SC grants consumer group partial win vs. Meralco in lowering electricity rates

The Supreme Court has ordered the Energy Regulatory Commission (ERC) to determine the valuation of the Manila Electric Company’s (Meralco) regulatory asset base so it can provide consumers with electricity at lower rates.

In a decision reached during their en banc session Tuesday, the justices “voided the [ERC’s] adoption of the current or replacement cost in the valuation of Meralco’s regulatory asset base,” the SC PIO said.

The decision partially grants a petition by the National Association of Electricity Consumers for Reforms Inc. (NASECORE) that challenged a 2016 Court of Appeals (CA) decision affirming the ERC orders that made final Meralco’s approved unbundled rates.

“The Court held that ERC’s order was in violation of its statutory mandate to approve rates that will provide electricity to consumers “in the least cost manner’,” the SC PIO said in a statement.

“Thus, it remanded to ERC the case for determination of a reasonable and fair valuation of the regulatory asset base that will provide electricity to consumers ‘in the least cost manner’,” it added.

Senior Associate Justice Antonio Carpio penned the decision, a copy of which was not immediately available. The SC PIO did not disclose how the magistrates voted.

In partially granting NASECORE’s petition, the SC found that the ERC failed to “properly consider” the findings by the Commission on Audit (COA) of Meralco’s “excess revenues” or “over-recovery.”

The commission also failed to keep its legal mandate under the ERC Charter to approve a power rate that provides consumers with the least cost of electricity, the tribunal ruled.

Republic Act No. 9136, or the Electric Power Industry Reform Act (EPIRA), took effect in 2001. The law required all electric distribution utilities to apply for the unbundling of electricity rates approved by the ERC, the commission created by EPIRA.

Meralco filed an application for the approval of its unbundled rates, appraisal of its properties, and a proposed of P1.1228/kWh increase in electricity rates, according to the CA decision.

The ERC approved it in 2003, but the CA ordered in 2004 that the commission first audit Meralco’s books, records, and accounts before the ERC could fix the rates for Meralco. In 2006, the SC ordered the ERC to request for a COA audit of Meralco.

State auditors did the audit and submitted a report to the ERC in 2009. Two years later, the ERC made final Meralco’s unbundled rates that it had earlier approved.

NASECORE challenged this in court, claiming that the ERC erred by disregarding COA’s findings that Meralco’s operating expenses, including employees’ pension and other benefits, should not be passed on to consumers.

But the CA affirmed the ERC orders, prompting NASECORE to go to the SC, which has now partially granted its petition. —VDS, GMA News