By | Feb. 12, 2014 at 12:01am
ENERGY Secretary Jericho Petilla on Tuesday admitted to the Supreme Court Tuesday that the state-run Power Sector Assets and Liabilities Management (PSALM) may have engaged in anti-competitive behavior that resulted in a sharp spike in electricity prices.
But the government defended the Energy Regulatory Commission (ERC) for approving the P4.15 per kilowatt-hour increase in power rates sought by the Manila Electric Co. (Meralco), saying the agency acted “with regularity” in approving the rate hike.
Outside of the hearing, Meralco said Tuesday it would likely stagger its next rate hike of P4.56 per kilowatt-hour, which is not covered by the petitions filed before the Supreme Court. The company said this would reduce the impact of the rate hike on consumers.
The research organization IBON, however, said that Meralco’s generation charge alone is already higher than the average that American households pay in total for their power.
At the continuation of oral arguments on several petitions to stop the rate hike, Petilla acknowledged that PSALM might have violated the rules of the Wholesale Electricity Spot Market (WESM), resulting in higher power rates.
Militant lawmakers and consumer groups have petitioned the Supreme Court to stop the rate hike being imposed by Meralco on its more than 5 million customers.
Questioned by Associate Justice Marvic Leonen, Petilla admitted that PSALM could have engaged in anti-competitive behavior by offering the capacity from the Malaya power plant without actually dispatching power.
Asked if this was illegal and anti-competitive, Petilla replied: “Under the rules, it is.”
Petilla’s response seemed to absolve Meralco of responsibility over the record-high power rate increase.
Assistant Solicitor General Vida San Vicente, counsel for Energy Department and the ERC, asked the Court to dismiss the petitions against the rate hike, arguing that they were premature.
San Vicente denied that the ERC committed a grave abuse of discretion when it approved the power rate increase and said the petitioners did not avail of the proper remedy, which was to contest the rate hike before the commission.
The petitioners thus failed to exhaust all available administrative remedies before bring their case to the Supreme Court, San Vicente said.
The state lawyer also disputed the petitioners’ allegations that the Energy Department and the ERC had committed a grave abuse of discretion in approving the rate hike without prior publication of the adjustment, saying automatic adjustments were exempted from this requirement in the Electric Power Industry Reform Act (EPIRA).
Under the Automatic Adjustment of Generation Rate rules, the adjusted generation cost was automatically computed using a prescribed formula “without need of ERC verification and confirmation,” San Vicente said.
She also denied the contention that the government had violated the petitioners’ due process rights by failing to hold a public hearing on the rate hike, saying that the supply contract had been reviewed, and the new generation cost had gone through an evaluation process.
“The safeguard is a rate fixing process, hence, due process is observed,” she told the justices.
San Vicente also said that ruling some provisions of the EPIRA unconstitutional, as the petitioners have asked, would be tantamount to coming up a policy decision that belonged to Congress, not the courts.
Last week, Meralco defended the legality of its rate hike and asked the Supreme Court to lift the temporary restraining order it earlier issued, warning of possible “rotating blackouts and other dire consequences in the economy.”
The Palace opposed Meralco’s bid, saying it was “not consistent with the public interest.”
But in defending the rate hike Tuesday, the Energy Department seemed to be reversing this position.
The TRO was issued on Dec. 23 last year and is set to lapse on Feb. 21.
During the hearing, the justices grilled ERC executive director Francis Saturnino Juan over the agency’s approval of the rate hike.
Leonen asked: “Why didn’t the ERC find anything strange with the high generation cost?”
Juan replied: “When the December 5 letter [from Meralco] was issued, there was no indication of irregularity.”
Leonen asked if the high price did not give the ERC suspicion that there was something wrong. Juan answered that it had no reason to suspect anything was wrong, since “there was reported sufficient capacity.”
Therma Mobile Inc. supported Meralco’s claim that they did not benefit from the rate hike. The firm, which supplied power to Meralco during the period in question, said it was paid at its contract price regardless of the bid price.
Oral arguments began Jan. 21 with petitioners militant Bayan Muna party-list and the consumer group National Association of Electricity Consumers for Reforms (Nasecore) presenting their case. The second hearing was held Feb. 4 with Meralco facing the Supreme Court. With Alena Mae Flores source
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