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Thursday, November 23, 2006
State power firm 'manipulated costs': probe body
MANILA -- The Power Sector Assets and Liabilities Management Corporation (Psalm) was guilty of price manipulation for the Wholesale Electricity Spot Market (WESM), the Philippine Electricity Market Corporation (PEMC) discovered on Wednesday.
Citing the findings of the Market Surveillance Committee (MSC), which was tasked to investigate reported price fixing in the WESM, the PEMC said investigation found out that there was abuse committed.
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"The MTC has determined that the Power Sector Assets and Liabilities Management Corporation (Psalm) has behaved anti-competitively and abused market power," the PEMC said in a statement.
Based on the MSC's investigation, the market offers during peak hours in the billing period from Aug. 26 to Sept. 25, 2006 were found to be "unusually high" and with similar price bids on the third month of the WESM's market operation.
With the findings, the PEMC Board immediately directed a correction of the affected bills in the third and fourth billing month in order to protect consumers. "This ensures that higher price offers in the WESM will not be passed on to consumers," the PEMC added.
The MSC recommended the following actions to ensure that the mistake would not happen again: transfer of management and control of at least 70 percent of total energy output of independent power producers (IPP) power plants under contract with the National Power Corporation (Napocor) to IPP administrators; issuance of additional guidelines on acceptable and unacceptable behavior for all trading participants; and the accelerated implementation of the universal levy for stranded contract cost and stranded debt.
Peter Wallace, a member of the MSC board, said imposing a sanction on Psalm is not possible at this time because provisions in the WESM rules state that Psalm enjoys a six-month immunity from any suit or penalty.
He also said that while a mistake was indeed committed, imposing sanctions would not help the market mature and learn from the process. "There was a mistake made but the point is this is a learning mistake," he added.
Both the MSC and Wallace said the WESM is still new and industry participants are all learning a new and quite complex system. (MSN/Sunnex)
For more Philippine news, visit Sun.Star Dumaguete. (November 23, 2006 issue)
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