The Department of Energy (DOE) is currently looking into this week's red alert issuances. To this end, we have been actively meeting with the electric power industry participants to ensure that the underlying issues surrounding the red alerts are effectively addressed by the entire energy family at the soonest.
We have put into action several immediate remedial solutions to demonstrate the DOE's firm commitment to protect electricity consumers from the adverse effects of red alerts. Aside from looking into the reasons for the unplanned outages and the spikes in electricity spot market prices, DOE is also undertaking a review of "replacement power" and “outage allowance” provisions in existing Power Supply Agreements (PSAs) between Generation Companies (GenCos) and Distribution Utilities (DUs) to ensure their proper implementation.
The DOE recognizes, however, that short-term answers are not enough. Thus, we are taking a holistic approach that focuses on the establishment of institutional solutions that would benefit consumers in the long run.
Among these are the continuing implementation of the Retail Competition and Open Access (RCOA) which is currently subject to a Temporary Restraining Order by the Supreme Court, the creation of a "forward market", as well as the thorough evaluation of current market price caps. These mechanisms were provided for under Republic Act No. 9136, or the Electric Power Industry Reform Act of 2001 to facilitate market competition that would provide consumers with a reliable power supply at the least cost.
The DOE fully intends to pursue these policy directions to create permanent solutions to the otherwise temporary, yet recurring challenge of red alerts. In this regard, we are calling on the cooperation of all our industry participants and stakeholders for the mutual benefit of everyone.
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