Last of two parts
HAVING provided its explanation of why electricity bills have skyrocketed in the wake of the Iran war, the Energy Regulatory Commission (ERC), in its June 8 anniversary commentary, moved on to explaining what it is doing about that problem, and what it thinks should happen next. That part of the discussion was much shorter because, as I pointed out in the first part of this column on Tuesday, there are limitations on what the ERC can do, although it is not completely handcuffed.
“In response to the electricity price stress of 2026,” the statement said, “the ERC implemented a series of concrete measures. It temporarily suspended the GEA-All (Green Energy Auction Allowance) collection in May and June 2026, utilizing the fund’s healthy balance to offer direct cost relief to consumers on their bills. It enforced consumer protection measures for all electricity industry participants under Executive Order (EO) 110 (i.e., the presidential directive declaring a ‘national energy emergency’). Additionally, it amended the Magna Carta for Residential Electricity Consumers to institutionalize automatic bill deposit refunds and issued advisories for more flexible payment arrangements. The ERC also expedited action on pending rate refunds to mitigate increases and deferred the implementation of recent rate decisions that led to a rate increase.”
In addition to this, ERC Chairman Francis Saturnino Juan reached out to me by private message on Tuesday, June 9, after the publication of this column’s first part to share a few thoughts, and he made a vital point. It was one that I had already thought about, but he expressed it rather more cogently than what was in my mind at the time, so to the extent that I can without overstepping the bounds of confidentiality, I’ll discuss that below. But let’s examine the ERC’s public assertions first.
There are no specific prescriptions for bill relief included in EO 110, but the executive order directs concerned agencies such as the ERC and the Department of Energy (DOE) to exercise discretion as broadly as possible to mitigate rising energy costs, in accordance with existing laws. Thus, everything else the ERC spelled out above is simply a matter of maximizing its mandate under the Electric Power Industry Reform Act (Epira) of 2001 and derivative laws, which is fine, because that’s what the ERC should be doing. But the distinction is important, because if some of ERC’s actions are challenged later in court — which I would expect they would be — EO 110 provides a layer of legal cover. San Miguel’s lawyers should just go ahead and sit down now; you guys will be wasting your time and your boss’ money.
The temporary suspension of the GEA-All is minor relief, as that consumer-funded subsidy to green energy auction winners only amounts to about 0.24 percent of one’s monthly electric bill. To put that in perspective, on my May bill from Meralco (fortunately, the last one for my previous and horribly energy-inefficient residence) of about P19,500, the GEA-All charge was only about P45. However, the ERC’s choosing to make suspending the GEA-All one of the first relief measures to implement is encouragingly symbolic, because the GEA-All should not even exist in the first place. As my friend Myrna Velasco pointed out in her Manila Bulletin column a few weeks ago, there is no legal basis for the imposition of the GEA-All; it is something that the DOE conjured from thin air and saddled all of us with beginning in January this year, as part of its dogged-to-a-fault pursuit of renewable energy development.
The GEA-All is one of two subsidies to RE developers; the other is the Feed-in Tariff Allowance, or FIT-All, which accounts for about 1.29 percent of one’s bill (note: I am using my own electric bill as a reference; the percentage varies a bit depending on one’s consumption, so yours might be slightly different). The ERC cannot do away with the FIT-All, because it is authorized by Republic Act 9513, or the Renewable Energy Act of 2008, although it can modify the rate to some extent and even temporarily suspend collection of it for a good reason, as was done for a period of time during the Covid-19 pandemic.
The GEA-All is another story, however. I am sure I may get another message from ERC Chairman Juan about this, because he is an attorney, and I am not, but a logical read of the circumstances suggests that the ERC, being an independent constitutional body and not subordinate to the DOE (contrary to popular belief), could and probably should reject the GEA-All entirely. The DOE, after all, does not have the authority to impose a tax, which is what the GEA-All actually is; it needs to be authorized by Congress, wherein the government’s power of the purse lies.
The other measures taken by the ERC so far are good ones, and to the credit of most of the industry, there has been a willingness to cooperate. Meralco, for example, deferred disconnections for overdue bills from May through July; that obviously does not make the bills go away, but it does give customers flexibility to manage them.
The additional point made by Chairman Juan in his communication to me was the importance of the mandated competitive selection process (CSP) in moderating electricity rates, specifically generation rates. Just as with a lot of legal mandates here, there seems to be a belief that CSP is more honored in the breach than the observance, which is wrong. As Juan explained, while the ERC does have some influence over rates, primarily in bilateral, negotiated power supply agreements (PSAs), its hands are tied when it comes to rates created as a result of a PSA created by CSP. The ERC must accept those rates, and this has been unequivocally confirmed by a Supreme Court ruling.
“Now, if participants to the CSP will get that message,” Juan said, “We anticipate they will already compete and offer their best prices and no longer pad their offers ahead of the ERC’s anticipated disallowances when it reviews the PSAs.”
I agree with that completely, because under ideal circumstances, the process could not possibly work any other way. But that raises another, much larger problem: The circumstances cannot possibly be ideal under the Epira, the existing mother law for the power industry, because despite the good intentions behind it, it has institutionalized an anticompetitive and monopolistic framework for the entire industry. Epira is badly outdated and does not serve its intended purpose, and the result of that is we continue to be afflicted by some of the highest electricity costs in Asia.
There are some efforts to update Epira; for example, a comprehensive bill in the House of Representatives (House Bill 4148, filed by Ilocos Sur Rep. Kristine Singson-Meehan) seeks to do precisely that. That bill is far from perfect (I discussed it at length in these pages back in March), but the effort is critical, and needs to be supported. To that end, I am currently working on organizing a roundtable of key industry stakeholders — the ERC, the DOE, other government agencies concerned and representatives from the generation, transmission, distribution and market sectors — to discuss the badly needed tear-down and rebuilding of the Epira law. I need more things on my to-do list like I need a hole in the head, but this topic is critically important for the well-being and growth of the Philippines, so I hope to be able to put this discussion together in the coming weeks. Stay tuned.
ben.kritz@manilatimes.net
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