ERC to Review Impact of $3.3-Billion Natural Gas Deal

ERC Chairman Monalisa Dimalanta. PHOTO: MIKE ALQUINTO
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The Energy Regulatory Commission (ERC) has announced its intention to conduct a thorough review of the $3.3-billion liquefied natural gas (LNG) deal and its potential impact on consumer prices. In a statement issued by ERC Chairman Monalisa Dimalanta, she emphasized the need to assess any effects on current and future power supply agreements (PSAs) of Meralco, as well as the behavior of players in the Wholesale Electricity Spot Market (WESM) and retail market.

The $3.3-billion deal involves a collaboration between Meralco PowerGen (MGen), Aboitiz Power, and San Miguel Global Power Holdings Corp. (SMGP) to establish the country’s “first and most expansive” LNG terminal. Once operational, this facility in Batangas province is expected to provide fuel for power plants capable of generating over 2,500 megawatts (MW) of electricity. As part of the agreement, MGen and Aboitiz Power will jointly invest in two of SMGP’s gas-fired power plants, namely the 1,278 MW Ilijan plant and a new 1,320 MW combined cycle power facility.

While the review of the merger primarily falls under the jurisdiction of the Philippine Competition Commission (PCC), the ERC is keen to examine the potential consequences on consumer prices and the behavior of market players. This collaborative effort between the ERC and the PCC builds upon a memorandum of agreement (MoA) signed in 2019 to promote competition within the energy industry. The aim is to address concerns regarding power outages and the subsequent rise in electricity prices.

These developments come in response to allegations made by the United Filipino Consumers and Commuters (UFCC) that the partnership between the three business conglomerates effectively monopolizes the LNG market, enabling them to dictate prices and leading to higher rates for consumers. However, Chairman Dimalanta clarified that a coordinated review process has been in place since 2019, and the recent establishment of a joint inquiry signifies the operationalization of this agreement. This collaborative effort allows both regulatory bodies to fulfill their mandates more effectively and serve the Filipino public.

The ERC’s review of the $3.3-billion LNG deal reflects its commitment to safeguarding the interests of consumers and ensuring fair competition within the power sector. By thoroughly assessing the potential impact on consumer prices and the behavior of market players, the ERC aims to maintain a level playing field and prevent any anti-competitive practices that may arise from this merger.

It is important to note that the ERC’s review process takes into account international best practices, local laws, and customs to contextualize potentially unclear aspects to an international audience. This approach ensures transparency and fairness in evaluating the deal’s implications, not only for the Philippines but also for the global energy market.

In conclusion, the ERC’s decision to review the $3.3-billion LNG deal demonstrates its commitment to protecting consumer interests and promoting fair competition within the power sector. By closely examining the potential impact on consumer prices and the behavior of market players, the ERC aims to ensure a level playing field and prevent any anti-competitive practices. Through collaboration with the PCC and adherence to international standards, the ERC strives to provide a transparent and trustworthy regulatory environment for the benefit of the Filipino public and the global energy market.

Source: The Manila Times

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