURT RESOLUTION ON WESM PRICES BUT EGGING ERC TO ACT ON THE 2019 SPIKES IN WESM PRICES
Consumer Group Laban Konsyumer Inc. (LKI) lauded the Supreme Court, Second Division Resolution dated March 11, 2020, but released recently, regarding the Wholesale Electricity Spot Market (WESM) prices during the 3rd and 4th months of WESM operations, which in effect prevented increases to the generation charge being passed on to consumers and affirmed the ERC’s jurisdiction to correct Wesm market prices when warranted.
But LKI also brought up its recent statements last year 2019 on the WESM prices spikes, saying from a consumer’s point of view of the recent Supreme Court Resolution, we insist on inquiring further why ERC did not do its job in the past and saying there is still so much more the regulator can do to do its job.
Atty. Vic Dimagiba, President of LKI, welcomed the Supreme Court Resolution “that the prices for the 3rd and 4th months of WESM should be adjusted. Based on the SC Resolution, WESM prices surged during the 3rd and 4th billing months of WESM operations, with WESM prices reaching as high as PhP4,903/MWh and PhP7,218/MWh, respectively. PEMC investigated this matter and the PEMC Market Surveillance Committee concluded that certain market participants behaved anti-competitively and abused market power and resulted to unreasonably high Wesm prices.
LKI said consumers thankfully were spared from being charged high generation pass through cost, as reported “The amount involved was almost 9 billion pesos, translating to what would have been an additional imposition of Php6.00/kWh in generation charges.”
Dimagiba shared the sentiment of the Supreme Court that “this Resolution is a welcome relief to the consumers as there would be no additional burden to consumers. If the WESM prices were not adjusted, this would have translated to an increase in the generation charge of its consumers of about 90 centavos and P2.05 per kilowatt hour for the supply months of September and October, 2006, respectively which we will be passed on to consumers.”
But the group believes that the ERC has the power to set WESM settlement prices at reasonable levels since and may impose prices as long as the rate setting is reasonable. The ERC is granted the power to fix prices in the market under the WESM, and may propose rate adjustment as long as they are unreasonably high and even if there are no anti competition behavior
LKI pointed out referring to previous releases “For background: In the summer of 2019, there were 51 Yellow alerts and 15 Red Alerts and registered a record high in terms of Wesm prices. The highest Wesm prices was Php 12.04 /kWh in July 2019. The Load Average Weighted wesm prices shot up to Php 7.89 pkwh while the lowest is Php 2.06 pkwh. The consumers absorbed the high Wesm prices as a passed on costs from the Distribution Utilities and Electric Cooperatives the PEMC had identified more than 30 violations of the market rules. Whereas before the PEMC points to the ERC as the investigating entity, the Supreme Court Resolution affirms the ERC power to investigate and penalize abuse of market power, and Wesm prices to reasonable amount even if there are no anti-competitive behavior.
LKI reasoned “ERC should do a better job of ensuring lower generation costs… Customers, and Industrial Customers, each of which have different interests and agenda to pursue in a rate case before the ERC, not to mention other consumers who are advocates of energy efficiency and renewable energy who would want also to pursue their own agenda… But the regulatory commission’s duty is to protect the broader public interest and so it has to take a broad societal perspective, whether for ratemaking or other matters, in its decision making. It is in a unique position of trying to do what is best from the public’s perspective. For after all, special interests do not represent the broad public interest.”
Relatedly, Laban Konsyumer had written the ERC and requested details and action taken on 47,000 consumer complaints involving electricity bills. No details were submitted by the ERC in the Senate Energy Committee hearing last July 6, 2020. END END