Energy Regulatory Commission Chairman
Hon. Agnes Devanadera
The Philippines is on the path towards energy transition not only with the advent of new technologies and increased awareness of energy efficiency and sustainability measures but also of the pressing need to go digital in the wake of the coronavirus pandemic.
As the regulator, the Energy Regulatory Commission (ERC) has an important role to play in ensuring affordability, access and energy security while economics, markets, environmental concerns and policymakers also influence the way forward for the country’s transition to a low-carbon future.
ERC has to take on the challenge of new technologies that could change and mold future electricity prices amidst changes in the demand profile due to energy efficiency measures implemented by both the consumer and the generator and the impact of the COVID pandemic.
“The biggest challenge from Day 1 to present is how to use ERC’s regulatory powers to ensure reasonably priced and stable supply of electricity given the limited human and financial resources,” said ERC Chairperson Agnes VST Devanadera when asked about the challenges faced by the agency prior and during the pandemic and how they were able to overcome them.
“We had to deal with filling up of vacant positions requiring very high Qualification Standards set by the Civil Service Commission. ERC was also confronted with a decision from the Civil Service Commission invalidating some 130 appointments of ERC employees,” she said.
“The number of accounts to be handled outnumbered our resources. Thus, we beefed up our recruitment for technical people and submitted to the Department of Budget and Management (DBM) reorganization proposals to address our complement deficiencies,” explained Devanadera, who also served as Secretary of Department of Justice during the term of President Gloria Macapagal Arroyo. She was also former Government Corporate Counsel and Solicitor General and was instrumental in ushering various reforms in the government, including the recovery of ill-gotten wealth from the Marcoses, reprivatization of water utilities, and the prosecution of key personalities involved in the Maguindanao Massacre.
She was appointed Chairman of the ERC by President Rodrigo Duterte on Nov. 22, 2017.
Devanadera said ERC explored automation of certain process to fast-track evaluation of pending cases and devised other mechanisms to ensure that cases are being resolved by the Commission at the most efficient manner.
“During the pandemic, we focused on how, as a regulator, we can help ease the burden of our electricity consumers. We made sure we monitor the situation on the ground so that if there is a need for ERC intervention, we issue advisories to guide our stakeholders. Examples of these are advisories on suspension of certain charges, deferment of some collections or adjustments and of course, granting some relief in the form of staggered payments and the no disconnection policy,” she said.
Last year, ERC experienced an all-time high number of consumer complaints being filed following the imposition of the Enhanced Community Quarantine (ECQ).
“For this, we had to increase our presence in the social media to immediately address concerns and or complaints. We increased the number of our email platforms from 1 to 5 in order for us to efficiently attend to the consumer complaints in the entire country,” she said.
“Within the first two months, we already instituted doing things virtually. We crafted the Rules on e-filing, e-hearing, e-public consultation, e-inspection, etc. Internal meetings and activities proceeded as scheduled using MS Teams and Zoom Applications,” Devanadera said.
She said the focus of these measures were “on ensuring resiliency of and caring for one another and the result of the innovations is a 21% increase in productivity.”
Eye-opener
Devanadera said COVID-19 became an “eye-opener” and made ERC realize the vulnerabilities of the electric power sector and that of the agency.
“There was a noted shift in the demand/load patterns for electricity which shifted from commercial/industrial loads to residential loads. In general, demand for electricity has been reduced significantly as the government was compelled to implement quarantine/lockdown measures to minimize the threat and spread of COVID-19. This has changed the lifestyle/working conditions as people are mostly staying and working from home. Thus, there was a significant increase in residential load demand while there was a substantial decrease in both commercial and industrial loads,” Devanadera said.
Apart from that, the ERC Chief said the pandemic confirmed the need to augment ERC’s workforce and to implement new working arrangements such as maintaining a skeletal force of 20% to 30%, make the Work-From-Home arrangement productive and devise an “n-1” system such that when an employee is directly exposed or tests COVID positive, no office is entirely paralyzed.
“It is also imperative and we saw the urgency for our agency to improve on our existing work processes through automation. This will enable the Commission to facilitate disposition of cases and access records/files remotely, especially during pandemic or force majeure events,” Devanadera said.
Technology became a critical tool in the discharge of the agency’s duties during the pandemic.
