10 Jul 2007
The Power Sector Assets and Liabilities Management Corporation (PSALM) is optimistic that the termination of the investigation on its alleged market power abuse will consolidate efforts within the power sector to further promote privatization, competition, and market development.
PSALM President Jose C. Ibazeta said they continue to maintain its good working relationship with stakeholders and "coordinate closely with all parties concerned to improve the market and the power industry in general. The success and future of this sector will primarily hinge on our ability to cooperate towards achieving the goals of power industry reform."
On July 6 (released July 9), the Energy Regulatory Commission (ERC) adopted the recommendation of its Investigatory Unit (IU), finding "no prima facie" evidence against PSALM for anti-competitive behavior or market power abuse, and ordered the investigation to be terminated.
In late 2006, the Philippine Electricity Market Corporation (PEMC) alleged that PSALM's bidding behavior caused an increase in the load weighted average price during the third month of operations of the Wholesale Electricity Spot Market (WESM), which began operating in June 2006. PEMC is the governing body of the WESM while PSALM undertakes transitional trading on behalf of Independent Power Producers (IPPs) under contract with the National Power Corporation.
The ERC said that "mere suspicion cannot substitute for proof, and absence of proof to constitute a prima facie case against PSALM does not justify the conduct of formal proceedings against it. The Commission cannot simply rely on speculation, conjectures or guesswork to establish an anti-competitive behavior act or conduct of PSALM."
"We are aware of the tremendous challenges that we face in the Philippine power sector which has both a dominant supplier and electric distributor. What transpired in the past reflects the government efforts in mimicking competition in a market far from ideal. The kinks in the market place need to be ironed-out before real competition takes place," Mr. Ibazeta said.
He added that he has instructed PSALM management to comply with the Commission's directives to adopt policy measures that will strengthen the independence of its trading teams from one another and from PSALM management. "These measures will complement other steps we have taken to make our trading teams more independent, including separate registrations filed with PEMC in March 2007," he concluded.
Strategic Communications and Partnership Division |