THE Energy Regulatory Commission (ERC) said it is weighing whether to act first in reviewing the public offering requirement (POR) for power companies or the Certificate of Compliance (CoC) rules.
“Do we address the CoC rules first? Do we need to amend our POR guidelines?” ERC Chairperson and Chief Executive Officer Francis Saturnino C. Juan said at an open commission meeting last week.
Section 43 of Republic Act No. 9136, or Electric Power Industry Reform Act (EPIRA), requires unlisted generating companies and distribution utilities to offer and sell to the public at least 15% of their common stock.
New companies are required to offer shares to the public within five years from the issuance of their CoCs, a license issued by the ERC allowing the operation of a power plant or other facilities used in generating electricity.
A company can offer its shares by listing on the Philippine Stock Exchange or make a direct offer of stock to the public or its employees. It can also comply with the requirement by registering securities.
Only 40 of the 264 gencos are compliant with the POR requirement, while 131 are non-compliant, according to Sharon O. Montaner, ERC market operations service director. The POR requirement is not applicable to the rest.
The non-compliant power firms represent capacity of nearly 14,000 megawatts.
Ms. Montaner said some gencos have raised a number of issues, including whether the offer of shares to the public is substantially compliant with the POR rules if no one subscribed.
“They are now seeking confirmation whether that (qualifies as) substantial compliance with the POR rules because they have made an effort, ‘yun lang walang bumili (even though no one took up the offer),” she said.
“Imposing the implementation of offering and selling of securities to the public may be futile for some gencos and maybe unnecessary exercise and entail additional costs,” Ms. Montaner said, referring to underwriting fees and the minimum capital stock requirement,.
She added the requirement has been deemed a “barrier to entry” for small, stand-alone investors, and those who do not belong to a conglomerate.
Mr. Juan said that the ERC cannot issue provisional authority to operate to non-compliant power firms.
He said the rules need to be “aligned with the objective of ensuring the restructuring and modernization of the power industry.” — Sheldeen Joy Talavera