Meralco rate hike stalled to give way to appeal process

Business World Online

Posted on June 12, 2012 10:54:12 PM

REGULATORS ARE holding off from deciding on Manila Electric Co. (Meralco) and the National Power Corp.’s (Napocor) petition to charge consumers for undistributed electricity even as the two firms bagged a favorable court ruling last month.

Both firms will first have to secure a final court ruling as an appeal could still overturn a recent resolution that had upheld Meralco and Napocor’s settlement deal, an Energy Regulatory Commission (ERC) official said.

“If the Office of the Solicitor General will avail of this remedy, it would be premature for them (Meralco and Napocor) to ask for revival of their petition with the ERC,” Francis Saturnino C. Juan, executive director at the regulatory agency, said in a text message to BusinessWorld.

The Pasig Regional Trial Court Branch 71 upheld a settlement agreement on May 29 in which Meralco will be paying Napocor P14.3 billion for energy it had promised to buy but never distributed.

Meralco was contracted to buy energy from Napocor in 2001 to 2003 but chose to source only a portion of its power requirements from Napocor instead of using up its whole contracted capacity.

Meralco intends to pay the amount by collecting a planned P0.12-per-kilowatt-hour increase in electricity rates from its subscribers. The rate hike petition has pending with the ERC since 2004.

The Solicitor General filed a case with the ERC to prevent the increase saying the agreement should not be valid. The Solicitor General said the agreement between Meralco and Napocor was disadvantageous to the government.

But the ERC said it does not have the jurisdiction to decide on the merits of the settlement agreement. The case was then moved to the Pasig City Courts.

A temporary restraining order released by the Court of Appeals in 2010 sought to stop proceedings in the Pasig court, which finally ruled on the validity of settlement deal last month.

After the Pasig court’s decision, both Meralco and Napocor expressed interest in reviving its petition with the ERC.

But Mr. Juan said the agency wants to wait until the appeals process is over before it can fully act on the petition.

The Office of the Solicitor General could not be reached to determine if they plan to appeal the decision of the court to uphold the settlement agreement and prevent the proposed increase in electricity rates.

Mr. Juan said both parties may also want to update their petition but this may only be entertained after the appeals process.

Meralco’s consolidated core net income grew 5% to P3.4 billion in the first quarter from P3.3 billion.

Its consolidated reported net income went up by 58% to P3.4 billion from P2.1 billion in the same period last year.

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Shares of Meralco closed at P246.6, up 1.9% from its previous close of P242 apiece. --ENJD     source