Face-off at SC today on power rate increase

MANILA, Philippines - Power distributor Manila Electric Co. (Meralco) will face the groups questioning its controversial P4.15 per kilowatt-hour rate increase before the Supreme Court (SC) today.

In preliminary conference at 2 p.m., the parties will discuss and agree on issues to be debated on in the oral arguments on Jan. 21.

The SC justice in charge of the case will facilitate the conference.

After the meeting, the high court is set to come up with guidelines outlining the procedural and substantial issues to be tackled by both sides during the oral arguments.

Energy Secretary Jericho Petilla, on the other hand, said his department is preparing contingency measures to avert power outages in the franchise areas of Meralco.

Petilla said the DOE is looking at various ways on how to ensure the fuel supply of unpaid power producers.

“The game plan we have is we’re looking into which particular companies are going to have problems then the way I look at it, it’s going to be the oil-based companies, the diesel plants. We’re now going to get in touch with them. We’re also looking at various ways of actually giving them the fuel if we can just in case the issues between Meralco and the generators are not resolved,” Petilla said in an interview on ANC over the weekend.

Meralco has warned that power outages loom in the summer months – when demand is higher – as a result of the 60-day temporary restraining order (TRO) issued by the Supreme Court on its record increase of P3.44 per kilowatt-hour generation rate hike last December.

The high court prevented Meralco from collecting the December generation charge of P9.10 per kwh even through a staggered scheme and instead ordered the power distributor to peg this at P5.67 per kwh.

Meralco has asked the high court to dismiss the petition filed by militant groups and lift the 60-day TRO it issued.

Petilla said as far as power supply is concerned, the situation is not alarming at this point.

He noted, however, the danger of the bills piling up in case the SC allows Meralco to collect the actual December 2013 and the January 2014 generation charges.

“We will try to make sure that there’s a way to make some mitigation here so as not to charge consumers in one go,” Petilla said.

He stressed that it would be the SC and the ERC that will decide while DOE can make a recommendation.

“We have to look at what’s best... cushioning the impact is what we’re looking at here,” Petilla said.

“The preliminary billings from the power suppliers and WESM (wholesale electricity spot market) indicate the January 2014 generation charge translates to P10.23 per kwh. The reason for the increase is still the Malampaya shutdown which crossed two billing periods coupled with the scheduled, extended and forced outages of generation plants in December,” said Larry Fernandez, Meralco head of utility economics.

Power players

The two petitions were filed last month by Bayan Muna party-list and consumer groups led by National Association of Electricity Consumers for Reforms (Nasecore) assailing the legality of the rate hike implemented by Meralco.

Meralco, the Energy Regulatory Commission (ERC) and the DOE were originally named respondents.

But in a whereas order last week, the high court ordered petitioners to amend their petition and include the power firms accused of collusion in simultaneously increasing generation rates, which was used by Meralco to justify the increase.

In its comment with counter-petition filed last week, Meralco also asked the high court to include as respondents other stakeholders in the industry - Philippine Electricity Market Corp. (PEMC), operator of electricity trading flood Wholesale Electricity Spot Market (WESM), and transmission firm National Grid Corp. of the Philippines (NGCP).

The high court immediately granted the plea and named respondents PEMC, NGCP, First Gas Power Corp., South Premiere Power Corp., San Miguel Energy Corp., Masinloc Power Partners Co. Ltd., Quezon Power (Phils.) Ltd. Co., Therma Luzon Inc., Sem-Calaca Power Corp., FGP Corp.,1590 Energy Corp., AP Renewables, Inc., Bac-Man Energy Development Corp./Bac-Man Geothermal, Inc., First Gen Hydro Power Corp., GNPower Mariveles Coal Plant, Ltd. Co., PANASIA Energy Holdings Inc., Power Sector Assets & Liabilities Management Corp., SN Aboitiz Power, Strategic Power Development Corp., Trans-Asia Power Generation Corp. and Vivant Sta. Clara Northern Renewables Generation Corp.

Records showed the power producers supplied Meralco in November last year when the generation costs increased.

The new respondents were also directed to attend today’s conference.

The Office of the Solicitor General (OSG), for its part, filed a motion last Jan. 8 - the deadline for filing of comments for respondents - seeking to be excused from answering the petitions.

The OSG argued the DOE and ERC were not required to do so being nominal parties.

This was contrary to ERC’s position, which filed its own comment before the SC justifying its approval of Meralco’s rate hike.

The SC junked OSG’s plea and directed it to attend the preliminary conference and submit the required comment by personal service by Friday.

In a 129-page comment filed through lawyers that included retired SC Justice Antonio Eduardo Nachura, Meralco defended its record-high rate hike.

In a nutshell, Meralco argued there was no violation of the constitutional right to due process as alleged by petitioners.

“Contrary to petitioners’ contentions, the automatic adjustment mechanism as implemented by the AGRA (Automatic Adjustment of Generation Rate) rules and EPIRA IRR (Electric Power Industry Reform Act - implementing rules and regulations) amendment, which were promulgated by the ERC and DOE, respectively, in the exercise of their quasi-legislative functions, faithfully comply with the requirements of due process,” it stressed.

Meralco pointed out that AGRA rules and the EPIRA’s implementing rules and regulations provided “all automatic adjustments are always subject to post-verification process by the ERC.”

Meralco also rebutted the prayer of petitioners to refund the rate adjustments, calling it “baseless, legally infirm and contrary to the doctrine of operative fact.”

Meralco said it merely collected the generation charge and other pass through charges for the relevant power firms as well as for the national and local government concerned.

Meralco said petitioners also failed to prove their allegation that it colluded with the power firms for the assailed adjustment.

On procedural ground, Meralco argued the petitioners failed to exhaust administrative remedies, violated doctrine of primary jurisdiction and failed to bring the action against real parties in interest.

Lastly, it warned of possible power interruption as a result of the legal actions against the increase.

ERC, in its comment, said the issues raised in the petitions are constitutional in nature and delved on the adjustment mechanism utilized by the commission in approving generation cost.

“An adverse decision thereon will have an impact on the ERC’s determination and current processes and affect consumers at large who are the ultimate payers of the generation charges pertaining to the electricity consumed,” read the commission’s 71-page comment filed through lawyer Francis Saturnino Juan.

ERC has denied there was grave abuse of direction on its part when it approved Meralco’s request for power rate hike, saying it had the legal basis to do so.

It noted that under Section 43 of the AGRA rules, distribution utilities such as Meralco are authorized to automatically reflect their generation cost for a particular supply month in the subsequent month’s billing.

Petitioners alleged their constitutional right to due process was violated when ERC approved the price adjustment without conducting public hearings.

They questioned why the ERC, which is under the DOE, approved the rate increase last Dec. 9 or just four days after Meralco submitted its proposal, citing lack of notice and hearings.

The groups said the public was also not duly informed about the adjustment since there was no publication.

Nasecore, in its petition, also urged the high court to order the creation of a committee, with the Commission on Audit to lead and conduct an automatic audit on electricity rate adjustments imposed by Meralco since 2004.

This committee, they explained, should determine the amount of refund Meralco should pay consumers for these alleged illegal rate increases, according to petitioners. – Iris Gonzales