ERC, SBMA clash over regulation of power rates in Subic Freeport

The rift between the Energy Regulatory Commission (ERC) and the Subic Bay Metropolitan Authority (SBMA) widens as both parties claim authority to regulate the rates being charged by distribution utilities within the Subic Bay Freeport Zone (SBFZ).

ERC chairman Manuel Sanchez told reporters yesterday that the commission "may even call Aboitiz Equity Ventures (AEV) liable for operating in the said special zone without securing necessary certificate of compliance (COC) with the ERC". "We can question Aboitiz Ventures for violating the law," he said.

SBMA has forged an agreement on May 15 with AEV for the privatization of the power distribution system in the SBFZ under a rehabilitate-operate-transfer (ROT) scheme. AEV, in joint venture with its subsidiary Davao Light & Power Corp., will spend over P350 million in the next five years for the rehabilitation of the system.

"The jurisdictional issue will be a battle of interpretation of laws," Sanchez said. "But I am confident that ERC’s stand is anchored on legal grounds."

In a press statement, SBMA said the power and authority to regulate the electric distribution utility within the SBFZ was not repealed by Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001, despite claims from the ERC.

SBMA said it was created and governed by a special law, RA 7227, which vested in the SBMA the power to regulate utilities within the SBFZ.

According to SBMA, it was able to secure a legal opinion from the Office of the Government Corporate Counsel (OGCC) which confirmed the power of SBMA to regulate, own, lease, and operate Subic Bay Freeport utilities.

"In sum, it is considered opinion that RA 9136 is not applicable to the regulation of the power distribution system at the Subic Bay Freeport. However, since the policies and processes found in RA 9136 are not inconsistent with the regulatory regime contemplated for Freeport authorities, the SBMA and the ERC could eventually draw-up areas of cooperation," the OGCC opinion said.

In a position paper, ERC made it clear that Sec. 22 of the EPIRA is explicit that the distribution of electricity shall be subject to regulation by the exclusive regulator in the power sector. "It made no distinction as to whoever is undertaking said distribution of electricity for it to be subject to ERC regulation," the ERC said.

ERC claimed that no entity could claim exception under the said provision unless an express provision in the same law can be involved. "Basic is the rule in statutory construction that when the law makes no distinction, no distinction should be made," the ERC said.

ERC also said a reading of the EPIRA and its implementing rules and regulations disclosed the manifest intent and purpose of the legislature to place the entire distribution sector under ERC’s jurisdiction.

"Thus, even if it may be argued that certain provisions of the said law are susceptible to an interpretation which exempt distribution utilities operating within the ecozones from ERC’s regulation, said interpretation should not be adopted," it said.

Commenting on the significance of the OGCC opinion, ERC said it is merely persuasive in character and not legally binding upon concerned parties.