Ombudsman suspends 4 ERC commissioners

The Office of the Ombudsman (OMB) has ordered the suspension of four commissioners from the Energy Regulatory Commission (ERC) after they were found guilty of conduct prejudicial to the best interest of the service, grave abuse of authority, grave misconduct, and gross negligence of duty.

Based on the resolution signed by Graft Investigation and Prosecution Officer II Cezar M. Tirol II last December 11, the four ERC commissioners suspended for one year without pay were Gloria Victoria Yap-Taruc, Alfredo Non, Josefina Patricia Magpale-Asirit, and Geronimo Sta. Ana.

Only newly appointed ERC Chairman Agnes Devanadera was not included in the OMB resolution.

Former ERC Chairman and Chief Executive Officer Jose Vicente Salazar, who was already fired earlier by President Duterte, was among those included in the suspension order.

Since Salazar was already fired from his post, his penalty is converted into a fine in the amount of his salaries for six months payable to the OMB.

Their suspension stemmed from the complaint filed by the Alyansa Para sa Bagong Pilipinas Inc. on Nov. 24, 2016.

They ERC officials were accused of showing partiality to the companies owned by businessman Manny V. Pangilinan in the Competitive Selection Process (CSP) in securing Power Supply Agreements (PSAs) from November 6, 2015 to April 30, 2016.

The respondents issued a CSP resolution back in 2015 which stated that all distribution utilities should conduct a CSP in the procurement of their supply to the captive market, with the exception of the PSAs already filed with the ERC.

“The ERC and the Department of Energy (DOE) are convinced that there is an advantage to be gained by having a CSP in place, in terms of ensuring transparency in the distribution utility's (DUs) supply procurement and providing opportunities to elicit the best price offers and other PSA terms and conditions from suppliers,” the resolution read.

The resolution, which was issued on Oct. 20, 2015, stressed that the effectivity will be made “immediately following its publication” on Nov. 6, 2015. But on March 15, 2016, the ERC commissioners backtracked on their original commitment and moved the effectivity of the resolution to April 30, 2016.

The complainant said that the respondents intentionally favored Manila Electric Company (Meralco) by extending its date of implementation “without any valid or justifiable reason.”

“The extension was allegedly a clear ploy to accommodate Meralco's sister companies/affiliates to bag the lucrative power supply agreements without complying with the mandated CSP,” the Ombudsman resolution read.

Because of their actions, Meralco was allowed, “through the backdoor,” to negotiate seven 20-year term lucrative and ineligible PSAs with its affiliated DUs companies and Power Generators (PG).

These companies are Atimonan One Energy Inc. (AIE), St. Raphael Power Generation Corporation (SR GenCor), Central Luzon Premiere Power Corporation (CLPPC), Mariveles Power Generation Corporation (MP GenCor), Redondo Peninsula Energy Inc. (RPE), Panay Energy Development Corporation (PEDC), and Global Luzon Energy Development Corporation (GLEDC).

The respondents were accused of implementing the contracts with these companies at a “sweetheart price.” At the same time, they exempted these companies of Meralco from the competitive process required by the 2015 CSP Resolution.

In their defense, the ERC commissioners argued that they moved the date of implementation due to numerous concerns made by other DUs and GenCos. They were reportedly concerned that the immediate implementation of the CSP Resolution “will necessitate them to repeat the entire PSA processes, which would possibly result in their companies incurring substantial loss detrimental to their consumers.”

The suspended commissioners denied any partiality shown to Meralco, but the Ombudsman was not swayed by their arguments.

“Respondents cannot feign ignorance that Meralco may take advantage of the period they would be providing to accept the filing of PSAs that do not have to comply with the CSP requirement, especially when they have recently denied said company's request to be exempt from CSP,” the Ombudsman resolution stated.

“Prudence dictates that respondents should have been on the lookout for the possible consequences that may result from their actions,” it added.

Meanwhile, Atty. Aaron Pedrosa, Secretary General of Sanlakas, welcomed the Ombudsman’s decision to suspend the ERC commissioners for manipulating the CPS, a power supply procurement scheme requiring public bidding instead of a negotiated procurement.

“The Ombudsman suspension order bolsters the truth that only collusion between the government and corporations could have allowed for such anti-consumer and anti-environment agreements to prevail,” said Pedrosa. “This suspension order should serve as a warning to the ERC to seriously review the petition against the deals, which was filed in intervention by concerned community leaders and peoples’ groups only to be junked by ERC chambers.”