“Technology has played a huge part in the discharge of our duties during the pandemic which helped and enabled the agency to continue to achieve, and even surpassed, our performance targets. Our virtual Commission meetings and hearings could not have been made possible without the help of technology. We have learned to optimize the use of virtual platforms to keep the agency running and deliver what is expected of us,” Devanadera said.
She said agencies and companies should put in place business continuity plans in order to cope in times of pandemic or any force majeure event.
“A shift to the smart grid technology would be beneficial, especially during pandemic or other force majeure events as it reduces human interaction and would avert bill shock and power industry front liners from getting infected or hurt,” the official said. Nonetheless, Chair Devanadera emphasized that while shift to smart grid technology is ideal during this pandemic, such shift has a cost that is being considered and reviewed comprehensively by ERC.
“Our best resource is still the human resources who we need to give priority and we must use the other material resources within our reach.”
An Experienced Transformation Leader
Devanadera’s experience as a lawyer and public servant helped immensely when she was appointed to the agency.
“Yes, every bit of my previous experiences whether as Secretary of the Department of Justice, as Solicitor General, as Government Corporate Counsel, as Undersecretary of the Department of the Interior and Local Government, or as Mayor, really helped and contributed in running the ERC,” said Devanadera.
ERC is composed of professionals from various disciplines such as engineers, accountants, lawyers, economists which meant “different strokes for different folks,” she said.
“The overarching principle in managing an office that I always use as guide is the same: ‘putting people first.’ We cannot be wrong,” she said.
Now in her fourth year as ERC Chair, Devanadera describes her stay as “quite challenging” considering the technical aspect of the industry that it regulates.
“Likewise, I came at a very ‘interesting’ time when the agency was confronted with internal challenges borne out of the change in leadership. It was a time when ERC was at the limelight and it was being attacked left and right. I needed to allow some healing and boost the employees’ morale to get them back on track,” she said.
She said the ERC is a collegial body and thus she had to study the entire industry while presiding over Commission Meetings wherein decisions are arrived at, most of the time unanimously “but there are times that the only option left is just to agree to disagree.”
Aside from Devanadera, the other members of the commission are Alexis M. Lumbatan, Catherine P. Maceda, Floresinda G. Baldo-Digal and Marko Romeo L. Fuentes.
She said the current composition of the commission —three lawyers, a CPA and an economist—helped them perform well in their mandate.
“We have what we need to perform our mandate…We recognize each other’s expertise and we are committed to working together and using our expertise in serving the public,” she said.
The commission was able to achieve several milestones and accomplishments under Devanadera, such as the implementation of various rate reduction schemes for the Distribution Utilities (DUs) to implement, especially during the quarantine periods which were aimed to provide rate relief to the consuming public.
ERC reduced the system loss cap by P0.05 per kilowatt-hour (kWh); reduced Feed-In-Tariff Allowance (FIT-All) by P0.1731/kWh; directed the rate adjustment in the Net Settlement Surplus (NSS) equivalent to P1.94 billion; ordered the refund of Regulatory Reset Experts Cost equivalent to P318.8 million; lowered the Retail Competition and Open Access (RCOA) threshold to cover more consumers that will enjoy lower generation rates; ordered the refund of over-recoveries of 64 DUs amounting to P3.3 billion; ordered the refund of excess Market Transaction Fees (MTF) equivalent to P688 million; avoided rate increase (amounting to P95.4 million) due to the dismissal of Power Sector Assets and Liabilities Management Corp.’s (PSALM) applications for recovery of stranded debts and stranded contract costs pursuant to the Murang Kuryente Act; suspended the FIT-All and Universal Charge–Environmental Charge (UC-EC); and suspended the bill deposit adjustment.
“The Refund of Regulatory Reset Experts Cost amounting to P318.8 million is unprecedented because it was only during my leadership that the Commission agreed that this cost should be borne by the government and not to be passed on to the electricity consumers,” said Devanadera.
ERC also introduced the ERC Academy which aims to reinforce the continuous capacity building of the agency’s staff and update the electric power industry players, consumer advocates, and media practitioners who cover the energy industry on the new policy directions of the ERC.
The agency also forged a partnership with Fr. Joaquin G. Bernas Institute for Continuing Legal Education-Ateneo Law School.
At the same time, ERC signed a Memorandum of Agreement (MOA) with the Department of Justice–Office of Alternative Dispute Resolution (OADR).
The said partnership will promote, develop and expand the use of ADR to achieve a speedier resolution of disputes filed before the ERC.
