posted October 01, 2019 at 11:30 pm by
Rey E. Requejo
The Supreme Court has directed the
Department of Energy and the Energy Regulatory Commission to comment on the
petition against a circular that allows power distribution utilities to select
their own third party to supervise the conduct of competitive selection process
on all power supply agreements.
In a resolution dated Sept. 17 but
released on Tuesday, the SC acted on the petition filed by Bayan Muna
Party-list which argued that Energy Department Circular 2018-02-003 effectively
allowed the DUs to designate a third party to conduct competitive selection
process on PSAs.
“Acting on the petition for
certiorari and prohibition (with application for the issuance of a writ of
preliminary injunction and/or temporary restraining order), the Court resolved,
without giving due course to the petition, to… require the respondents to
comment thereon within 10 days notice hereof,” stated the SC resolution.
Aside from the DoE and ERC, also
named respondents in the petition and also ordered to file their comments are
the Manila Electric Company (Meralco), Bantayan Island Electric Cooperative,
Inc., (Banelco), Isabela II Electric Cooperative, Inc. (Iselco II), Marinduque
Electric Cooperative Inc. (Marelco), Occidental Mindoro Electric Cooperative
(Omeco) and Sorsogon II Electric Cooperative Inc. (Soreco II).
Circular 2018-02-003 amended certain
provisions of Circular 2015-06-0008 which mandated the selection of a third
party which is recognized by the ERC and DoE or the National Electrification
Administration.
“The fact that the DUs appoint all
the members of the third party bids and awards committee (TPBAC) no longer
makes the bids and awards committee the ‘third party’ despite the token name.
Section 5 of DC 2018-02-0003, therefore, expressly brings back the control of
the bidding process to the DUs by repealing the mandatory requirement of a
third party,” the petition said.
In its petition, Bayan Muna, through
its chairman Neri Colmenares and Rep. Carlos Zarate, argued that Circular
2018-02-0003 violates policies and provisions intended to protect consumers
under the Electric Power Industry Reform Act (EPIRA) of 2001 and the
Constitution.
According to the petitioners, the
Circular 2015-06-0008 “ensures that the DUs do not have complete control of the
bidding process so that said DUs cannot frame the terms of references to favor
affiliates, associate firm or selected suppliers.”
They pointed out that a third party
recognized by the ERC and DOE or NEA is intended to ensure a sense of checks
and balance, as well as transparency, in the bidding process to benefit consumers.
“Whether or not the DUs will
manipulate the bidding is of no moment. The fact is, the assailed department
circular has expressly reversed provisions favoring the consumers and given the
DUs the opportunity to manipulate and the option to control the bidding process
which is detrimental to the consumers and violative of relevant laws,” the
petitioners argued.
Earlier, the SC had declared final
its decision that ordered the conduct of CSP on all PSAs submitted by the
country’s power distribution utilities on or after June 30, 2015 “to prevent
monopolies that result in exorbitant electricity rates.”
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The tribunal also ruled that “upon
compliance with the CSP, the power purchase cost resulting from such compliance
shall retroact to the date of effectivity of the complying PSA, but in no case
earlier than 30 June 2015, for purposes of passing on the power purchase cost
to consumers.”
The decision written by Senior
Associate Justice Antonio T. Carpio was anchored on Section 19, Article XII of
the Constitution which provides that “the State shall regulate or prohibit
monopolies when the public interest so requires. No combinations in restraint
of trade or unfair competition shall be allowed."
The SC said that since the authority
to distribute electricity is given through a legislative franchise, a regulated
monopoly within their respective franchise areas, “competitors are legally
barred within the franchise areas of distribution utilities.”
Thus, it pointed out that
“facing no competition, distribution utilities can easily dictate the price of
electricity that they charge consumers.”
“To protect the consuming public
from exorbitant or unconscionable charges by distribution utilities, the State
regulates the acquisition cost of electricity that distribution utilities can
pass on to consumers. As part of its regulation of this monopoly, the State
requires distribution utilities to subject to competitive public bidding their
purchases of electricity from power generating companies,” it said.
“Competitive public bidding is
essential since the power cost purchased by distribution utilities is entirely
passed on to consumers, along with other operating expenses of distribution
utilities. Competitive public bidding is the most efficient, transparent, and
effective guarantee that there will be no price gouging by distribution
utilities,” it added.
The issue on CSP was raised before
the SC by the Alyansa Para sa Bagong Pilipinas, Inc. represented by Evelyn V.
Jallorina and Noel Villon.
Named respondents were the ERC, DoE,
Meralco, Central Luzon Premiere Power Corp., St. Raphael Power Generation
Corp., Panay Energy Development Corp., Mariveles Power Generation Corp., Global
Luzon Energy Development Corp., Atinoman One Energy, Inc., Redondo Peninsula
Energy, Inc. and the Philippine Competition Commission (PCC).
Challenged in the petition were the
several postponements done by the ERC in the process of subjecting all PSAs by
distribution companies to CSP which requires power distributors to get at least
two offers for supply of electricity before awarding a PSA to ensure the least
cost for electricity consumers.
The SC held that the authority of
the ERC was limited only to the implementation of the CSP, and that the ERC had
no power and authority to postpone the conduct of CSPs.
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