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Sentinel of the energy sector

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The Energy Regulatory Commission (ERC), which is celebrating its 17th anniversary this year, has played a crucial part in the development of the Philippines. Since 2001, with the enactment of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act (EPIRA) of 2001, the ERC has been the country’s only independent regulatory body performing the combined quasi-judicial, quasi-legislative and administrative functions in the electric industry.

Under the regulatory body’s key goals and responsibilities lies the duty to promulgate and approve rules, regulations, guidelines and policies in the energy sector. Its mandate involves the enforcement of rules and regulations, like the issuance of permits and licenses to producers of electricity, and the resolution of cases and disputes over rates, among other things.

Sentinel of the energy sectorAbove all, the ERC is tasked with the duty to serve public interest, promoting the common good for all consumers in the Philippines. And in the near two decades that the commission has been doing those duties, it has become an organization known for the drive of its many professionals, all of whom possess the highest degree of technical competence and integrity.

As one of the pillars of the country’s public sector, the ERC draws its eminence from over a century of Philippine traditions, from the knowledge and practices of its predecessors. The history of the regulation of public services goes back to near the Philippines’ independence, when the enactment of Act No. 520 created the Coastwise Rate Commission in 1902.

The following years saw even more regulatory bodies introduced into the Philippine consciousness. In 1906, Act No. 1507 was passed, creating the Supervising Railway Expert. The year after, Act No. 1779 was enacted, creating the Board of Rate Regulation. This preceded Act No. 2307, which was patterned after the Public Service Law of the State of New Jersey and was approved by the Philippine Commission in 1914, creating the Board of Public Utility Commissioners. The board was composed of three members that absorbed all the functions of the Coastwise Rate Commission, the Supervising Railway Expert, and the Board of Rate Regulation.

Thereafter, several laws on public utility regulation were enacted. On November 7, 1936, Commonwealth Act No. 146, otherwise known as the Public Service Law, was enacted by the National Assembly. The Public Service Commission (PSC) had jurisdiction, supervision and control over all public services, including the electric power service.

The PSC reigned for almost four decades, overseeing many significant developments in the energy sector that changed the landscape of economic regulation in the country. On April 30, 1971, R.A. No. 6173 was passed, creating the Oil Industry Commission (OIC), which was tasked with regulating the oil industry and ensuring the adequate supply of petroleum products at reasonable prices.

When the former President Ferdinand E. Marcos issued his first Presidential Decree on September 24, 1972, he ordered the preparation of the Integrated Reorganization Plan by the Commission on Reorganization. The plan abolished the PSC and transferred the regulatory and adjudicatory functions pertaining to the electricity industry and water resources to then Board of Power and Waterworks (BOPW).

Five years later, on October 6, 1977, the Department of Energy (DoE) was created, and the government consequently abolished the OIC, replacing it with the Board of Energy (BoE) through Presidential Decree No. 1206. The BOE, in addition, assumed the powers and functions of the BOPW over the electric power industry.

The BoE was reconstituted into the Energy Regulatory Board (ERB) a decade later, on May 8, 1987, pursuant to Executive Order No. 172 issued by then President Corazon C. Aquino as part of her government’s reorganization program. The rationale was to consolidate and entrust to a single body all the regulatory and adjudicatory functions pertaining to the energy sector. The ERB, thus, assumed the responsibility to regulate the energy sector, overseeing the power rates and services of private electric utilities in the country.

Republic Act No. 7638 was signed on December 28, 1992, and the power to fix the rates of the National Power Corporation (NPC) and the rural electric cooperatives (RECs) fell into the hands of the ERB. Non-pricing functions of the ERB with respect to the petroleum industry, such as regulating the capacities of new refineries, were transferred to the DoE.

Near the turn of the millennium, there was an increasing pressure to deregulate the oil industry in the country. On February 10, 1998, with the enactment of Republic Act 8479, otherwise known as the Downstream Oil Industry Deregulation Act of 1998, a five-month transition period was prescribed by the government, after which the full deregulation of the oil industry would take effect. The ERB would be implementing an automatic pricing mechanism (APM) for petroleum products every month during the period.

On June 12, 1998, the Philippine oil industry was fully deregulated, and ERB’s sole focus of responsibility shifted to the electric industry. This was short-lived as nearly three years later, on June 8, 2001, EPIRA was passed. The government abolished the ERB and created in its place the Energy Regulatory Commission.

The newly created ERC had faced tremendous challenges through the years in keeping watch over the restructured electric industry. In addition to its traditional rate and service regulation functions, ERC was mandated to focus on two more primary responsibilities: ensure consumer education and protection and promote competitive operations in the electricity market.

With the ERC standing sentinel over the flow of energy throughout country, it has created a regulatory environment that is democratic, transparent, and accommodating to the needs of all stakeholders, and that equitably balances the interests of both the consumers and the investors in the country’s utilities.