DOE, ERC ordered to comment on case vs circular on 3rd party selection of distribution utilities

MANILA, Philippines–The Supreme Court (SC) has ordered the Department of Energy (DoE) and the Energy Regulatory Commission (ERC) to respond to the petition which seeks to declare as illegal a circular which allows power distribution utilities (DUs) to choose their own third party to supervise the conduct of competitive selection process (CSP) on all power supply agreements (PSAs).

In a two-page resolution made public Tuesday, the high court gave respondents ERC, the DOE and power distribution utilities such as the Manila Electric Company (Meralco), Batnayan 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) 10 days to comment on the petition.

“Acting on the petition for certiorari and prohibition (with the 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,” the high court said.

The petition was filed by Bayan Muna party-list which claimed that Energy Department Circular 2018-02-003 effectively allowed the DUs, themselves, to appoint a third party to conduct CSPs on PSAs.

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 (NEA).

“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 stated.

Thus, the petition filed by Bayan Muna through its chairman Neri Colmenares and Rep. Carlos Zarate told the SC 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.

They explained that Circular 2015-06-0008 which was amended by the 2018 circular “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.”

Petitioners said the purpose of a third party that is duly recognized by the ERC and DOE is to make sure that there is a sense of checks and balance, as well as transparency, in the bidding process to benefit consumers. It is also a means of plugging the gap that allows for self-dealing.

The case stemmed after the Circular was issued on Feb. 1, 2018, even while there are criticisms over Meralco’s failure to conduct CSP, which essentially reverses its policy for a genuine CSP that is supervised by a duly-recognized third party./ac