“But what is giving me fulfillment internally is how we have motivated our people to be committed to our work and to care for one another. On the other hand, it is the ability of ERC to be able to reach out to the consumers during this pandemic to alleviate the difficulties brought about by the pandemic,” Devanadera said.
Balancing consumer interest
The Electric Power Industry Reform Act of 2001 (EPIRA) mandates the ERC to promote and protect consumer interests but regulators need to find a balance between addressing adequate and reliable power to meet future demand and consumer interest.
“In every rate case, the Commission ensures that the rates approved and charged/billed to the consumers are just and reasonable. Just and reasonable means the recovery of costs that are prudently incurred, and the right to earn a reasonable return on investment. Determining prudency of the cost of investment will ensure that there is no windfall to the detriment of consumers. On the other hand, the reasonable return will encourage future investments in the power sector that will ensure adequate supply in the future,” says Devanadera.
At the same time, Devanadera said energy transition (which focus on sustainability and clean energy agenda) has an attendant cost and it is the ERC’s mandate to determine the allowable costs in this transition period.
“The movement towards clean energy has attendant cost. One example is cost of ancillary services in relation to the increase in intermittent RE power plants. The ERC’s key role in this transition is to determine the allowable cost for such transition, as well as to put in place safeguards for consumers who wants to avail specific programs related to this transition,” she said.
ERC is also currently developing rules pertinent to clean or renewable energy. This year, ERC is targeting to come up with the following rules: Green Energy Option Program (GEOP), Renewable Portfolio Standards (RPS), Distributed Energy Resources (DER), Net-Metering for Off-grid, Amendment to Feed-In Tariff Allowance (FIT-All) Collection and Disbursement Guidelines.
Meanwhile, Devanadera said the transition to clean energy via the emerging Liquefied Natural Gas (LNG) industry does not need a separate regulator.
“There is no need for a separate regulator for the emerging LNG industry, as long as the mandates and delineation of duties of DOE and ERC will be clear,” said the energy official.
At the moment, Devanadera said the Department of Energy (DOE), through its Natural Gas Management Division (NGMD), undertakes the permitting tasks and ensures that the same does not bar or hinder the natural gas industry players who wish to set up natural gas facilities and infrastructure in the country.
The ERC is also actively participating in all efforts to provide the required framework for LNG.
Moving forward
ERC has lined up its priority projects for 2021 which include the Green Energy Auction Program (GEAP), Renewable Portfolio Standards (RPS), Natural Gas Regulatory Policies and Pricing, Ancillary Service (Policies and Rate Setting) and Distributed Energy Resources (DER).
ERC is also preparing for the post-COVID recovery of the energy sector through the development of necessary policies, rules, and guidelines that emerged as urgent seeing the effects of the COVID-19 pandemic on the Distribution Utilities and to the consuming public.
“Existing rules and policies are also being reviewed to ensure that they are apt for the ‘New Normal’ environment. Improvements on our work processes/systems are underway to ensure the delivery/achievement of our work targets with or without pandemic or any force majeure event,” said Devanadera.
Devanadera said there is also a need for a law that will strengthen the ERC to make it more responsive and cope with the demands and challenges of this dynamic electric power industry.
She said the agency also needs sufficient manpower complement to enable the agency to act swiftly on all applications, complaints, and policy directions lodged with the ERC.
With the end of her term on July 10 next year, Devanadera wants to implement projects that will further improve the organization and its role in the power sector.
“With the remaining 16 months that I have now, I will do my best to complete and implement the projects that I think are needed for the ERC to improve on the delivery of its services, such as the work process automation, facilitate the disposition of cases, especially those that are considered as `low-hanging fruits’, and most importantly, strengthen the agency in terms of implementing a reorganization that will allow adequate/sufficient number of employees in order to cope with the demands of the growing electric power industry,” she said.
Devanadera intends to rest “big time” with her husband and family, especially her grandchildren, spend more time in their farm and continue with being a “plantita” once she completes her term.
Asked about plans to return to the political life in Quezon province or even at the national level, Devanadera said she may just work behind the scenes.
“Considering that my two sons are now in politics [one is mayor and the other one is councilor], I think it will be best for me to just work behind the scenes and just provide professional advice when asked to,” she said.
Devanadera previously served as the Mayor of her hometown in Sampaloc, Quezon, National President of the League of Municipalities of the Philippines, and Undersecretary of Interior and Local Government.