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Saturday, June 29, 2024

Energy 178, Atty. Nino Juan 3-parts articles about the ERC

Good articles by Atty. Nino Juan, former Executive Director of the Energy Regulatory Commission (ERC) then President of the Independent Electricity Market Operator of the Philippines (IEMOP). He's a friend from UP Diliman days in the mid-80s. 

 

Too late the hero

Atty. Nino Juan June 24, 2024

https://businessmirror.com.ph/2024/06/24/too-late-the-hero/

 

"... The payments that are due to the generation companies get deferred by the ERC directive for the DUs to recover their WESM generation costs from their consumers over a period of four months, instead of just one month. While the impact of the DUs’ WESM exposures is mitigated and the consumers get to enjoy “artificially” low generation prices for the current month, the generators’ collections are delayed also. The consumers remain liable for these deferred costs and will pay in full eventually. But with this ERC-mandated deferment, there is the possibility now that some generators may have to renegotiate with fuel suppliers for installment payments or incur new obligations to make up for the unanticipated reduced cashflows. For such new obligations, since they have no recourse from their customers, they are forced to absorb the added costs. Worse, they may have to postpone or scrimp on planned plant maintenance while they await the DUs’ payments, which can then result to more unplanned outages, red alerts, and WESM spikes. These are just some of the unseen costs of deferment."

 

Too late the hero

By Atty. Nino Juan June 25, 2024

Part two

https://businessmirror.com.ph/2024/06/25/too-late-the-hero-2/

 

"In taking away this option, the ERC could have resolved to act with dispatch on all PSA Applications to minimize the DUs’ exposure to WESM. It could have acted on all pending PSA Applications with extreme urgency. It could have streamlined the PSA application process by respecting already the outcome of the CSPs that the DUs are mandated to undergo and limiting the PSA review to the adherence by the parties to the CSP Rules. It could have earlier exercised its regulatory authority. But it remained nonchalant about all these. It was timid until the delays brought about by the CSP requirement, coupled with regulatory inaction on pending PSA Applications triggered “the confluence of extraordinary conditions.” After such confluence, the ERC was already quick to exercise its police power, unilaterally at that and without affording all affected parties the opportunity to react beforehand."

 

Too late the hero

Atty. Nino Juan June 26, 2024

Conclusion

https://businessmirror.com.ph/2024/06/26/too-late-the-hero-3/

 

As I anticipate that the ERC’s Order dated January 25, 2024 is not the end of this saga, I will desist from commenting further.  Suffice it to state, this is one monumental mess borne by regulatory inaction. As can clearly be seen, had the PBR timelines been followed, had the rate reset for Meralco’s 4th RP been undertaken as scheduled, there would have been no occasion for Meralco to implement interim rates. There would have been no Lapsed Years to speak of. There would not have been any dispute now between the Majority and Minority about how ERC is to wield its police power. We the consumers would have reaped the promised efficiency gains of PBR and enjoyed lower power rates and better distribution service, rather than being subjected to the final rates as determined by ERC using a backward-looking and confirmation-type methodology. In the end, we would not have been treated to this band-aid solution to a lingering regulatory failure to conduct the rate resets of Meralco and all other private DUs. 

 

I suppose, there is still no substitute to timely regulatory action. Too late, the ERC.

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Atty. Nino Juan was also praised by Sen. Garchalian when the Independent Market Operator, predecessor of IEMOP, was formed.

 

Formation of WESM’s Independent Market Operator

June 29, 2018

https://wingatchalian.com/news/formation-of-wesms-independent-market-operator/

 

Gatchalian also welcomed the selection of Atty. Francis Saturnino “Nino” Juan as the first chairman, president and chief executive officer of IMO.

 

The senator highlighted Juan’s integrity and in-depth knowledge of the energy sector, being the former Executive Director of the Energy Regulatory Commission (ERC), and the Chief Operating Officer of the IMO Transition Committee.

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