Philippines - Electrcity " More Lies from the DOE and PEMC on the Mindanao WESM" By David A. Tauli, Mindanao Coalition of Power Consumers

 The Philippine WESM is one of the beautiful creations of the EPIRA. The WESM was established under the EPIRA in order to attain the purpose of the Law: “To ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability to achieve greater operational and economic efficiency and enhance the competitiveness of Philippine products in the global market.” 

But the Philippine WESM has been ruined by the mismanagement of the electricity market by the Philippine Electricity Market Corporation and by the cupidity of the capitalist owners of the generating companies. The WESM is supposed to be a competitive market, free of ERC regulation, and governed by rules agreed upon by stakeholders in the WESM. But after the horrendous price spikes in the WESM in the late 2013, caused by collusion among the generating companies, the WESM is no longer freely competitive but has been under heavy-handed regulation by the ERC. 

The only possibility for enabling the WESM to attain the purposes for which it was created by the EPIRA is to phase out the PEMC and establish an Independent Market Operator that would take over the PEMC in administering and operating the Philippine WESM. 

One would expect that, in the meantime that the PEMC is in charge of the reregulated WESM, its administrators, the president and the members of the board of directors of the PEMC, would try to operate the WESM for the good of the public, and not only for the good of their friends, the oligarch owners of the generating companies. But the PEMC officers have not been doing that. They have not made any effort to improve the credibility of the WESM to the public and to the regulators. To compensate for their inability to do anything about the Philippine WESM, the PEMC officers have stepped up, since the beginning of the 2017, the campaign to impose on the people of Mindanao an isolated WESM, which is bereft of legal and economic justification and is intended solely to transfer billions of pesos from power consumers to the owners of the generating companies in Mindanao. 

The attempt to establish an illegal WESM in Mindanao by the officers of the PEMC, abetted by high officials in the DOE and in the Mindanao Development Authority, has been fueled by high-powered lies and more lies. This paper continues the exposure of the lies being peddled to the people of Mindanao by DOE and PEMC in their attempt to use an isolated WESM as an instrument for transferring money from power consumers to the oligarch owners of generating companies. 
1. In a public briefing on the Mindanao WESM in Davao City last month, PEMC President Melinda Ocampo claimed that: (a) there is lack of discipline among electric cooperatives in Mindanao, and (b) the government must require the electric cooperatives to participate in the Mindanao WESM and ensure that the electric cooperatives will pay their obligations in the spot market. 
1.1 Obviously Mel Ocampo based her claims concerning the electric cooperatives on her experiences in the failed attempt of the DOE and PEMC to establish the Interim Mindanao Electricity Market in 2013 (and which is now being revived with a new name as a “Mindanao WESM”). 
1.1.1 It is now clear that the initiator of the IMEM was DOE Secretary Carlos Jericho Petilla. It is against basic economic principles to establish a market for any commodity at a time of scarcity of the commodity because a market under conditions of scarcity is certain to result in high prices of that commodity. But Sec. Petilla decided that the DOE should establish a wholesale spot market for electricity in Mindanao at a time when there was acute power shortage, and people in Mindanao were suffering from rotating blackouts that lasted as long as 12 hours every day. We can only speculate that Sec. Petilla wanted to raise funds for his campaign to become a senator. 
1.1.2 Sec. Petilla convinced Mel Ocampo to use the PEMC to carry out an economically irrational and patently illegal undertaking, which they called an IMEM rather than an extension of the Philippine WESM. It is technically impossible to extend the WESM to Mindanao without the Visayas-Mindanao HVDC interconnection. Mel Ocampo saw that the PEMC could earn money from the market administration fees that will be paid by Mindanao consumers for the IMEM, and her friends among the owners of generating plants will make money from selling their generation in the market at high prices. 
1.1.3 The Committee on Energy of the House of Representatives, headed by Cong. Reynaldo Umali, came to a conclusion after a series of public hearings that culminated in a hearing in Cagayan de Oro City on March 6, 2014 to stop the operation of the IMEM. At that point, stopping the IMEM became an academic matter because the IMEM was forced to stop after only one month of operations from December 26, 2013 to January 25, 2014. The IMEM could not continue operating because the PEMC could not pay the generating companies that were dispatched by the IMEM in the single month of operation. (The PEMC has been lying about this by saying that they stopped operating the IMEM because of “a power crisis in Mindanao”. PEMC stopped operations of the IMEM because they could not pay the gencos. Mel Ocampo is also lying when she says that they could not pay the gencos because the electric cooperatives did not pay the PEMC.) 
1.1.4 Congressional investigation of the IMEM in 2014 was carried out under the initiative of Cong. Maximo B. Rodriguez, Jr. of Party List Abante Mindanao and Cong. Edgardo R. Masongsong of Party List 1-CARE. 

1.2 It is an indication of the serious lack of economic sense on the part of the ERC Commissioners, most of whom are still in the ERC, that they approved the establishment of an electricity market in Mindanao at a time when there was acute shortage of power capacity. Either the commissioners were ignorant of economic principles or they connived with Sec. Petilla and Mel Ocampo in the establishment of the IMEM, against the interests of the power consumers that the ERC is mandated to protect. It may be more charitable to say that the commissioners are incompetent in economic science rather than corrupt, but more harm can be inflicted on the electric power industry by incompetent commissioners than by corrupt commissioners. 

