Meralco consumers face steep rate hikes

Published December 8, 2017, 10:01 PM By Myrna M. Velasco

https://business.mb.com.ph/2017/12/08/meralco-consumers-face-steep-rate-hikes/

If the Energy Regulatory Commission (ERC) fails on its legal strategy, the customers of Manila Electric Company (Meralco) will suffer the brunt of monstrous electricity rate hikes of P4.15 and P5.33 per kilowatt-hour (kwh) in at least two billing cycles in the coming months.

That was following the Court of Appeals (CA) ruling reversing the decision of the ERC that effectively stopped the pass-on of such massive power rate spikes during the Malampaya shutdown’s “perfect storm events” of November-December 2013.

In an advisory to the media, ERC Spokesperson Floresinda B. Digal indicated that the regulatory body “is currently preparing its motion for reconsideration” on the case.

To recall, the affected power producers have elevated complaint to the Court after non-recovery of costs on those questioned supply months. For supply traded in the Wholesale Electricity Spot Market (WESM) alone, the unsettled payments for December 2013 supply month had been at P7.540 billion. The power firm-petitioners in this case are Sem-Calaca Power Corporation, Masinloc Power Partners Co. Ltd., Therma Luzon, Inc., Therma Mobile, Inc., and Northwind Power Development Corporation.

Citing “market failure circumstances” in the WESM, the ERC ordered in March 2014 to substantially trim down Meralco’s rate hikes by capping the WESM load weighted average prices (LWAP) at just the level of P6.00 to P7.00 per kwh (for the supply months of November-December 2013) from the actual settlement prices of more than P15 to P16 per kwh.

But a CA ruling penned by Associate Justice Socorro B. Inting has rendered that “the ERC’s issuance of the assailed orders is tainted with factual errors and legal absurdities,” hence, the regulatory body’s decision preventing the rate hikes then had been voided.

“The prices for the November and December 2013 supply months in the WESM for Luzon are reinstated and declared valid,” the appeals court has stipulated.

It added “the ERC committed errors of fact and law in the exercise of its quasi-judicial functions which warrant the reversal of the assailed orders.”

The CA noted that in issuing the March 3, 2014 order, “the ERC had no credible basis to conclude that the entire power generation industry withheld capacity in the ‘controversial tight supply’ months of November and December 2013 and precisely because the IU (investigating unit) has not yet concluded its investigation.”

The CA thus stipulated that “such erroneous act is basically akin to having a judge issuing a final sentence on a defendant even if the trial on the case is still ongoing.”

The Court similarly noted that the more surprising twist had been the move of the Philippine Electricity Market Corporation-Enforcement and Compliance Office (PEMC-ECO) on having “cleared many of the generation companies, including most of the petitioners (in the case), of any perceived withholding of capacity yet they are still covered by the assailed orders.”

The CA further opined that the ERC “incorrectly invokes police power to lend credibility to its actions.”