Questionable ERC issuances

On its final days, the Aquino administration, through the Energy Regulatory Commission (ERC), came out with several issuances that are deemed to be anti-poor, anti-investment and anti-competition.

The ERC issued several questionable resolutions on Retail Competition and Open Access (RCOA) in the electricity market, one of which is Resolution No. 11 which bars distribution utilities from engaging in the supply of electricity in a “contestable market,” referring to a group of customers that the ERC has allowed to choose their electricity suppliers.

Meanwhile, ERC resolutions 5 and 10 enumerate the entities that can apply for license as suppliers, and contain guidelines to determine a “contestable consumer” in the retail electricity market. ( A contestable consumer refers to one with a monthly average peak demand of at least one megawatt (MW).)

Manila Electric Company (Meralco) last week asked the court to nullify these ERC resolutions and a Department of Energy circular supporting these, saying these would discourage competition and would jack up electricity rates, contrary to the spirit and intent of the Electric Power Industry Reform Act (EPIRA) to promote free competition.

Resolution no. 11 also limits retail electricity suppliers (RESs) to supplying not more than 30 percent of the total average peak demand in the retail market. In effect, cost-efficient RESs that offer cheaper electricity prices would be barred from supplying contestable customers (those consuming at least one MW) once the cap is reached.

Under Resolution No. 11, the ERC set the dates making it mandatory for electricity customers to be part of the contestable market. With more customers required to be part of the contestable market, contestable customers will be at the mercy of suppliers.

The limited availability and capability of the remaining RESs to serve customers will, therefore, jack up electricity rates.

Meralco also pointed out in its petition that the EPIRA Law and its implementing rules allow DUs like Meralco to engage in the competitive retail electricity market as supplier, even without ERC approval. This would give consumers more choices in terms of price and quality of service.

Improved internet speeds

Just a few days since the Philippine Long Distance Telephone Co. (PLDT) group and Globe Telecom announced the acquisition on a 50-50 basis the telecommunications business of San Miguel Corp. (SMC), already, things are looking up for the quality of Internet service in this country.

PLDT subsidiary Smart Communications has announced that it will start using this year the 700 megahertz frequency as part of the accelerated deployment of its long-term evolution (LTE) service, in order to more quickly deliver faster, more reliable and affordable internet services throughout the country.

Officials explained that deploying LTE on 700 MHz combines a powerful frequency with the most advanced mobile phone technology. They are also in talks with device manufacturers to make available more affordable LTE smartphones and tablets using this frequency soon.

Meanwhile, Globe Telecom last Monday activated its first cell site supporting the 700 MHz frequency (MHz) which PLDT and Globe acquired from SMC. Internet speed tests conducted reached as much as 100 mbps near the cell site.

Short-sighted critics say that the acquisition is bad for the local telecommunications sector since it put an end to a potential third telco player and that is SMC. They have even asked the newly created Philippine Competition Commission to immediately review the deal.

But even the just released implementing rules of Republic Act 10667 or the Philippine Competition Act recognizes the fact that not all mergers or acquisitions are bad. It said that even prohibited merger or acquisition agreements (or those that substantially prevent, restrict, or lessen competition in the Philippines in the relevant market) may be exempt from prohibition when the concentration has brought about or is likely to bring about gains in efficiencies that are greater than the effects of any limitation on competition that result or are likely to result from the said agreement.

SMC had the chance to become a viable third player in the telco industry given that it held most of the 700 MHz frequencies for several years now.

SMC held talks with Australia’s Telstra for a possible telco venture but the talks fizzled out. Possibly left with no choice, SMC decided to just get out of the telco business.

BDO chief market strategist Jonathan Ravelas was quoted as saying that SMC’s giving up the telco business was a master stroke, as it will be getting a large sum (P69 billion) and spare itself from a bruising fight in an industry that is getting more competitive and bloodied.

Best of the best

Now that the dust of the May 9 elections has settled so to speak, the battle has transferred to the halls of the Senate and the House of Representatives where the leadership of each chamber is now at stake.

There is a four-cornered fight for the Senate presidency, with current Senate President Franklin Drilon and Senators Tito Sotto, Koko Pimentel and Alan Peter Cayetano slugging it out.

Of the four, Cayetano is the best Senate president for president-elect Rodrigo Duterte. The incoming president seems to believe so as well.

If there is one person who can help Duterte achieve his legislative agenda, it would be Cayetano.

Just like Duterte, Cayetano hates corruption. He fought several big fights against corruption, involving big names like former first gentleman Mike Arroyo and outgoing Vice President Jejomar Binay.

But more importantly, his loyalty to Duterte is beyond question. He supported Duterte from the beginning and never waivered in his support, even when the going was tough.

This is the kind of leader in the Senate that Duterte needs – someone who shares his vision and plans for the country, someone who has excellent leadership skills, someone who knows how to push Duterte’s agenda in the Senate, someone who can organize the divergent opinions and come up with a strong consensus on much-needed measures.

Just like Duterte, Cayetano is known to be equally strongwilled, independent, and one who delivers on his promises.

Cayetano would have made a great vice-president for Duterte. At least, he can still be Duterte’s partner for nationbuilding if he becomes Senate president.

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