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ERC tells Iloilo power firm: Pay back consumers

It was unclear who will enforce the P500-M refund order as the Panay Electric Co. has been taken over by More Power
/ 04:45 AM February 02, 2021

BLUE BUILDING The headquarters of the Panay Electric Co. in Iloilo City. The company’s distribution system has since been taken over by More Electric and Power Corp. —CONTRIBUTED PHOTO

ILOILO CITY — Just months after its distribution assets were expropriated, the Panay Electric Company (Peco) has been ordered to refund city residents more than half a billion pesos in over-recoveries.

The Energy Regulatory Commission (ERC) has directed Peco to implement a refund totaling P527.795,809.57 in a 38-page decision promulgated and posted on its website on Dec. 28, 2020, but only became widely known this week. The refund directive includes P526,543,617.82 in total “over recoveries” from January 2012 to December 2014 and P1,252,192.06 in total “over recoveries” from Peco’s previous application for cost adjustment.

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Marcelo Cacho, Peco head of public engagement and government affairs, declined to comment on the ERC decision when reached by the INQUIRER on Monday.

Peco had previously sought approval from the ERC of a total net “under-recovery” of P128,369,790.07.

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But in its decision, the commission said that “after careful scrutiny and evaluation” of Peco’s records and submissions, the total net “over-recovery” from 2012 to 2014 actually reached P526,543,617.82.

“Under recoveries” or “over recoveries” are the differences in the actual costs or charges with those collected by distribution utilities from consumers.

The breakdown of the over recoveries to be refunded included charges passed on to consumers totaling P358,441,371.36 for generation, P112,690.64 for transmission, P162,939,218.50 for system loss, P6,152,699.94 for lifeline subsidy, and P149,829.43 inter-class cross-subsidy.

How to enforce

It was however unclear how the refund would be implemented as it was supposed to be gradually done through electric bill adjustments.

Officials of More Power Electric Corp., which has taken over Peco’s distribution system after a long-drawn court battle, could not be reached for comment.

More Power, owned by ports tycoon Enrique Razon, took over the distribution assets of Peco in February last year after the Iloilo City Regional Trial Court issued a writ of possession.

More Power’s right to provide electricity in Iloilo City was strengthened when President Duterte signed Republic Act 11212 on Feb. 14, 2019, granting the company a 25-year franchise to establish, operate and maintain a power distribution system in the city.

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On Sept. 15, 2020, the Supreme Court also reversed a July 1, 2019 decision of the Mandaluyong Regional Trial Court that shielded Peco from expropriation.

In its decision, the high court ruled that Peco’s distribution assets are “susceptible to expropriation for the same public purpose of power and electricity distribution” and that the expropriation of its distribution system by More Power satisfies the “constitutional requirements of due process and equal protection.”

It cited Peco’s legislative franchises which provided that the government could expropriate its distribution system on or before its franchise expiration.

The high court also ruled that the expropriation by More Power of Peco’s distribution system “serves both the general public interest of conveying power and electricity in Iloilo City and the peculiar public interest and security of ensuring the uninterrupted supply of electricity.”

Peco, on Dec. 11, 2020, filed a motion for reconsideration asking the High Court to “take a second hard look at the unprecedented circumstances of the case, not to mention the far-reaching legal implications” of the court’s decision.

It argued, among others, that only the government has the right to expropriate Peco’s property if the government decides to operate and maintain the electric distribution system, and not another private entity. The motion is still pending in the high tribunal. INQ

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TAGS: ERC, expropriation, over recoveries, Peco, refund
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