Philippines
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SC asked to reconsider ruling favoring
Meralco in electricity rate adjustments
SC asked to reconsider ruling favoring Meralco in electricity rate adjustments
The Supreme Court (SC) was asked to reconsider its decision that affirmed the ruling of the Energy Regulatory Commission (ERC) which allowed the Manila Electric Company’s (Meralco) request for a staggered collection of automatic rate adjustments arising from increased generation costs for November 2013.
More than P22.6 billion in recovery costs were expected to be collected by Meralco from its electricity consumers.
In a motion for reconsideration filed on Wednesday, July 20, the SC was told its Aug. 3, 2021 decision that affirmed the ERC’s order issued on Dec. 5, 2013 was not for the interest and protection of consumers despite not compelling them to pay the adjustments in just one bill.
“The Majority (of the SC justices) did not see anything wrong with how the ERC exercised (or failed to exercise) its powers,” the motion stated.
It also told the SC: “But how about the consumers who will be forced to shoulder the rate hike, which is the highest recorded pass-on charge in Philippine history, and which atrocious amount was a result of anti-competitive behavior, ineptness, and irregularities? What about the State policy of consumer protection and regulation of monopolies for the public good? From where we sit, the consumers do not feel that its interests are being protected and promoted.”
The motion was filed by representatives of Party-List groups Bayan Muna, Gabriela Women’s Party, ACT Teachers Party-list and Kabataan Party-list; and the National Association of Electricity Consumers for Reforms (Nasecore), Federation of Village Associations (FOVA) and Federation of Las Pinas Homeowners Association (FOLPHA).
Case records showed that in a letter dated Dec. 5, 2013, Meralco informed ERC that the total cost of generation to be passed on to its almost five million captive customers amounted to P22.64 billion, equivalent to a generation charge for December 2013 billing of P9.1070 per kilowatt hour (kwh), or an increase of P3.44 from the P5.67 per kwh.
Meralco told the ERC that the increase, one of the highest, would be P4.15 per kwh for residential customers.
The petitioners in the SC case said that request was immediately granted by the ERC without investigating first the generation rate despite reported irregularities. Thus, they said the haste by which the request was granted deprived them the opportunity to oppose or protest.
“ERC utterly failed in its duty to promote the interest of the consumers. Its actions point to dereliction of duty in the face of the blatantly irregular Meralco letter. This dereliction of duty greatly prejudiced the public good and destroyed the trust and respect of the people in our regulators and institutions,” they lamented.
Meralco said the sudden increase in the generation cost was due to the maintenance shutdown of the Malampaya facility that supplies natural gas to three major power plants -- Ilijan, San Lorenzo and Sta Rita -- which supply an aggregate capacity of 2700 megawatts of electricity to its franchise area.
Unfortunately, Meralco also said the Malampaya shutdown coincided with the scheduled maintenance of two other plants -- Pagbilao 2 and Sual 1 -- which contribute over 950 megawatts to its needs.
The incidents forced Meralco to buy expensive power from the Wholesale Electricity Spot Market (WESM), it added.
On March 3, 2014 ERC ordered a regulated prices in WESM for the supply months of November and December 2013 to ensure competitive market environment among power generation companies (GenCos) and to safeguard the interest of the consuming public.
It said its order was in line with its mandate under the Electric Power Industry Reform Act of 2001 (EPIRA) to protect public interest by not allowing excessive and unreasonable prices of electricity during the period of Malampaya shutdown.
It also said the order was issued at the time it was investigating the alleged collusion among GenCos to manipulate prices of electricity in the spot market during the shutdown of Malampaya gas facility in 2013.
The ERC order was nullified by the SC in its decision. The SC said the ERC order was issued even if the power regulator was still in the process of completing its findings on the possible abuse of market power which could have negatively impacted on the prices of electricity in the market.