The Energy Regulatory Commission (ERC) has issued 24 show-cause orders against 13 generation companies (gencos) whose generating units were found to have exceeded allowable limits for equivalent unplanned outages, as the Philippine regulator steps up scrutiny amid tight electricity supply in the Visayas and Mindanao.

In a statement on Wednesday, the ERC said the orders, issued on Oct. 14, direct the companies to submit verified explanations for their reported noncompliance with applicable reliability performance standards. The move forms part of the commission's assessment of power plant outages amid concerns over recurring supply disruptions and elevated electricity prices, particularly in the Visayas and Mindanao.

The action follows a June 11 enforcement round in which the ERC issued notices of noncompliance, with orders to comply and explain, to 25 gencos, covering outage events involving 48 generating units. The commission subsequently reviewed the outage records, explanations, and supporting documents submitted by those companies against the applicable reliability standards and the allowable outage limits for each generating unit and assessment period. Show-cause orders were then issued to companies whose units were determined to have surpassed the prescribed equivalent unplanned outage limits. The October orders thus mark the next stage of the same enforcement effort, giving the named companies a formal opportunity to explain their outage records before the commission decides whether penalties are warranted.

Companies Covered by the Orders

The firms named include subsidiaries and affiliates of major energy players Aboitiz Power Corp. (AboitizPower), First Gen Corp., Manila Electric Co. (Meralco), and Vivant Corp. Among those ordered to explain are AboitizPower subsidiaries Therma Mobile, Inc., Therma Visayas, Inc., and Cleanenergy 9 Power, Inc., as well as Lopez-led Energy Development Corp. and its subsidiary Bac-Man Geothermal, Inc.

The list also covers Meralco PowerGen Corp.'s (MGEN) Toledo Power Co., Inc. and Excellent Energy Resources, Inc. — the latter part of the LNGPH consortium — along with Vivant's Meridian Power, Inc. (MPI). Others identified were Belgrove Power Corp., Central Azucarera de San Antonio, Inc., Republic Cement & Building Materials, Inc., SPC Island Power Corp., and Sunwest Water & Electric Company 2, Inc.

Company Responses

MGEN, LNGPH, and MPI confirmed receiving the orders and said they would submit their respective responses within the prescribed period. LNGPH said its gas-fired power plant in Batangas resumed operations in March and is now fully operational.

"We are already preparing our response to the ERC explaining the circumstances surrounding the outages, which were necessary to ensure the safe and reliable operation of these units and their continued contribution to the region's energy requirements while also supporting grid stability," MGEN Thermal President and Chief Executive Officer Arnel L. Santos said.

MPI likewise confirmed receipt of the ERC order and said it would respond within the period set by the regulator.

"We are finalizing our reply and, out of respect for the process, will not comment further until the Commission has received and considered it," the company said.

Penalties and Due Process

The ERC said it had yet to receive the verified responses required under the latest orders and will evaluate the additional submissions and supporting documents before resolving the cases. Appropriate penalties will be imposed if violations of the prescribed reliability performance standards are established, the regulator said, adding that enforcement proceedings must observe due process, with any penalties supported by evidence and grounded in applicable regulatory standards. Once filed, those responses will form the basis for the commission's resolution of the cases — the step at which any penalties would be decided, and the immediate development to watch as the process advances.

Revised Outage Limits

In July, the ERC adopted revised rules on the reliability performance indices and equivalent unplanned outage days per year for generating units to strengthen outage monitoring and encourage better maintenance planning. Under the revised standards, generating units using pulverized coal technology are allowed up to 32.15 equivalent unplanned outage days annually, while those using circulating fluidized bed technology have a limit of 27.32 days. Combined-cycle plants have an allowable limit of 14.35 days, gas turbines 26.92 days, diesel plants 21.09 days, and geothermal plants 22.98 days. The limits for conventional hydroelectric plants, oil-fired thermal plants, and biomass facilities are 12.72 days, 37.03 days, and 32.06 days, respectively.

ERC Chairperson and Chief Executive Officer Francis Saturnino C. Juan said the commission used the 2020 reliability standards when it issued the initial notices of noncompliance and subsequently applied the 2026 reliability indices in evaluating the companies' responses. In practice, that places each case under two versions of the benchmark: the notices that opened the process were issued under the 2020 standards, while the explanations now being prepared will be judged using the 2026 indices.

"The ERC continues to monitor the reliability performance of generating facilities and prevailing grid conditions to ensure compliance with regulatory requirements and address concerns affecting electricity supply," the regulator said.

Strained Grids

The Visayas and Mindanao grids have repeatedly been placed under red and yellow alerts this year amid insufficient generation capacity and tight operating reserves, driven partly by power plant outages. Since the start of the year, the two grids have recorded a combined 149 yellow alerts and 57 red alerts following the shutdown of generating units.

This article was reported by Sheldeen Joy Talavera for BusinessWorld.