Nasecore asks SC to dismiss petition vs RCOA in power industry

By on March 5, 2017


Nasecore describes itself as an aggrupation or organization of different civic-minded individuals who are all electricity consumers and subscribers, and who are collectively promoting and upholding consumer welfare and protection in the electricity industry. (Photo: NASECORE/ Facebook)
Nasecore describes itself as an aggrupation or organization of different civic-minded individuals who are all electricity consumers and subscribers, and who are collectively promoting and upholding consumer welfare and protection in the electricity industry. (Photo: NASECORE/ Facebook)

MANILA –The National Association of Electricity Consumers for Reforms (Nasecore) has asked the Supreme Court (SC) to dismiss the petition filed by Philippine Chamber of Commerce and Industry, Ateneo de Manila University, San Beda College Alabang and mall owner Riverbanks Development Corp against the retail competition and open access (RCOA) in the power industry.

Nasecore describes itself as an aggrupation or organization of different civic-minded individuals who are all electricity consumers and subscribers, and who are collectively promoting and upholding consumer welfare and protection in the electricity industry.

Nasecore said in its submitted 25-page comment for intervention filed to the SC asked the tribunal to dismiss the petition for lack of merit, saying “any decision or resolution to the contrary will definitely prove harmful to the welfare and interest of the electricity consuming public.

“One of the pillars of the restructuring of the energy industry, as envisioned by the EPIRA (the Electric Power Industry Reform Act of 2001), is the establishment of retail competition and open access. The framers of the EPIRA believed that the migration of electricity consumers to the competitive retail electricity market would lead to market competition thereby leading to lower and reasonable electricity prices,” Nasecore noted in its comment-in-intervention.

“Nasecore is intervening in the present case based on the ground that the issues raised herein are matters of transcendental importance, public service, policy and interest, and that its electricity consumers-members will be directly, actually and greatly affected by the annulment of the Department of Energy (DOE) and Energy Regulatory Commission’s (ERC) assailed issuances in this petition,” read the comment.

In its motion for intervention, Nasecore Executive Director Rafael Antonio Acebedo asked the tribunal to dismiss the petition for lack of merit, saying “any decision or resolution to the contrary will definitely prove harmful to the welfare and interest of the electricity consuming public.”

Nasecore filed the motion in an effort to reverse the Court’s ruling against the RCOA, a landmark policy meant to give consumers the choice to choose their own electricity supplier.

The SC temporarily stopped the implementation of RCOA, which was supposed to take effect on February 26, based on a petition filed by the Philippine Chamber of Commerce and Industry, Ateneo de Manila University, San Beda College (Alabang) and mall owner Riverbanks Development Corp.

The respondents on the petition were Department of Energy Secretary Alfonso G. Cusi, the Energy Regulatory Commission and Chairman Jose Vicente B. Salazar, and Commissioners Alfredo J. Non, Gloria Victoria C. Yap-Taruc, Josefina Patricia M. Asirit and Geronimo D. Sta Ana.

Nasecore said it “vehemently disagrees” with the petitioners who wished to stop RCOA, which is covered by DOE Circular No. DC-2015-06-0010, series of 2015; ERC Resolution No. 5, Series of 2016; ERC Resolution No. 10, Series of 2016; ERC Resolution No. 11, Series of 2016; and ERC Resolution No. 28, Series of 2016.

“The assailed issuances are valid and reasonable regulatory measures geared toward the promotion of the avowed purposes of the EPIRA, among others, promote true market competition and prevent harmful monopoly and market power abuse in the electric power industry,” Nasecore said.

Nasecore said without RCOA “certain industry players will be able to monopolize and abuse the electricity market.

Nasecore noted that prior to the assailed issuances, Manila Electric Company (Meralco) contracted with contestable customers through its affiliate local retail electricity supplier, MPower. “As of August 2016, a total of 1,368 consumers in Luzon and 176 in the Visayas belonged to the contestable market. Further, as of 18 June 2016, MPower was already able to capture about 50 percent of the market share of the contestable market within its franchise, or 18 percent of the total nationwide.”

“It is clear that Meralco was able to take advantage of its position as the exclusive distribution utility over its franchise area with unparalleled access to the contestable customers,” Nasecore said. “Where is the true market competition in a situation wherein 50% of the market share belongs to one entity? There is none. A harmful monopoly clearly exists.”

The power of the “Meralco cartel” goes well beyond its advantage as franchise holder, Nasecore added, as Meralco’s affiliates also own and operate large power plants that supply power to Meralco and can supply power to contestable customers.

During the first quarter of 2016, Nasecore noted that Meralco had entered into 20-year power supply agreements with generating companies owned by Meralco’s owner, the Pacific Group. These contracts would cover 90% of Meralco’s power requirements. “In this regard, the Alyansa Para sa Bagong Pilipinas, Inc. claimed that the said deals or contracts would burden consumers with overpriced power costs of PHP12.44 billion a year.”

“Meralco and its affiliates are thus very well-positioned to engage in unfettered predatory pricing, price and market manipulation and other unfair practices. Indeed, if the petitioners prevail, this cartel can proceed unfettered and will control the contestable market. Verily, the granting of this petition will effectively destroy the free and fair market envisioned by law,” Nasecore said.

Nasecore said it is holding on to EPIRA’s promise to promote true market competition and prevent harmful monopoly and market power abuse in the electric power industry. It hopes that this promise will bring the cost of electricity down not just for the large electricity consumers but also for the end-users at the household level.