CA affirms ERC ruling on refund by electric coops

The Court of Appeals (CA) has affirmed orders of the Energy Regulatory Commission (ERC) for electric cooperatives nationwide to refund consumers the amount of P812.81 million in over-recoveries of system losses.

In a 30-page decision, the Special Seventeenth Division of the appellate court has denied the consolidated appeal filed by 91 electric cooperatives seeking to nullify the orders of the ERC charging them over-recoveries in the implementation of the purchased power adjustment (PPA) as mandated by RA 7832

(Anti-Pilferage of Electricity and Theft of Electric Transmission Lines/Materials Act of 1994).

The CA, in a decision penned by Associate Justice Estela Perlas-Bernabe, upheld the constitutionality of RA 7832, which the electric cooperatives sought to be declared as illegal, insofar as it set caps on the recoverable rate of system losses.

“The validity and constitutionality of RA 7832 can no longer be raised in the instant petitions. The said law was approved on Dec.r 8, 1994 and took effect on Jan. 15, 1995. The corresponding IRR (Implementing Rules and Regulations) was signed on July 7, 1995. Petitioners cannot evade the application of the law after it has become effective,” the CA ruled.

The electric cooperatives earlier asserted that the system loss caps prescribed under Section 10 of RA 7832 are “arbitrary and violative of the non-impairment clause, thus, invalid and unconstitutional.”

Under Section 10 of RA 7832, the maximum rate of system loss that the cooperative can pass on to its customers shall be: 22 percent at the end of the first year following the effectivity of RA 7832; 20 percent at the end of the second year following the effectivity of the law; 18 percent at the end of the third year; 16 percent at the end of the fourth year; and 14 percent at the end of the fifth year.

They also assailed the implementation of the system loss caps even after the effectivity of Republic Act 9136, otherwise known as the

Electric Power Industry Reform Act (EPIRA) of 2001.