MVP, other power firms lament energy regulatory delays

MANILA, Philippines — Corporate tycoon Manuel V. Pangilinan, chairman of Manila Electric Co. (Meralco), hopes the regulatory process in the power sector would move at a faster pace considering the pressing need to meet the growing demand for additional power.

“We can only encourage the government to move more clearly,” Pangilinan told reporters on the sidelines of the annual stockholders meeting of his conglomerate Metro Pacific Investments Corp. (MPIC).

He cited the legal issues hounding energy regulatory commissioners as well as the competitive selection process.

The Ombudsman had suspended four ERC commissioners – Alfredo Non, Gloria Victoria Yap-Taruc, Josefina Patricia Magpale-Asirit and Geronimo Sta. Ana, but the Court of Appeals issued a temporary restraining order (TRO) against the suspension.

Meralco’s power supply agreements, meanwhile, are facing regulatory delays because these did not go through the competitive selection process as they were filed a day before the new policy took effect on April 30, 2016.

The seven PSAs of Meralco involve 3,551 megawatts (MW) of supply from coal-fired power plants.

“There are issues on ERC commissioners and competitive selection process which is now pending in the Supreme Court. We can’t move too,” Pangilinan said. 

“All we can do is to impress the urgency of approving power plants,” he said, stressing the growing demand for power with the bill volume of Meralco growing nine percent in the first quarter of the year. 

“We do need to urgently add capacity on stream because if plants go on unscheduled or scheduled maintenance, margins are very thin,” Pangilinan said.

Other industry players also lament the lack of regulatory or financial incentive for generation facility initiatives.

The Electric Power Industry Reform Act emphasizes competition and non-discriminatory treatment in its policy of Retail Competition and Open Access. 

“This policy, however, fails to take into consideration the current economic and political realities faced by potential players in the power industry, including long regulatory delays, along with the difficulty of competing at a stage when a player is still only starting to recover its large investment. These factors are undeniably discouraging prospects for any budding project to face,” a source said. 

Some see the current state of things, however, as an opportunity.

For instance, industry leaders such as San Miguel Global Power and Aboitiz Power have made big, bold moves. 

Just recently, San Miguel completed its acquisition of the Masinloc power plant in a deal worth $1.9 billion, while Aboitiz Power’s has undertake a $1.2 billion a acquisition of the GN Power Mariveles and Dinginin coal plants.

Sources said the two largest power players seem to have gotten the ball rolling for industry consolidation, perhaps with the aim of breaking away from the pack and strengthening their leadership position.

Other industry players said it would be very interesting in the next few years for the power sector as the major players make major decisions amidst the looming supply uncertainties, regulatory challenges and possible industry consolidation.