SC: Power supply deals submitted on or after June 30, 2015 must undergo bidding

All power supply agreements submitted by distribution utilities to the Energy Regulatory Commission (ERC) on or after June 30, 2015, must undergo the Competitive Selection Process (CSP), the Supreme Court has ruled.

The justices ruled the ERC committed grave abuse of discretion when it unilaterally postponed the effectivity of the CSP requirement for 305 days, an act they said the commission had no power to do, according to a Monday press statement from the Court's public information office.

The SC also ordered that the power purchase cost after compliance with CSP "shall retroact to the date of the effectivity of the PSA, but in no case earlier than 20 June 2015, for purposes of passing the purchase cost to the consumers."

The case stems from a petition filed by the Alyansa Para sa Bagong Pilipinas Inc. against the ERC, the Department of Energy (DOE), and several power distribution utilities, including Meralco, in 2016.

The petition sought a temporary restraining order against ERC resolutions that postponed the implementation of the requirement and the nullification of seven "midnight" deals Meralco allegedly entered into while the CSP requirement was not in effect.

CSP is a form of competitive public bidding for distribution companies' purchase of electricity. The DOE adopted it as a policy on June 30, 2015, to ensure transparency in the process of securing power supply contracts.

However, the ERC issued a resolution in October 2015 that, among others, set the cut-off date for compliance with the CSP requirement to Nov. 7, 2015. In March 2016, the commission issued another resolution postponing the effectivity of the CSP requirement to April 30, 2016.

While the CSP requirement was not effective, 90 power supply deals were submitted to the ERC, several of them having terms spanning more than 20 years, the SC said.

The petitioners claimed that the postponement allowed Meralco to "hurriedly sign" seven deals that will supposedly cost consumers P12.4 billion a year for 20 years.

"The ERC's delegated authority is limited to implementing or executive CSP in accordance with the 2015 DOE Circular, not postponing CSP so as to freeze CSP for at least 20 years, effectively suspending CSP for one entire generation of Filipinos," the ruling, penned by Senior Associate Justice Antonio Carpio, stated.

"The delegated authority to implement CSP does not include the authority to postpone or suspend CSP for 20 years, beyond the seven-year terms of office of the ERC Commissioners postponing or suspending the CSP, and beyond the seven-year terms of office of their next successors, as well as beyond the six-year terms of office of three Presidents of the Republic," it added.

Sought for clarification, Court spokesman Brian Keith Hosaka explained that the High Court did not void the power supply deals but required that they undergo CSP.

Eleven justices voted in favor of the petition: Chief Justice Lucas Bersamin, Carpio, and Associate Justices Diosdado Peralta, Mariano Del Castillo, Estela Perlas-Bernabe, Marvic Leonen, Jose Reyes, Jr., Ramon Paul Hernando, Rosmari Carandang, Amy Lazaro-Javier, and Associate Justice Alexander Gesmundo, who, while on official travel at the time, left a vote for Carpio's ponencia.

Two voted against it — Associate Justices Alfredo Benjamin Caguioa and Andres Reyes, Jr. —  and Associate Justice Francis Jardeleza abstained. —KBK, GMA News