The Energy Regulatory Commission (ERC) will issue show cause orders (SCOs) to 40 generation companies for failing to submit required documents and data for a fuel audit.
ERC Chairperson Monalisa Dimalanta said the move stems from the increase in coal and gas prices in 2022, which she attributed to Indonesia’s export ban and the war in Ukraine. The audit covers the period from January to October 2022.
“Since coal and gas fuel around 80 percent of power plants in our system, this led to a significant increase in power bills at that time because of the fuel pass-through arrangement under PSAs (power supply agreements),” Dimalanta said.
“We at the Commission wanted to make sure that DUs (distribution utilities) are performing their obligation to verify that these pass-through charges are in accordance with ERC-approved formulas and caps before billing the consumers,” she added.
The generation companies that failed to comply with the ERC order to submit complete documents and data for the fuel audit are in violation of Section 43 (o) and (r) of Republic Act No. 9136, also known as the Electric Power Industry Reform Act of 2001 (EPIRA), along with additional instructions issued by the commission during its deliberation.
Section 43 of the EPIRA outlines the functions of the ERC, including the mandate “to monitor the activities in the generation and supply of the electric power industry with the end view of promoting free market competition and ensuring that the allocation or pass through of bulk purchase cost by distributors is transparent, non-discriminatory and that any existing subsidies shall be divided pro-rata among all retail suppliers.”
“Fuel invoices need to be submitted monthly to support the pass-through fuel costs incorporated in the genco billings. The DU needs this to verify if the pass-through costs (volume, price, efficiency rates) are within the formula and cap allowed by the commission in the order or decision approving the implementation of the PSA,” Dimalanta said.
She emphasized that if there is no basis for passing on the costs, “those costs cannot be charged or will need to be refunded if already charged to consumers.”
“Plus there could be administrative fines imposed on both DU and genco,” the ERC chair said.