1.3 Sec. Petilla and Mel Ocampo convinced NEA Administrator Edita Bueno to join them in the establishment of the IMEM, and Edita Bueno ordered the electric cooperatives in Mindanao to cooperate with the PEMC in the establishment of the IMEM. (Apparently the DOE and the PEMC have not convinced present NEA Administrator Edgardo R. Masongsong to help them establish the Mindanao WESM, so Mel Ocampo is now trying to indirectly force the electric cooperatives to cooperate with her. But why should the electric cooperatives cooperate with anyone to cheat the member-consumers of the electric cooperatives. And this is not just petty cheating. It will result in an annual amount of fifteen billion pesos being defrauded from power consumers and transferred to oligarch owners of generating companies.) 
1.4 Mel Ocampo is now blaming the electric cooperatives for the failure of the IMEM which, according to her new rationalization, was due to non-cooperation by the electric cooperatives and their failure to pay their obligations to the PEMC that were incurred during the aborted operation of the IMEM. 
1.4.1 The claims of the IMEM about being owed money by the electric cooperatives arising from the one-month operation of the IMEM are baseless. All of the cases that the PEMC filed with the ERC to force the electric cooperatives to pay their fictional obligations to the PEMC have been withdrawn by the PEMC without the ERC coming to a decision on the claims of indebtedness of the electric cooperatives to the PEMC. 
1.4.2 The PEMC was charging the electric cooperatives for supposed consumption of electricity from the IMEM, but the electric cooperatives did not order any power supply from the IMEM during its one-month operation. Mel Ocampo is now saying that the electric cooperatives were not cooperating with the PEMC because they did not order power supply from the IMEM. 

2. In the public briefing on the Mindanao WESM in Davao City last month, Undersecretary Wimpy Fuentebella was quoted as saying: “Some companies who joined the market have yet to get paid.” Usec. Fuentebella then went on to say that the NEA should strengthen its monitoring of the electric cooperatives because the NEA is “mandated to ensure that they comply with the policies. 
2.1 Usec. Fuentebella is actually calling on the NEA to force the electric cooperatives to participate in the Mndanao WESM. But the NEA does not have a mandate to force electric cooperatives to participate in a voluntary market. Moreover, the establishment of a Mindanao WESM is not in accordance with the provisions of the EPIRA, and not in accordance with any legitimate policies promulgated by the Department of Energy concerning the Philippine WESM. 
2.2 Usec. Fuentebella is referring to the draft Department Circular of the DOE, entitled “Declaring the Launch of the Wholesale Electricity Spot Market (WESM) in Mindanao and Providing for Transition Arrangements”. But this is a bogus circular of the DOE. It is only a draft and not yet issued under signature of the DOE Secretary. The DOE has not yet issued any official policy to govern the proposed WESM in Mindanao. But DOE officials are deceiving the public into thinking that there are already laws and policies that make it legal to establish the Mindanao WESM. 
2.3 It is true what Undersecretary Fuentebella said that some companies have not yet been paid for the one month operation of the IMEM in Dec. 2013 to Jan. 2014. The unpaid companies are generating companies. And the non-paying entity is the PEMC. The generating companies who lost money in the IMEM are now helping the PEMC establish the illegal Mindanao WESM in the hope that they could be paid what the PEMC owned them for their cooperation in the operation of the illegal IMEM. 

3. Undersecretary Fuentebella, PEMC President Mel Ocampo and other officials of the DOE and the PEMC have been making it appear that the draft DOE Circular on the Mindanao WESM and the so-called “Mindanao Dispatch Protocol”, which was attached to the bogus DOE Circular on the Mindanao WESM, are legal documents that authorize the establishment of the Mindanao WESM. 
3.1 The draft DOE Circular on the Mindanao WESM and the so-called “Mindanao Dispatch Protocol” are not legal documents passed by Congress; not legal documents officially signed by the Secretary of the Department of Energy; and not legal documents approved by stakeholders in the electric power industry in Mindanao. But these documents are being declared deceitfully by Undersecretary Fuentebella and PEMC President Mel Ocampo as legal documents that authorize the establishment of the Mindanao WESM. This is nothing but usurpation of authority on the part of the undersecretary and the PEMC president. And lies, lies, and more lies. 

Conclusion 
In their attempt to establish an illegal and economically disastrous WESM in Mindanao, officials from the DOE, the PEMC and the MinDA have been using gestapo tactics: (1) force the stakeholders to participate in the Mindanao WESM by using fake documents; and (2) tell lies to the people repeatedly and the people will soon accept the lies as truths. But that would work only if the people of Mindanao are fools. Which they are not. The fools in this case are the people in authority who believe that gestapo tactics will work in modern times when it is easy to expose lies and deceptions coming from corrupt officials in high places in the government. 

March 15, 2017

(Article supplied by Annie Geron PSI Asia Pacific Region Co - Chair, and a Philippine Union Activists Official)