ERC defies OSG, files comment on pleas vs. Meralco power rate hike

Defying the Office of the Solicitor General's position to be silent on the issue, the Energy Regulatory Commission (ERC) filed a comment on a consolidated petition contesting the legality of Meralco's P4.15 per kilowatt-hour power rate hike.

The comment was filed Wednesday, a day before the Supreme Court denied the OSG's motion that aims to distance the government from the legal battle involving the power rate hike.

In a comment submitted to the high court, the ERC, which green-lighted the power rate hike last month, said it is already investigating allegations of supposed anti-competition behavior in the wholesale electricity spot market (WESM).

The ERC said while it agreed with OSG's position to keep silent on the issue, it still decided to file a comment.

“The ERC noted that the issues elevated before the Supreme Court are constituional in nature and delved on the adjustment mechanism utilized by the ERC in the normal approval of the generation cost component of the electricity retail rate,” the ERC said.

“An adverse decision thereon will have an impact on the ERC's determination and current processes and affect consumers at large who are the ultimate payers of the generation charges pertaining to the electricity consumed,” it added.

Nominal parties

In a motion filed with the SC last January 2, the OSG, as the government's lawyer representing ERC and the Department of Energy, said it is the government's position to no longer participate in the SC oral arguments on the power rate hike issue.

The OSG insisted that the DOE and the ERC are considered “nominal parties” in the case and should no longer be required to file a comment. It added that only Meralco, as a private company, should be required to actively participate in the debate.

On Thursday, the SC denied the OSG's motion and still required the DOE and the ERC to file a comment before January 17, as well as to attend oral arguments on January 21.

The ERC filed its comment on Wednesday, a day before the SC order requiring the government to submit a formal comment on the issue.

AGRA Rules

In its comment, the ERC stressed that its approval of Meralco's request to enforce a staggered power rate hike had a legal basis under the Automatic Generation Rate Adjustment (AGRA) Rules.

“It must be noted that the Agra Rules... stand as good and valid law upon which ERC can lawfully anchor its action of giving such clearance to Meralco.

The ERC also opposed the petitioners' appeal to the SC to declare Section 6 and 29 of the Electric Power Industry Reform Act (EPIRA) as unconstitutional. The two sections of the law state that prices charged by generation companies and electricty suppliers are not subjected to ERC regulation.

Section 6 states: “Upon implementation of retail competition and open access, the prices charged by a generation company for the supply of electricity shall not be subject to regulation by the ERC except as otherwise provided in this Act.”

Section 29, meanwhile, states: “The prices to be charged by suppliers for the supply of electricity to the contestable market shall not be subject to regulation by the ERC.”

Not the sole legal remedy

In its comment, the ERC insisted that the declaration of Section 6 and 29 as unconstitutional “is not the only legal remedy available to address the alleged anti-competitive behavior committed by the generation companies.”

The ERC cited Section 45 of the EPIRA, which empowers the ERC to monitor and penalize any market power abuse or anti-competitive or discriminatory act or behavior by any participant in the electric power industry.

“In fact, towards this end, Respondent ERC is now conducting its investigation of the possible anti-competitive behavior in the wholesale electricity spot market based on the ERC Competition Rules and Complaint Procedures,” the ERC said.

“Hence the declaration of the nullity and constitutionality of Section 6 and Section 29 will not provide the requisite redress petitioners are seeking for,” it added.

The ERC said a “full and complete” determination of issues on the validity of Meralco's generation charge for its December 2013 billing can be solved independently from the issue of the purported constitutional infirmity of Section 6 and 29 of the EPIRA.

Rigorous evaluation

The ERC also belied the petitioners accusation that it had failed in its regulatory functions when it granted clearance to Meralco's staggered power rate hike.

“The generation component of the retail rate has been subjected to rigorous evaluation when Meralco's power supply agreements were heard by the ERC in a full-dress hearing in the same manner it has done in all power supply agreements filed by other distribution utilities assiduously studied and thereafter approved by the ERC,” the ERC said.

“Needless to state, trifling with the regulatory framework that has been put in place by EPIRA for the past 10 years may result to (sic) severe consequences both from the macro and micro perspective of the whole industry, considering that the overall framework of EPIRA encompasses the interest not only of the consumers but also of those who will be responsible for the creation of capital in developing econony like the Philippines,” it added.  

Consolidated petitions

The consolidated petitions questioning Meralco's power rate hike were filed by a group of party-list lawmakers from Bayan Muna, Gabriela Women's Party, and Act Teachers, and from the National Association of Electricity Consumers for Reforms (Nasecore) and the Federation of Las Piñas Homeowners Association.

The petitions stemmed from Meralco's plan to increase – on staggered basis – electricity rates by P4.15 per kilowatt-hour, citing the maintenance shutdown of the Malampaya natural gas platform from November 10 to December 11.

Meralco claimed it was forced to buy expensive electricity from the Wholesale Electricity Spot Market to meet the 2,700-megawatt deficit for peak load demand of Luzon.

The increase was supposed to have been divided into three tranches consisting of a P2 raise last December, P1 in February, and P0.44 in March, along with the corresponding taxes and service charges. — KBK, GMA News