ERC orders SMC unit to explain alleged market abuse

The Energy Regulatory Commission (ERC) has ordered South Premiere Power Corp. (SPPC), a unit of conglomerate San Miguel Corp. and the operator of the 1,200-megawatt Ilijan Power Plant, to explain its alleged anti-competitive behavior in June 2022.

“We must remind our stakeholders that power generation — while it is privatized and deregulated — remains a business imbued with public interest. Deregulation does not equate to freedom from rules.

All stakeholders, together with the regulator, have that shared obligation to ensure market integrity, fair competition, and consumer welfare,” ERC Chair Monalisa C. Dimalanta said on Tuesday.

In a Show Cause Order dated 24 July, the ERC gave SPPC 15 days from receipt to submit a verified explanation detailing why it should not be penalized for possible violations of Section 46 of the Electric Power Industry Reform Act of 2001.

The order was based on a report from the Philippine Electricity Market Corp. (PEMC), which found that Ilijan was placed on “open breaker status” — or disconnected from the grid — from 5 to 25 June 2022. 

During that period, market prices surged by 30 percent, and the grid issued multiple Yellow and Red Alerts due to low reserves.

The ERC also issued a Notice to Explain to PEMC over its actions related to the Ilijan incident.

PEMC initially informed the ERC of possible anti-competitive behavior by SPPC on 13 September 2022, but later withdrew the notice, citing the need for finalization. No formal report was submitted despite repeated follow-ups from the ERC until April 2024.

It was only in May 2024 that PEMC submitted a Market Surveillance Committee resolution dated 11 August 2022, recommending that a Notice of Possible Anti-Competitive Behavior be endorsed against SPPC-Ilijan.