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‘WESM rule violations, not price manipulation’

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AGENCY FINDING

‘WESM rule violations, not price manipulation’

/ 06:30 AM November 04, 2014

BAGUIO CITY—Philippine Electricity Market Corp. (PEMC) on Monday said its investigation into unusual increases in electricity prices last year did not find evidence of price manipulation but only violations, committed by some companies, of rules governing transactions in the Wholesale Electricity Spot Market (WESM).

Thus, PEMC said it could not have established whether “anticompetitive behavior” was evident in WESM trading from November to December 2013, contrary to an earlier report, lawyer Philip Adviento, PEMC manager for training and communications, said in a phone interview.

WESM is the mechanism where power distributors, like rural electric cooperatives, buy additional electricity at lower prices from power-generating companies.

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The November to December 2013 transactions led to unusually high power charges imposed in December 2013 and in January this year, which outraged consumers in Metro Manila and in the provinces. The courts have restrained power generators from collecting the contested charges.

Electric cooperatives in the Cordillera and the Ilocos regions have urged the Energy Regulatory Commission (ERC) to release a report addressing allegations that some companies colluded to fix electricity prices.

Price fixing qualifies as “anticompetitive behavior,” a general term for dubious business practices, which is prohibited under Republic Act No. 9136, or the Electric Power Industry Reform Act of 2001.

Section 45 of the law states: “No participant in the electricity industry may engage in any anticompetitive behavior including, but not limited to, cross-subsidization, price or market manipulation, or other unfair trade practices detrimental to the encouragement and protection of contestable markets.”

Only the ERC has the authority to determine whether the high rates were the product of such behavior, Adviento said, after denying that he made that conclusion in an Oct. 25 interview with the Inquirer.

In a letter sent on Monday, Adviento said the Inquirer and the average consumer must make a distinction between the terms “breaches” and “anticompetitive behavior,” saying confusion over the use of these terms made it appear that PEMC possesses the authority to investigate instances of anticompetitive behavior.

PEMC’s authority is limited to determining “breaches of WESM rules and market manuals,” Adviento said, which were contained in a report to the ERC.

He agreed to do the Oct. 25 interview to address the Inquirer story published on Oct. 24 regarding the resolution filed by Cordillera Region Cooperatives Association Inc. and Region 1 Electric Cooperative Association Inc.

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The ERC has imposed a price cap on WESM trading, the latest of which was extended for 120 days from Oct. 27, in order to keep electricity prices stable.

But unless the agency resolves whether price fixing took place and determines how WESM may have been manipulated, President Aquino might start relying on companies liable for price fixing last year, said Carl Ala, media officer of the party-list group Bayan Muna.

Bayan Muna Rep. Neri Colmenares, House senior deputy minority leader, has asked the ERC to submit a report on the WESM problem to Congress on Nov. 7, after it allegedly reneged on an earlier commitment to issue a report on Oct. 25.

Colmenares, in a statement, said delaying the release of the WESM findings would only make people believe that “the report is being whitewashed so the culprits behind the unprecedented power rate hike [would] be exonerated.” Vincent Cabreza, Inquirer Northern Luzon

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TAGS: Energy Regulatory Commission, Philip Adviento, Philippine Electricity Market Corp., price manipulation, rule violations, Wholesale Electricity Spot Market
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