ERC flags risks in power listing law, eyes change

The Energy Regulatory Commission (ERC) is reexamining the law that requires power generation companies (gencos) to publicly offer or list their shares, warning that strict enforcement could cut the country’s installed capacity in half.

ERC chairperson Francis Saturnino Juan stated during a public meeting last week that the agency must carefully balance the legal mandate under Section 43(t) of the Electric Power Industry Reform Act (EPIRA) with the realities faced by the generation companies.

“Our requirement of public offering means we will have to issue the rules, since it is our mandate to implement the Section 43(t) requirement — rules that will be aligned to ensure the restructuring and modernization of the power industry,” Juan said.

Under the law, new gencos are not required to comply upon application, but within five years of receiving a Certificate of Compliance (CoC), they must either list shares on the Philippine Stock Exchange (PSE) or register their securities.

Bourse listing required

Juan noted, however, that not all companies may be able to meet the PSE’s requirements.

“Not all gencos can comply with the requirements of PSE to be able to list publicly, so I think we have to take into consideration these requirements,” he said.

He warned that enforcing the rule without adjustment could result in significant power supply losses.

“Assuming we require those that can comply with PSE listing, then only 50 percent will be able to comply, while the other 50 percent will not.”

“So we will deny them CoC and PAO, and we will lose 50 percent of the installed capacity. That’s the kind of dilemma or predicament we might face,” Juan explained.

The ERC is now weighing possible amendments to its CoC rules or performance-based regulation guidelines to clarify compliance.