DOJ to proceed with power rate hike probe

Posted at 03/14/2014 3:02 PM

MANILA, Philippines - The Department of Justice will proceed with its investigation into Manila Electric Co.'s (Meralco) unprecedented P4.15 per kilowatt hour rate hike late last year, despite the Energy Regulatory Commission's (ERC) ruling that voided the rate adjustment.

In a press statement, Justice Secretary Leila De Lima said the DOJ Office for Competition's (OFC) probe will determine if there was an abuse of market power or violations of competition laws.

De Lima stressed that the mandate of the OFC, by virtue of Executive Order (EO) No. 45 which created the office, is "to investigate and prosecute all cases involving violations of competition laws as well as carry out market studies to guide industries and consumers."

The ERC had ruled that there there was violation of the Wholesale Electricity Spot Market (WESM) Rules on the part of generation companies, which led to the tightness in the supply of electricity in the last quarter of 2013.

Meralco bought power from the spot market due to the simultaneous shutdowns of the Malampaya natural gas platform and several power plants. Consumer groups blamed the expensive cost of power bought via the WESM for the unprecedented rate adjustment.

The DOJ noted that the ERC ruling specifically stated that it was "without prejudice to the results of the investigations into the possible culpability of any or all of the market participants."

Concerned groups formally asked the justice department to investigate the controversial rate hike, alleging collusion among industry players.