Energy Regulatory Board Case Study

In 1987, Energy Regulatory Board (ERB) was established and mandated to have regulatory and adjudicatory functions on the energy sector of the country. However, according to Villamejor-Mendoza (2006), its functions on electric utilities were not mentioned since there was a provision under Section 12 of the 1987 Constitution which mandated ERB “to coordinate with DENR, NEA, NPC and other appropriate agencies in the exercise of its pertinent functions…in the field of energy”. Hence, the regulatory function of the electricity sector remained under NPC Board. In 1992, DOE Law (RA 7638) separated the regulatory and player/operator function of NPC and which transferred the former function to ERB. The enactment of this law boosted the participation

Both generation and supply are deregulated, transmission and distribution are regulated by the Energy Regulatory Commission (ERC). Other major entities involved in the privatization are the Department of Energy, the Joint Congressional Power Commission, the Power Sector Assets and Liabilities Management Corporation, and the National Transmission Corporation. (Meija, 2003). The DOE is in charged with the supervision of the restructuring in accordance to the EPIRA. This includes the development of policies for efficient supply and economical use of energy, the Philippine Development Program and incentives for investments. The agency is also responsible for the monitoring of the private sector activities for restructuring and modernization, encourage private bodies for further investments, and coordinate a public awareness campaign on the privatization of the electricity industry. An independent, quasi- judicial regulatory body, the ERC is assigned to monitor the activities of the participants in the industry to safeguard the interests of the consumers (Mejia, 2003). Considering that the transmission and distribution sectors are natural monopolies, the ERC functions as an independent regulator to

Firstly, the command and control regulation – as explained in the manual, this type of regulation is simply the enforcement of standards which if not met, have corresponding legal sanctions. These standards can be set by legislation or by regulators permitted by regulation to define rules. One of its disadvantages was its vulnerability to regulatory capture since cooperation between the regulator and regulated entity is required and thus, the close relationship between the two could lead to a “captured” relationship. Secondly, the self-regulation – also known as “DIY (do-it-yourself) command and control”. Under this type of regulation, state intervention is minimal and doesn’t require legislation since the private sector (business) develops its own rules of performance which are being enforced and monitored. High level of commitment and comprehensive nature of rules in businesses are the strengths of this type regulation. However, it is stated that, “self-regulation will always be open to challenge by outside interests who feel that the standards and rules are not primarily geared towards reducing the impacts of undesirable