Predictability

The Energy Regulatory Commission (ERC) is being set aright under its new chairman Francis Saturnino C. Juan.

- ALEX MAGNO

There was a reason why the ERC suffered from a backlog of cases under the previous chair: the Commission entertained all pleadings from so-called “consumer” advocates. Such pleadings happened after the fact — after competitive biddings happened and the outcomes ruled.

Tampering with competitively derived outcomes creates numerous systemic risks and an energy environment that is even more unfriendly to consumers. Entertaining after-the-fact pleadings expands the margin of discretion for regulators and reduced the predictability of the process.

Chairman Juan issued a public statement after the ERC was once again besieged by protests from groups who operate on a shortsighted understanding of the regulator’s role. That statement distilled the Commission’s mandate into two fundamental roles: first, to ensure that a truly competitive process in its place; second, to ensure predictable rules that guarantee cost recovery for investors.

The first mandate assures our consumers get the best energy prices possible under prevailing market conditions. When energy supplies are delivered through transparent competitive bidding, we are assured no overpricing burdens the consuming public.

The second mandate assures investors safety from shifting policies. When the rules become elastic, subject to renegotiations after the fact, the investment environment becomes a slippery slope. The rules must be firm.

Otherwise, we will continue to fail in attracting worthy investments into our economy. In the energy sector, this will translate into shortages and a greater possibility for outages. Our consumers will suffer more because of that.