SC’s Meralco rate hike ruling alarms MBC

Makati businessmen have expressed concern about the repercussions of a recent decision by the Supreme Court (SC) ordering the Manila Electric Co. (Meralco) to suspend a rate increase set for this month while it considers a petition filed by various consumer groups.

In a statement released yesterday, the Makati Business Club (MBC) said it is concerned that the SC decision regarding Meralco’s petition for rate hike adjustment granted by the Energy Regulatory Commission (ERC) sets a precedent for all future petitions by any utility before a regulatory agency.

"Under these conditions, the effectivity and authority of the regulatory agency will be undermined as the Supreme Court will grow to be seen by the public as the de facto regulatory agency," the MBC said.

The group pointed out that utility investors and operators have become increasingly reluctant to conduct business in the Philippines due to the perceived instability and unpredictability of the regulatory environment.

"In the case of the electric power industry, the consequence of this will be shortages of power, as we are beginning to experience in the Visayas despite the presence of power plants rendered idle precisely because of the foregoing reason," the MBC said.

The group called on the SC to exercise judicial restraint on matters of business and contracts, which they said may have tremendous impact or unintended consequences on the economy.

"We look to the Supreme Court to limit its role to ruling on matters of law and the Constitution, unless there is a clear preponderance of evidence that abuse of discretion exists," the MBC said.

The SC ordered Meralco and the ERC, which allowed charges to rise by 12 centavos per kilowatt-hour, to "observe the status quo prevailing before the filing of the petition" last Dec. 23 by consumer groups Freedom from Debt Coalition (FDC), Akbayan, Sanlakas and Partido ng Manggagawa.

The ERC and the debt-laden utility firm have until today to respond to the petition. The SC is set to hear oral arguments on Jan. 27.

The petitioners said the ERC did not consult consumers before it issued its Nov. 27 order granting Meralco its first rate increase since 1994, and that the increase lacked legal basis.

The petitioners urged the Supreme Court not to give credence to the ERC’s assurance that it will have Meralco return the excess payments if the increase is deemed unreasonable. They pointed out that Meralco does not have a good track record on refunding consumers.

The petitioners also questioned the ERC’s decision to allow Meralco’s rate hike, saying the power firm did not even ask for a specific increase when it filed its application with the commission.

They assailed the ERC for not conducting a hearing before granting the increase.

The rate hike has also become a political hot potato.

Critics accused President Arroyo of allowing the hike in return for support from the powerful Lopez family, which owns part of Meralco, in convincing Sen. Noli de Castro to run as her vice president in the May elections.

De Castro used to be a broadcaster at ABS-CBN, a television network controlled by the Lopezes.

Meralco, which supplies power to about four million homes and businesses in Metro Manila and nearby provinces, said it expected the rate hike of around two percent to deliver a revenue boost of P1.9 billion this year.

The power firm, whose key shareholders are the government and a joint venture of energy firm First Philippine Holdings and Spain’s Union Fenosa SA, returned to profit in the second quarter of 2003 after losing P2 billion in 2002.

The ruling on the rate hike was not the first brush Meralco has had with the SC. In 2002, the high tribunal ordered the group to pay back some P30 billion to customers for years of overcharging.

Meralco, which is making refunds in stages, also faces maturing debts of around P24.6 billion by 2006.