The Court of Appeals (CA) has upheld the decision of the Energy Regulatory Commission (ERC) mandating the state-run National Power Corp. (NPC) to grant P0.80 per kilowatt hour (kWh) discount to big-ticket customer Cathay Pacific Steel Corp. (Capasco).

The ruling also benefits many other big industrial customers of NPC and Manila Electric Company (Meralco) that are qualified to avail of the government’s Special Program to Enhance Electricity Demand (SPEED).

It was noted that power-intensive industries, such as cement, glass, and semiconductor firms, are among those that may gain more leverage if they decide to avail of the program.

SPEED is a pricing incentive aimed at stimulating electricity demand and optimizing utilization of the existing power plants by offering discounts to qualified industrial customers on their incremental consumption of power above the customer baseline load (CBL).

The adoption of SPEED was in response to President Arroyo’s directive in her State-of-the-Nation Address in July 2002 to give price incentives to large users in a bid to utilize excess power, encourage economic activity and create more jobs.

In a 20-page decision penned by Associate Justice Ramon G. Garcia and concurred in by Associate Justices Rosmari D. Carandang and Manuel M. Barrios, the CA’s Tenth Division dismissed the petition for certiorari with application for a temporary restraining order and writ of preliminary injunction filed by NPC.

The appellate court ruled that it did not find any grave abuse of discretion on the part of ERC when it issued its questioned orders dated December 19, 2006 and May 18, 2009.

The ERC, in its 2006 order, directed NPC to grant Capasco an 80-centavo discount for its energy consumption in line with the SPEED Implementing Rules and Regulations. While in its 2009 directive, the commission ordered NPC to immediately refund Capasco some P24.63 million representing its SPEED discount from October 2002 to July 2003.

In dismissing the NPC petition, the CA pointed out that “courts will not interfere in matters which are addressed to the sound discretion of the government agency entrusted with the regulation of activities coming under the special and technical training and knowledge of such agency.”

“Administrative agencies are given wide latitude in the evaluation of evidence and in the exercise of their adjudicative functions, latitude which includes the authority to take judicial notice of facts within their special competence,” it added.

On October 11, 2002, the ERC issued an order authorizing NPC to implement the SPEED and grant discounts to qualified customers in the amount of P0.80 in Luzon, P0.70 in Cebu and Negros, and P0.10 in Mindanao.

In April 2003, NPC filed a motion seeking an adjusted discount rate of P0.50 per kWh for power-intensive and distressed industries in the LuzonGrid and a zero discount rate for Cebu-Negros and Mindanao Grids. The power distributor contended that while it recognizes the objectives of SPEED, it is also imperative to safeguard its financial viability to sustain its operations.

The ERC, in an order dated September 4, 2003, granted NPC’s motion and the new discount rates shall take effect during the October 2003 billing month.

Meanwhile, on April 10, 2003, NPC, National Transmission Corp. (Transco) and Meralco entered into a tripartite agreement relative to the implementation of SPEED.

The said agreement provides, among others, Meralco will apply for authority from ERC to implement its SPEED-rider, a counterpart measure designed to pass on the rebates in NPC and Transco SPEED rates, and that Meralco will provide NPC and Transco an initial list of eligible customers for Phase 1 and 2 of the program.

The list shall consist of customers which registered a billing demand of at least 1,000 kilowatts or 500 kilowatts, at least from July 2001 to June 2002.

However, in September 2003, ERC ordered NPC to explain why no administrative or criminal sanctions should be imposed upon it for granting a discount of only P0.50 per kWh to some qualified customers in Luzon instead of R0.80.

In its compliance dated November 3, 2003, NPC explained that although it was authorized to immediately implement SPEED by virtue of the October 11, 2002, there were no customers that availed of the discount until January 2003 and there was also a need for it to evaluate the CBL for certain periods.

NPC nevertheless assured ERC that the implementation of the discount rate as authorized by the commission shall be made retroactively once the validations of the CBL of eligible customers have been finalized.