Biz Buzz: Power sector politics

It took a while — several months of planning, maneuvering and, finally, execution, to be exact — but Energy Secretary Alfonso Cusi finally has the “clean slate” he's always wanted at Philippine Electricity Market Corp. (PEMC).

PEMC, of course, is a key organization in the country’s energy sector, being responsible for running the Wholesale Electricity Spot Market that, in turn, is in charge of creating an efficient platform for the trading of power supply deals between producers and users. The whole idea is to provide consumers with the cheapest electricity rates possible. In theory, at least.

Just recently, PEMC announced the resignation of its longtime president Melinda Ocampo, surprising many players in the energy sector who thought she would stay on for the duration of the Duterte administration.

That's because Cusi, who chairs PEMC, “strategically” did not act on the courtesy resignations he requested from the organization’s board of directors as early as December of last year. With no word or even rumors of any firing or replacement on the grapevine, the PEMC top brass could be forgiven for thinking that they would be spared the ax.

As it turned out, Cusi was just biding his time, waiting to chop off some key branches, as it were, at the opportune time.

And here's where the story gets interesting. By its charter and mandate, PEMCwas meant to transform itself into a completely private organization a few years after it was created by the Electric Power Industry Reform Act.

With key board members originally named by the energy secretary, these directors were supposed to give way eventually to private sector representatives and with the organization moving toward its ultimate goal of becoming an IMO (independent market organization) much like the Philippine Stock Exchange (only, it would trade electricity supply contracts instead of stocks).

But previous secretaries of energy had always resisted the idea of letting PEMC go and allowing it to become a completely private sector entity. Why? Well, why would anyone want to let go of an organization that makes millions or even billions in fees from market participants who participate in the WESM scheme?

And contrary to popular perception, the Department of Energy and the various agencies under it are actually some of the less affluent organizations of government, the cashrich nature of their business notwithstanding.

That's where PEMC comes in, with previous energy chiefs relying—we’re told—on the generosity and largesse of the organization to compensate for their budget limitations.

“Basically, PEMC functioned as a piggy bank for the government officials in the energy sector,” said one industry insider. “If there was an initiative that needed funding, the energy secretary would approach PEMC for it. If there was a seminar overseas that staffers needed to attend, you could rely on PEMC to provide the budget you didn't have.”

No wonder the organization was virtually untouchable to previous energy chiefs. Cusi has a different idea, however.

Biz Buzz learned that, after evaluating the situation carefully—and keeping the status quo at PEMC in the meantime, including keeping the government’s representatives on the board—the energy chief has now decided to go full speed ahead into making the entity an IMO. The goal is nothing less than making PEMC and WESM more efficient organizations that will, hopefully, result in cheaper power rates for consumers.

So after sitting on the cour- tesy resignation letters of the PEMC brass for six months, Cusi finally struck one clean blow and replaced all directors in a deft boardroom coup. The affected officials were caught off guard, as were the energy sector players—everyone except Cusi, apparently, who had been planning the move for some time now.

So who is running PEMC now? Well, there's a new board of directors and a new caretaker committee. But Biz Buzz hears that the man to watch—someone who may end up heading the powerful and cash-rich organization if he acquits himself well over the coming months—is a junior (meaning relatively young) member of this caretaker transition team.

This person is a former energy undersecretary who is competent about energy issues, but ended up supporting another presidential candidate in 2016. Will he get the top job? He could if he plays his cards right. Abangan.