The Heads of ASEAN Power Utilities and Authorities (HAPUA), in collaboration with Tenaga Nasional Brighter (TNB) and Yayasan Canselor UNITEN (YCU), successfully held an exclusive webinar with the title “Dispute Settlement Leading Practice: Introduction to Energy Arbitration in the Philippines.” The webinar was held virtually on 4 April 2024 and drew over 140 participants to discuss energy arbitration in the Philippines, particularly in the electricity sector, as energy prices change. 

Photo 1. Poster for the HAPUA Working Group 5 Webinar Dispute Settlement Leading Practice. 

The two-hour webinar attracted participants from ASEAN countries, including HAPUA members, government institutions, private companies, industries, academia, and researchers. Prof. Ir. Ts. Dr. Tiong Sieh Kiong, Director Institute of Sustainable Energy, Universiti Tenaga Nasional (UNITEN), served as the webinar’s master of ceremonies. The presentation section was expert-led, followed by a panel discussion with the speaker and moderator. 

Akbar Dwi Wahyono, Research Analyst at the ASEAN Centre for Energy (ACE), began the webinar with opening remarks and a brief introduction. Attr. Engr. Jesusito Morallos, Chairman of the Rules Change Committee (RCC) for the Wholesale Electricity Spot Market (WESM), spoke about Energy Arbitration in the Philippines. 

Jesusito G. Morallos presented Dispute Settlement Leading Practice Energy Arbitration in the Philippines, focusing closely on electricity across the energy value chain. The speaker specifically addressed the two-fold characteristics of WESM Rules in the Philippine electricity market. Regulatory policies and market transactions affect energy arbitration. It is important to point out that the priority of managing dispute risks is instrumental in making sure that the energy value chain operates efficiently. The focus should be on regulatory requirements and contractual obligations.

Practical examples and case studies were offered to demonstrate the usefulness of arbitration in resolving disputes throughout the energy value chain. The discussion emphasised the importance of a strong dispute resolution mechanism in ensuring energy market stability and efficiency, and it provided examples of how arbitration can effectively address challenges arising from contractual arbitration “breach” of regulatory policies in two scenarios: violation cases and inter-party disputes. 

The discussion concerning semantic breach in relation to the ERC-PMC Protocol on the Jurisdiction of WESM Rules describes the value of the notion in terms of the settlement of conflicts. More explicitly, this topic describes how semantic breaches result in violations of the WESM Rules and, consequently, in the dispute that may be addressed through decision-makers, whose appeals and reviews are highlighted. Moreover, the topic advocates arbitration as the optimal conflict settlement approach due to its economic aspect and absence of regulatory scrutiny. It is noted that arbitration is better suited to the changing demands of the electrical market and is a more efficient, flexible, and economically viable approach to dispute resolution.  

The webinar discussed arbitration methods in the WESM Rules. WESM rules are specific to different aspects depending on the specifics of energy market areas, such as disputes between parties in contracts (contractual disputes) and regulatory regulations. The analysis attempted to explore the need to differentiate between commercial and regulatory disputes in their resolution, focusing on how arbitration frameworks guarantee “party autonomy” principles based on compliance issues.

The webinar discussed arbitration methods in the WESM Rules. WESM rules are specific to different aspects depending on the specifics of energy market areas, such as disputes between parties in contracts (contractual disputes) and regulatory regulations. The analysis attempted to explore the need to differentiate between commercial and regulatory disputes in their resolution, focusing on how arbitration frameworks guarantee “party autonomy” principles based on compliance issues. 

Several alternative perspectives on energy dispute resolution frameworks were offered, centred on the question of “Party Autonomy” and the utilisation of arbitration instruments within the energy value chains. However, a narrative of arbitration processes and the differences in arbitration processes in specific energy market regions were given to demonstrate the necessity of the developed dispute resolution frameworks. Morallos gave examples that showed the arbitration processes of energy disputes are beneficial, especially in the power generating, transmission, and distribution sectors. In this sense, the salient role of arbitration as a tool for mitigating fair conflict and ensuring the parties expeditiously solve their disagreements for a fraction of the cost was emphasised. 

The webinar discussed various arbitration modes suitable for all energy sectors, including power generation, transmission, distribution, and renewable energy. The topic has provided background on various arbitration modes in line with the nature of the conflict and the parties involved. There has also been an emphasis on the need for flexibility and adaptability in energy dispute resolution. It has thus focused on a combination of best practices and new ideas aimed at enhancing efficiency in the arbitration process. The presentation has thus promoted the philosophy of sustainability and development in the energy sector, particularly in the Philippines.  

Photo 2. Akbar Dwi Wahyono of ACE moderated the Panel Discussion and invited Jesusito G. Morallos of WESM Philippines. 

Before closing remarks, Akbar facilitated the panel discussion that invited Morallos to answer participants’ questions. During the discussion, it was emphasised that strong dispute settlement procedures are crucial for successful efforts to integrate regional markets, including ASEAN. The use of arbitration frameworks, such as the New York Convention, is essential to offering a highly established system that is adaptable to variations in local juridical systems. Lastly, it was mentioned that HAPUA is making an attempt towards the development of a highly cohesive arbitration system model that will retain consistency while preserving the sovereignty of the member states. Furthermore, the discussion focused on why arbitration is preferable to regulatory adjudication for settling disputes within the Wholesale Electricity Spot Market (WESM). The discussion also emphasised how crucial it is to ensure fair arbitration proceedings and that parties fulfil their contractual duties, both of which are in perfect harmony with WESM’s independent governance framework.

In essence, the webinar stated the critical role of effective dispute resolution systems in ensuring the sustainability of energy projects and promoting equity in the market. By fostering cooperation and coordination between regulators and utilities, stakeholders may effectively manage disputes while maintaining access to essential energy commodities, including electricity.