Duterte orders ERC execs to quit, wants agency scrapped over corruption

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President Rodrigo Duterte has ordered all officials of the Energy Regulatory Commission to resign and asked Congress to disband the agency or withhold its budget over reports its bids and awards committee chairman Francisco Villa Jr. was driven to suicide by pressure to approve anomalous deals.

Duterte issued the order from Peru, where he attended the Asia-Pacific Economic Cooperation leaders’ summit.

But two senators preached caution against a sweeping, hasty decision such as abolishing the agency.The chairman of the Energy Committee, Sen. Win Gatchalian, said his panel was willing to undertake an “objective inquiry” of the ERC, including allegations of corruption. And Senate Minority Leader Ralph Recto objected to the ERC’s abolition, saying the agency is needed “to police the electricity market.”

“Change the people, but do not abolish the body,” Recto said in a statement. “Improve it, reform it, but do not dismantle it. Change the software, upgrade the hardware. Then reboot.”

At the same time, he acknowledged that Villa’s death “must not be in vain” and justice should be given to the late ERC executive.

Villa, who killed himself November 9 in his Paranaque home, had penned a series of “suicide notes” since August in which he wrote of the pressures, including one in which he accused ERC chairman Jose Vicente Salazar of choosing a project “through a rigged selection system.”

Reacting to Duterte’s statement, Villa’s family said they “are deeply and profoundly humbled and so grateful for the attention of President Duterte to shed light on our tragic loss.”

“We thank the President for taking the first step towards reforms in the power industry which will benefit consumers and the economy,” the Villa family added.

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They also asked for help in setting up “a helpline for government employees undergoing the same kind of stress and harassment in the workplace.”

“Change the people, but do not abolish the body,” Recto said in a statement. “Improve it, reform it, but do not dismantle it. Change the software, upgrade the hardware. Then reboot.”

Mandate, tasks

The ERC, an independent quasi-judicial government body that replaced the Energy Regulatory Board, was created through Section 38 of Republic Act 3196 or the Electric Power and Industry Reform Act (Epira) of 2001 signed into law by then President Gloria Macapagal-Arroyo.

Among the mandates of the power industry watchdog are to promote competition, encourage market development, ensure customer choice, and discourage/penalize abuse of market power in the restructured electricity industry.

The commission is also tasked to implement rules and regulations under the Epira, which was hailed during its passage as a groundbreaking law expected to lower power rates for both household and industrial consumers.

However, the Epira is now being criticized for its supposed ineffectiveness as electricity prices in the country have remained among the highest in the region.

Allegations of corruption, irregularities

ERC has been beset by allegations of corruption and irregularities. In 2014, under the chairmanship of former Pampanga representative Zenaida Ducut, who was charged in connection with the pork barrel scam, it was reported that according to the Commission on Audit (COA), the ERC allegedly lavished its officers with MacBooks and iPads and deployed government vehicles without “For Official Use” markings.

In its reply, Ducut’s camp was quoted in news reports as saying that the purchase of the gadgets was necessary and not excessive and was made to allow employees “to do multitasking on the Web,” to overcome “system compatibility issues,” and “boost geometrical employees’ productivity.”

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In the case of the government vehicles, the ERC, through its spokesperson, explained that these had to be unmarked so that the commission would be able to carry out surprise inspections of distribution utilities and electric cooperatives.

“If the name of the agency will be written on the sides of the vehicle, they will be directly sending the message that they are proceeding to the area, which will defeat the purpose of the trip,” the ERC spokesperson said.

The same COA report in 2014 stated that the ERC failed to conduct periodic meter testing to check the accuracy of 125 out of the 139 power distribution utilities (DU) in the country.

The COA said “the low compliance by the DUs puts the consumers at a disadvantage as they are not assured if their meter readings are accurate. But despite this situation, the commission had not been aggressive in following up with the DUs their action to execute the immediate meter testing nor made a move to impose sanctions on those [not complying].”

In its reply, the ERC said more time was needed to conduct the testing and that some tests were “too expensive.” The commission was quoted in news reports as saying that in some cases, it was cheaper to replace two-year-old electric meters instead of testing them and that some DUs had opted to do that.

Not consistent with full disclosure of gov’t deals 

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In its 2015 audit report, the COA pointed out that the “funds equivalent to one percent of the approved Market Transaction Fees (MTF) of the Philippine Electricity Market (PEMC) set aside for ERC’s monitoring facilities, aggregating P57,028,132.70 from CY 2006 to CY 2015 were not recorded in its books but remained with PEMC because of a provision in the annual ERC decisions on the level of MTF, which is not aligned with existing rules and regulations.”

The COA further observed in its 2015 report that, “The ERC policy in directing applicants for Certificates of Compliance (CoC) to shoulder the transportation and lodging expenses attendant to the conduct of ocular inspections without proper accounting thereof is not consistent with the State policy on full disclosure of government transactions and may impact on the independence of the Commission on the discharge of its functions.”

A CoC is a requirement for an entity to engage in the generation of electricity and operate its facilities. Among those required to apply for a CoC are existing generation facilities, generation facilities under construction, and new generation facilities.

To be able to secure a CoC, these entities are required to submit to the ERC the following: letter of request, company profile, articles of incorporation, project background/description, historical power generation data (for existing generation facility), and service operating contract (for renewable energy-based power plant).

Moreover, the COA in its 2015 audit report said that the ERC issued CoCs to 217 independent power producers/generating facilities and 1,371 self-generation facilities “without the conduct of ocular inspections as required in” the rules.

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