Weaponizing the judiciary

It is unfortunate that the judiciary has been weaponized by vested interests to support their narrow and anti-social objectives.

Development projects are needlessly delayed by restraining orders issued by courts at the instance of disgruntled bidders to public projects or property owners with no sense of public good in right-of-way cases. Potential foreign investors have hesitated because our judicial system is not seen as generally reliable in quickly and fairly resolving conflicts.

A recent example of how a vested interest group has weaponized the judicial system is the TRO issued by a Taguig court against Meralco to stop it from conducting its usual competitive selection process or CSP for the supply of electricity its subscribers use. The CSP is a process devised by the Department of Energy to assure no sweetheart deals between power producers and power distributors. It is strictly supervised and its results are redundantly studied by the ERC before finalization.

The TRO filed by the Malampaya consortium alleges that they will be disadvantaged by the CSP because it does not take into account the increased cost of producing Malampaya natural gas.

Actually, the Malampaya consortium has no personality to file the TRO because they are not directly affected. They do not bid under the CSP, the power plants they supply are the bidders. The Lopez Group that runs the Batangas gas plants and San Miguel that runs Ilijan regularly participate in the CSP process.

The Malampaya consortium might have filed the TRO because they plan to raise the price for Malampaya gas and make it significantly higher than imported natural gas.

The consortium is claiming that an unidentified law supposedly provides preference for local natural gas. I don’t remember such a law and I have asked around and no one seems to have heard of one.

RA 7638 provides that for indigenous energy sources, we should develop and update the existing Philippine energy program and provide for an integrated and comprehensive exploration, development, utilization, distribution and conservation of energy resources, with preferential bias for environment-friendly indigenous and low-cost sources of energy. Very general statement of policy.

I do recall that when we first crafted an energy program 40 years ago, we provided an incentive for those who will explore and develop indigenous energy to include petroleum, coal and geothermal. We allowed the developers to price their production based on a formula pegged on Dubai Light crude prices. This means, even if the cost of developing these sources were lower than imported energy, the developers will be kept whole. This incentive made geothermal energy an important local energy source.

If the problem of the Malampaya consortium is their failure to anticipate the higher cost of producing Malampaya now because it is nearly depleted, that’s their problem. They should have placed a number on that increased cost and deducted that from what they paid Shell and Chevron. They now want their TRO to make the power consumers pay for their failure to anticipate higher production cost.

That is so unfair to power consumers in Meralco’s franchise area. Indeed, the TRO, which was extended from 72 hours to 20 days, is already endangering future power rates. Meralco’s inability to conduct the CSP and ERC to approve the resulting supply contract means Meralco will have a deficit of 1000 MW. Meralco will then have to go to the spot market to fill the gap and given the tight supply situation, the spot market price will almost certainly be a lot higher than a CSP contracted price. It is just as well that the Court eventually dismissed the complaint.

Ricky Razon, who heads one of the companies in the Malampaya consortium, has a reputation of social consciousness. During the pandemic, Razon used his resources to negotiate and bring to the country the vaccines which the government couldn’t seem to get. He also had a vaccination center up and running near MOA so more of us can be vaccinated. I am sure if he was given the proper context of this case, he would have also decided to protect the public from power rate increases.

Besides, higher power rates will negatively impact the positive momentum for our economy’s growth rate. Because our power grids are interconnected, even Razon’s More Power, a power distribution utility in Iloilo, Bacolod and Bohol will be affected by higher power rates. Maybe Dennis Uy, the other consortium member, needs the extra money. But Razon would have been magnanimous in deciding for the common public good. But the Court beat him to it.

The other example of weaponizing the judiciary is the criminal and administrative case filed by some anti-coal group against Energy Secretary Popo Lotilla for endorsing the Aboitiz-owned Therma Visayas Inc. Unit 3 expansion in Cebu. The group erroneously claims that the project violates the moratorium on greenfield coal-fired power projects declared by the previous administration.

If it did its homework, the group would have learned that the moratorium does not cover existing coal-fired power generation facilities, coal-fired power projects classified as committed, existing power plant complexes with firm expansion plans, or projects that have made significant progress.

Ironically, Sec Popo is very committed to renewable energy to the point that we have criticized him for putting the stability of our national power grid at risk. Solar and wind are not dependable as baseload inputs to our power grid.

No wonder the PCCI issued a statement that noted coal remains an important component for economic growth while waiting for clean, reliable, and affordable baseload technologies.

“Insecurity of supply causes harm that can affect the lives of consumers and businesses and ultimately hinders our country’s resilience and march toward progress,” PCCI said.

Let us not weaponize the judiciary. It just messes things up, making our lives more difficult than it should be.

Boo Chanco’s email address is [email protected]. Follow him on X @boochanco.