The Energy Regulatory Commission (ERC) said it made three improvements on the public offering rule (POR) guidelines to make it easier for power generation companies (gencos) and electric distributors to offer shares of ownership to the public.
The amended guidelines, approved last October 16, streamline the process for these companies to comply with the POR, which mandates these power firms to sell to the public at least 15 percent of their common shares not later than five years from the issuance of their certificate of compliance (COC). The POR is a key requirement of the Electric Power Industry Reform Act (Epira).
The ERC said the rules now provide a clearer definition of a ‘holding company,’ eliminating previous confusion about which parent companies were affected. Also, companies are now given a longer and more practical period to prepare for and complete their public offering, acknowledging that the process takes significant time and planning.
Lastly, the ERC said requirements have been synchronized with the current listing standards of the Philippine Stock Exchange (PSE). This ensures energy companies follow a single, consistent set of rules when they go public.
The agency said these changes are helpful for small and medium-sized power producers and utilities who may have found the previous rules challenging. By making the process more manageable, the ERC encourages broader compliance and avoids having to excuse their non-compliance through the repeated issuance of provisional authority to operate (PAO), rather than the regular COC.
ERC Chairperson and CEO Francis Saturnino C. Juan said this is a win for rationality and public participation in the energy sector.
‘The start of the 5-year period is when a generator or distribution utility already has, is in possession of, the minimum requirements for listing with the PSE. Because right now, if we don’t do that, if we count the five years just from the issuance of the COC to it, the small generation companies are discriminated because the big ones, they can immediately comply with the requirement just by listing with the PSE.
But what about the smaller generators that they won’t list even if they want to because their capitalization is not at P500 million. Their income for the past three years has not reached P15 million. Or their stockholders do not exceed 1,000. So, they still can’t list with the PSE,’ Juan said during a news briefing.
The ERC said ‘indiscriminately enforcing the POR on all companies will not only defeat section 43 (t) objectives, but will also be anti-competitive, as it will impose additional barriers to entry; benefit a handful of generators, but discriminate the others; and increase electricity costs without commensurate economic benefits.’
Earlier, the agency said 54 percent or 136 of the 251 gencos in the country have yet to comply with the POR. These energy firms have a combined capacity of about 13,745 megawatts.