THE Energy Regulatory Commission (ERC) has approved the application of Kepco SPC Power Corp. (KSPC) to “unbundle” or separate its different business segments.
“After due consideration of all evidence, as well as the technical evaluation of the instant application, the Commission, on 21 June 2018, deliberated and resolved to APPROVE KSPC’s BSUP (business separation and unbundling plan) subject to certain conditions and full compliance with the requirements of the BSG (business separation guidelines), as Amended,” the ERC said.
The decision, which was docketed last week, ordered KSPC to submit documents, including its accounting separation statements, management responsibility statement, and an auditor’s report on the separation statements.
KSPC, a joint venture of Kepco Philippines Holdings, Inc. and SPC Power Corp., has two business segments: generation of electricity and provision of ancillary services; and retail electricity supply services.
The joint venture in June 2005 started the construction of a 200-megawatt circulation fluidized bed combustion power plant in the City of Naga, Cebu. It undertook the whole construction, operation and maintenance of the plant, including fuel supply, among others without any government guarantees.
The company’s power generation covers the production of electricity while its ancillary service segment is needed to facilitate the orderly trading of electricity and ensuring that the supplied power is of an acceptable quality.
KSPC holds a retail electricity supplier (RES) license as approved by the ERC on Oct. 18, 2016. The license allows the company to sell electricity to the contestable market, or those whose consumption reached the set threshold. The RES business also includes energy trading in relation to the sale of electricity.
The issue for the commission’s resolution was whether KSPC’s proposed business separation and unbundling plan, and accounting and cost allocation manual meet the requirements of Republic Act 9136 or the Electric Power Industry Reform Act of 2001 and its implementing rules and regulations (IRR), and business separation guidelines issued by the ERC.
Section 36 of R.A. 9136 and Rule 10, Section 3(b) of the IRR require electric power industry participants to structurally and functionally unbundle their business activities, namely: power generation, transmission, distribution and supply. — Victor V. Saulon
