The Energy Regulatory Commission (ERC) on Monday said it will closely review a recent power sector transaction and assess its impact on electricity rates and competition, with particular focus on market share limits. This follows the Philippine Competition Commission’s (PCC) approval of a deal involving three major power generation companies—Meralco PowerGen Corp. (MGen), Therma Natgas Power Inc. (Therma), and San Miguel Global Power Holdings Corp. (San Miguel Power).
ERC chair Monalisa Dimalanta emphasized the commission’s responsibility to ensure that the acquisition and merger do not breach market share limitations set under the Electric Power Industry Reform Act (EPIRA), which is designed to prevent monopolies and protect consumers from inflated power prices.
The deal, approved by the PCC last month, involves MGen and Therma, through their joint venture Chromite Gas Holdings Inc. (Chromite), acquiring a 67 percent stake in South Premiere Power Corp. (SPPC), Excellent Energy Resources Inc. (EERI), and Ilijan Primeline Industrial Estate Corp. These entities operate significant power plants and an LNG terminal. Along with San Miguel Power’s acquisition of a 33 percent stake in the assets, the deal grants them control over crucial energy infrastructure, including the Batangas-based LNG terminal.
Dimalanta said the ERC will carefully assess the implications of the transaction, noting that both power plant ownership and control of the LNG terminal could exceed the limits on market share set by EPIRA. Under the law, no company or group can own more than 30 percent of the installed generating capacity (IGC) of a grid or 25 percent of the national IGC. These caps are in place to avoid excessive concentration of power generation in the hands of a few companies, which could lead to higher costs for consumers.
“This review is essential to ensure that the deal does not result in a breach of EPIRA’s market share restrictions,” Dimalanta said. “The ownership of the terminal is especially crucial, as it gives control over the fuel supply for these power assets, which can have a significant impact on electricity prices.”
As of March 2024, the latest ERC data shows the power producers, including Aboitiz Equity Ventures Inc. (AEV) and San Miguel Corp., have substantial control over the national and regional grids. AEV holds 22.47 percent of the national installed capacity, with significant shares in Luzon and Mindanao. San Miguel Corp. follows with 19.78 percent national control, predominantly in Luzon.
With rising concerns about power rates, particularly in light of such mergers, the ERC review will be crucial in determining whether the deal could lead to reduced competition and higher electricity prices for consumers.
While the PCC has approved the deal, the ERC’s examination will determine if further regulatory action is needed to protect consumers from potential monopolistic practices in the power sector.
