Professionalism and the ERC

So complex and demanding are the functions and responsibilities of the Energy Regulatory Commission (ERC) that the law that created it pegged its members’ compensation at the same level as that of justices of the Supreme Court. Every section of Republic Act No. 9136, known as the Electric Power Industry Reform Act of 2001 (Epira), squarely puts the burden of protecting the interest of consumers and ensuring competitiveness in a deregulated industry on the shoulders of the 5-member commission.

The Epira is a tough read for a nonspecialist.  One can only imagine what it would take for the commission that is charged with its implementation to properly discharge its function. It is difficult to find a comparable agency of government that demands of its top officials a working familiarity not just with the law but also with energy economics, science, finance, accounting, engineering, and regulation theory. Indeed, experts may be hired to supply the needed technical knowledge. But, without an operational grasp of the kind of issues that are submitted to them, how will the commissioners make sense of expert inputs or assess their relative value?

Yet, what is astonishing is that while it is clearly aware of the complexity of the task, the law is phrased in such a way that it demands so little of the ERC officials in terms of qualifications. Section 38 states: “The Commission shall be composed of a Chairman and four (4) members to be appointed by the President of the Philippines. The Chairman and the members of the Commission shall be natural-born citizens and residents of the Philippines, persons of good moral character, at least thirty-five (35) years of age, and of recognized competence in any of the following fields: energy, law, economics, finance, commerce, or engineering, with at least three (3) years actual and distinguished experience in their respective fields of expertise: Provided, That out of the four (4) members of the Commission, at least one (1) shall be a member of the Philippine Bar with at least ten (10) years experience in the active practice of law, and one (1) shall be a certified public accountant with at least ten (10) years experience in active practice.”

The crucial criteria, I believe, are “recognized competence” and “actual and distinguished experience in their respective fields of expertise.”  But how are competence and distinguished experience in a given field to be measured? The law is silent and leaves the selection entirely to the President’s discretion. There is no Judicial Bar Council to do the screening, as in the case of Supreme Court justices. ERC appointments are not subject to confirmation by the Commission on Appointments, unlike those for constitutional commissions like the Civil Service Commission and the Commission on Audit.

The current chair and chief executive officer of the ERC, Zenaida Cruz-Ducut, is a lawyer and a former representative of the second district of Pampanga. She was appointed to that position by then President Gloria Macapagal-Arroyo, who now occupies the same congressional seat. Given the enormity of her responsibilities, it is fair to ask in which field of expertise Ducut can claim “recognized competence” and “distinguished experience.” Nothing in her professional background, prior to her appointment as ERC chair and CEO, suggests that she had any experience in energy-related matters.

Yet, in resisting the growing clamor for her resignation, Ducut has the gall to seek refuge in the law. “While I speak for the entire ERC as its chairperson and CEO, our decisions are ‘collegial’ and are based on law and regulations and not on my sole discretion, as some detractors would like the public to believe,” she said. “The professionalism and reputation of the entire ERC organization is at stake here and I will not abandon but will lead my people to what is proper and appropriate.”

I argue that what undermines the professional credibility of any autonomous regulatory agency of government in the first instance is the appointment to it of individuals who seem to have only the slightest notion of what their job entails. Moreover, if the idea is to depoliticize the energy sector, isn’t it a mistake to appoint a politician to head such a sensitive body?

But, what else is new? This was how Arroyo ran the government. She took care of people like Ducut who were loyal to her, even if this meant disrespecting institutions. Her cynicism about government was matched only by the shameless self-assurance of many of those she appointed, particularly during her second term—people who had no qualms about filling up positions that were plainly too big for them.

“People have to understand,” Ducut said in defending herself, “that the task relegated to us is very complex as it is data-intensive. There are thousands of hours of trading intervals and price offers that need to be examined by the ERC-IU members.” I think there has never been any doubt about the complexity of the work that the ERC was assigned by law to perform. It is not only data-intensive but also knowledge-intensive. Above all, it demands wisdom and professional vigilance of the highest order.

Perhaps it’s not surprising that people like Ducut would take on this cushy job without thinking or worrying that it might be totally beyond their ken. Indeed, many in that position avoid doing anything controversial, in the hope that they may comfortably retire eventually without anyone noticing their unfitness for their office. But, crises do have a way of bringing such realities to light so they won’t be replicated.

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