Forty generation companies need to explain their failure to submit complete documents and data for a fuel audit after the Energy Regulatory Commission (ERC) approved the issuance of individual show cause orders (SCOs) against them.
The power regulator said over the weekend that the SCOs cover the audit period from January to October 2022 and cite violations of Section 43 of the Electric Power Industry Reform Act of 2001, which mandates the ERC to promote competition, encourage market development, ensure customer choice, and penalize abuse of market power.
ERC chairperson Monalisa Dimalanta said the gencos must submit monthly fuel invoices to justify pass-through costs billed to distribution utilities (DUs) under power supply agreements (PSAs).
“The distribution utility (DU) needs this to verify if the pass-through costs, such as volume, price and efficiency rates, are within the formula and cap allowed by the commission in the order or decision approving the implementation of the PSA,” Dimalanta said.
“If there is no basis for the passing on of costs, those costs cannot be charged or will need to be refunded if already charged to consumers. Plus, there could be administrative fines imposed on both DUs and gencos,” she added.
Dimalanta noted that the commission issued the SCOs, especially given the spike in coal and gas prices in 2022, driven by Indonesia’s coal export ban and the global impact of the war in Ukraine.
“Since coal and gas fuel around 80 percent of power plants in our system, this led to a significant increase in power bills at that time because of the fuel pass-through arrangement under PSAs,” she said.
The ERC has not disclosed the names of the gencos involved or the timeline for resolving the matter. As a quasi-judicial body, the ERC handles cases and applications that influence power rates across the country.