Court halts PEZA power rule

BY MARIA KRISTINA C. CONTI/BUSINESSWORLD A PASIG COURT HAS BARRED the Philippine Economic Zone Authority (PEZA) from regulating electricity use in areas in its ambit, saying power supply might be disrupted if distributors fail to comply with new and disputed rules. In a six-page order dated November 21, 2007, Pasig RTC Branch 71 Judge Franco T. Falcon granted petitioners Manila Electric Co. (Meralco) and the Private Electric Power Operators Association, Inc. (PEPOA) an injunction against rules which allow the PEZA to control and regulate bilateral power supply contracts. The Energy Regulatory Commission (ERC) says this power is its sole prerogative, granted under the 2001 Electric Power Industry Reform Act (EPIRA). ERC Chairman Rodolfo T. Albano, Jr., in a recent interview, said "The authority in the EPIRA is for exclusive jurisdiction of the ERC as far as rates are concerned." Judge Falcon wrote, "PEZA is already poised to implement the questioned guidelines at anytime since they are already effective as of September 24. Since the guidelines are presently being questioned in the main case, it is impossible to expect Meralco and PEPOA to comply with the same, exposing them to the penal provisions." The PEZA claims the 1995 Special Economic Zone Act gives it authority over all utilities within its jurisdiction. On August 21, 2007, the PEZA board endorsed two resolutions, numbered 07-393 and 07-394, which requires all power suppliers and all power users to register with the authority. PEZA director general Lilia B. de Lima, in accompanying notes, said the exercise "will bring about desired changes in the power supply industry which are critical in promoting national competitiveness." The rules will affect PEZA’s 847 locators in about 1,000 ecozone projects. Despite the court ruling, PEZA Deputy Director for Policy and Planning Jesus S. Sirios told BusinessWorld the agency hopes to give locators the power to choose soon. "Giving locators the choice is giving them the means to lower their electricity rates," he said. "The rules will establish open competition and open access in PEZA, and the price is something that can be affected by market forces.," he added. Meralco and PEPOA claimed in their appeal that the PEZA’s accomplishing this function clashes directly with what the ERC does. Meralco Vice-President for Utility Economics Ivanna G. dela Peña said, "We’re glad that they (the court) granted it (an injunction). We want to be sure the regulator is still ERC because that is what the law says." Ms. dela Peña, in a recent forum, called the case "the rumblings of instability in the regulatory environment". In a paper submitted to Congress on EPIRA amendments, Meralco said consumers, suppliers and utilities will have to face two potentially conflicting regulations if the PEZA is given power to set rates independent of the ERC. The injunction upholds the status quo — the ERC will still regulate PEZA-based power utilities until the case is finally decided. The court has ordered PEZA to reply within 10 days and Meralco to pay a bond of P30 million.