April 3, 2019 | 10:18 pm
THE Court of
Appeals (CA) upheld its 2017 decision nullifying the orders of the Energy and
Regulation Commission (ERC) in 2014 which regulated the surge in prices at the
Wholesale Electricity Spot Market (WESM) during the Malampaya shutdown in 2013
for maintenance.
In a 20-page resolution
on March 29, the CA former fifteenth division denied the motion for
reconsideration of the ERC, saying there is no “delegated authority” in the
Constitution or in the Electric Power Industry Reform Act (EPIRA) which grants
ERC the authority to regulate electricity rates.
“The absence of
delegated authority empowering the ERC to impose agency rates as an exercise of
police power ordinarily moots any need to determine the concurrence of a lawful
subject and lawful means to justify the power’s exercise,” the CA ruled.
“Movants insist that
the power to replace rates must be recognized. However, it bears stressing that
had the legislature intended the ERC to have such power, Congress would have
expressly included the same in the plethora of prerogatives the EPIRA granted
the ERC. However, the EPIRA is plainly silent on the matter,” the CA added.
The CA also disputed
the agency’s failure to exercise validly the fixing of rates as a
“quasi-judicial function” as no notice and hearing with the parties were
conducted. “(E)RC’s investigations were still ongoing when the ERC issued the
challenged Orders. The inevitable conclusion is that the parties were not
heard.”
The court also denied
the “police power contention” on the issuance of the assailed orders as it
failed to comply with the requirements that there should be a lawful subject
and lawful method.
“As We have found, the
imposition of ERC rates in lieu of WESM prices was a penalty levied
prematurely. Its investigations into abusive and competitive behavior was still
ongoing. Therefore, there were no offenses justifying such penalty, rendering
the method unfounded and illegal,” the CA ruled.
The CA in November 2017
nullified the four orders issued by ERC on 2014 which declared void the price
increases for the November and December 2013 supply months in the WESM for
Luzon.
The ERC on March 3,
2014 issued an order following “hints that certain power industry players may
have breached the aforementioned market rules.”
The ERC said that the
prices on WESM during the November and December 2013 were not “reasonable,
rational and competitive.”
The appellate court
also denied the motion for intervention of Manila Electric Company (Meralco)
which claimed that voiding the orders of ERC would impact “millions of
consumers.”
Meralco then was
supposed to increase its power rate to P4.15 per kilowatt-hour for the December
2013 bill. However, it was unable to pass to the consumers the said increase
following the Supreme Court’s issuance of a temporary restraining order (TRO)
against ERC’s approval of Meralco’s increase following a petition led by Bayan
Muna Rep. Neri J. Colmenares and Carlos Isagani T. Zarate, along with other
party-lists.
The Supreme Court in
May 2014 extended the TRO indefinitely.
Petitioners are San
Miguel Energy Corp., South Premier Power Corp., Strategic Power Development
Corp., SMC Powergen Inc., Petron Corp., SN Aboitiz Power-Magat, Inc., SN
Aboitiz Power-Benguet, 1590 Energy Corp., AP Renewables, Inc., Team (Phils.)
Energy Corp., Sem-Calaca Power Corp., Masinloc Power Partners Co. Ltd., Therma
Luzon, Inc., Therma Mobile, Inc., and Northwind Power Development Corp.
The resolution was
written by Associate Justice Marlene B. Gonzales-Sison and was concurred in by
associate justices Mariflor P. Punzalan-Castillo and Rafael Antonio M. Santos.
— Vann Marlo M. Villegas
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