FDC withdraws manifestation, says notice on ERC website misleading

Wednesday, February 9, 2011

A CAUSE-oriented group and an organization of electricity consumers were unprepared to participate in the Energy Regulatory Commission (ERC) hearing yesterday on the application of price substitution mechanisms for the Wholesale Electricity Spot Market (WESM) for Visayas.

The Freedom from Debt Coalition (FDC) Cebu eventually withdrew its manifestation to be a party in the case, saying it was unable to prepare to tackle the subject of the hearing because of an allegedly “misleading” notice posted on the ERC website.

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FDC’s position opposed the establishment of WESM Visayas, whose commercial operation began on Dec. 26 yet.

The National Association of Electricity Consumers for Reforms (Nasecore) was also not prepared to tackle the price substitution mechanism for WESM Visayas, but went ahead and became an intervenor. Like FDC Cebu, Nasecore had prepared to contest the establishment of WESM Visayas, said counsel Wilfredo Garrido Jr.

Nasecore and FDC cite similar grounds in opposing the operation of WESM Visayas, namely: WESM will only cause power rates to go up in the Visayas because of the lack of supply; transmission lines in the grid cannot cope with additional supply; and the lack of mechanism to mitigate price spikes in WESM.

A businessman from Talisay City also came, thinking that the hearing was about the establishment of WESM Visayas.

Felipe Concepcion, owner of Talisay Ice Plant, was accepted by the ERC as intervenor, although he has yet to submit his position on the case.

The ERC website says yesterday’s hearing was on the establishment of WESM Visayas.

ERC Commissioner Rauf Tan, who presided over the hearing, told FDC it should have downloaded the ERC order on the hearing and the application of the Philippine Electricity Market Corp. (PEMC), the firm that manages the WESM, instead of merely looking at the heading in the hearing schedules of the commission.

In an order dated Jan. 17, 2011, ERC set three days—starting yesterday—for jurisdictional hearing, pre–trial conference, expository presentation and evidentiary hearing on PEMC’s proposed price mechanisms for WESM.

Tan said the ERC cannot act on the groups’ opposition to the establishment and operation of WESM Visayas and recommended that they raise their positions to the Department of Energy (DOE).

They can file a case for dispute resolution instead, said Tan. He told Sun.Star Cebu that in a dispute resolution, ERC can call those opposed to WESM Visayas and the DOE to a hearing.

Tan said the ERC hearing on the case will be the price mechanisms proposed by the PEMC.

The proposed price mechanisms—the price substitution mechanism (PSM) and administered price determination methodology (APDM)—are to be applied when there are unfavorable conditions that affect the electricity market.

The PSM is proposed for undesirable market pricing situations—like very high prices or extremely low prices—caused by congestion in the network or the power system, such as when the amount of electricity in the grid cannot be accommodated by transmission sytems in the grid.

The APDM, on the other hand, is to be used during market intervention or suspension, an incident to be declared by the ERC.

The mechanisms are to be applied to isolate one market from the other, which means that if WESM Luzon experiences very high prices, WESM Visayas will be isolated from the spike, even if Luzon grid exports to or imports power from the Visayas.

About 20 persons affiliated with FDC Cebu held a rally in front of the ERC office along Gorordo Ave., Cebu City. But the group was not able to participate in the
hearing, except to manifest it is withdrawing its petition for intervention.

Jose Aaron Pedrosa Jr. of FDC Cebu told the ERC they were “made to believe” that the hearing was a public consultation on the establishment of WESM Visayas. “(This) is tantamount to a denial of due process,” he said.

Tan dismissed the charge, saying ERC welcomes anyone who wants to intervene and submit their position related to the case.

Lito Vasquez of FDC Cebu complained about the information presented by the PEMC during the first day of the three-day hearing, saying it was mainly technical jargon that is beyond the understanding of ordinary consumers.

Asked why FDC Cebu did not oppose WESM Visayas prior to its commercial operation, Pedrosa said the group had launched a national campaign against the electricity market but its efforts were in vain.

The commercial operation of WESM Visayas had been postponed several times by the DOE, following a trial run that started in July 2010, which was implemented after several meetings with stakeholders.

ERC expects to come up with a decision on the PSM and APDM case after about two months.

Since FDC Cebu has withdrawn, the remaining intervenors in the case are Nasecore, National Power Corp. and Concepcion.

Concepcion said that while the hearing focused on technical aspects of the WESM Visayas, he intends to listen and understand the discussions so that he can make a position on the issue.