Ombudsman suspends 4 ERC commissioners

The Office of the Ombudsman has ordered the one-year suspension of all four commissioners of the Energy Regulatory Commission (ERC) for allowing electric utilities such as Manila Electric Co. (Meralco) to forgo the bidding of their power supply requirements at the public’s expense.

ERC Commissioners Gloria Victoria Yap-Taruc, Alfredo Non, Josefina Patricia Magpala-Asirit and Geronimo Sta. Ana were found guilty of conduct prejudicial to the best interest of the service, aggravated by simple misconduct and simple neglect of duty.

Dismissed ERC Chair Jose Vicente Salazar was likewise found guilty of the administrative offenses.

Since President Duterte already removed him from office in October for allegedly manipulating the procurement of small ERC contracts, the Ombudsman required him to pay a fine equivalent to his six months’ salary.

As for the criminal aspect, the Ombudsman also found probable cause to charge the five ERC officials with violation of Section 3(e) of the Anti-Graft and Corrupt Practices Act for causing undue injury to the government and giving unwarranted benefits to private parties.

The two resolutions, approved on Dec. 11, arose from the Nov. 24, 2016, complaint of Alyansa Para sa Bagong Pilipinas Inc. that questioned the deferment of the competitive selection process (CSP) rule, which requires electricity distributors to hold competitive bidding for their power to lower consumer rates.

CSP rule deferred

The rule was supposed to take effect on Nov. 6, 2015. But on March 15, 2016, the ERC allowed a 45-day window deferring the CSP rule until April 30, 2016. This allowed 38 companies to procure an aggregate supply of 4,500 megawatts without having to hold a competitive bidding.

Meralco—whose Nov. 26, 2015, request for exemption from the CSP rule was originally denied on Dec. 10, 2015—especially had one last chance to negotiate seven power supply agreements with its sister generating companies for a total supply of 3,551 MW.

The Ombudsman said there was sufficient evidence that the ERC “gave unwarranted benefits to Meralco and other companies by exempting them from the coverage of the CSP requirement which was already in effect.”

The officials were faulted for their “gross inexcusable negligence” that allowed the power firms to circumvent government policy and deny consumers of the opportunity to obtain the best price offers and power supply terms.

The deferment of the CSP rule is a “deviation from respondents’ duty to promote public interest,” read the resolutions approved by Deputy Ombudsman for Luzon Gerard Mosquera.

The Ombudsman said the ERC “cannot feign ignorance that Meralco may take advantage of the period” and “cannot deny that Meralco’s [PSAs] are significant and material.”

It added that the CSP rule could not be deferred by “requests for clarification, exception and/or exemption,” especially as industry stakeholders were already heard in extensive consultations as early as February 2013.

ERC rules bent

The ERC officials claimed the regulator needed time to finalize the guidelines, but the Ombudsman bound it by the November 2015 effectivity date since the officials imposed this while “fully aware” of the supposed issue.

Bayan Muna Rep. Carlos Isagani Zarate, who filed the House resolution that opened the congressional inquiry into the alleged midnight deals, said the Ombudsman resolution validated the findings of lawmakers that the ERC bent its own rules to accommodate the power companies.

“This just goes to show that the commissioners indeed violated their own rules and showed undue partiality to the Meralco-affiliated generation companies,” Zarate said, adding that he hoped the Supreme Court would soon annul the seven Meralco PSAs because of this development.

Multisectoral alliance Sanlakas, which filed a separate complaint against the ERC officials on June 29, said the Ombudsman resolutions “bolster the truth that only collusion between the government and corporations could have allowed for such anticonsumer and antienvironment agreements to prevail.”

Floresinda B. Digal, head of the ERC regulatory operations service, said the commission would seek guidance from the Office of the President on the Ombudsman’s decision.

Digal said in a text message this would be ERC’s recourse “especially (since the decision) will have a significant impact not only on electricity consumers but on the economy as well.” —WITH A REPORT FROM RONNEL W. DOMINGO