SC gift: TRO on rate hike

By: Christine O. Avendaño - 11 years ago

The Supreme Court could not have thought of a better Christmas gift for the Filipino people.

Two days before the nation was to celebrate the happiest day of the year, the high court on Monday played the Grinch and handed down an order stopping for 60 days Manila Electric Co. (Meralco) from raising power rates by P4.15 per kilowatt-hour (kWh) starting this month.

Acting on two petitions brought a day apart last week by members of the Makabayan bloc in the House of Representatives and three consumer groups, the tribunal also scheduled oral arguments to give Meralco and the Energy Regulatory Commission (ERC) a chance to defend the increase and its petitioners to justify their opposition to it.

Besides asking for a temporary restraining order (TRO) to bar the increase, the petitioners asked the Supreme Court to rule on the constitutionality of two provisions in the Electric Power Industry Reform Act (Epira) of 2001 that consider power producers are not public utilities and put their charges outside the control of the ERC.

In a briefing for reporters, Theodore Te, spokesperson for the Supreme Court, said the tribunal ordered the consolidation of the two petitions and gave Meralco and the ERC up to Jan. 8 to file their comments. It set the oral arguments for Jan. 21.

Chief Justice Maria Lourdes Sereno authorized the TRO, which was recommended by the justice handling the case, Te said.

The Supreme Court is on a two-week holiday break.

Record-high hike

Had the Supreme Court not acted swiftly, Meralco would have added P7.37/kWh as generation charge to the bills for December of its 5.3 million customers in Metro Manila and surrounding provinces.

It would have been the first in a phased imposition of the record-high P4.15/kWh increase that the ERC authorized on Dec. 9 to enable Meralco to recover P9.6 billion in deferred generation cost.

The second phase would have been a P1 increase in February and the third, P0.44 in March.

Meralco declined to comment on the Supreme Court’s order, as it had not yet received a copy of the resolution. But company officials said they would abide by it.

“We have to follow whatever the Supreme Court says,” said Meralco president and CEO

Oscar S. Reyes. The company, he said, hoped the case would be resolved before the next billing cycle.

Alfredo S. Panlilio, Meralco senior vice president for customer retail services, said the company would study how to follow the court’s order.

About 70 percent, or 3.5 million, of Meralco’s 5.3 million customers have received and paid for bills that reflected the higher generation charge for this month. The rest have either not paid yet or have not been billed yet.

Reyes said customers who had paid the higher generation charge would get refunds.

“We can easily give a refund,” Reyes said.

At the Supreme Court, reporters asked Te about the higher generation charge already paid. “That would be addressed once the court decides (the case),” Te replied.

But since Meralco cannot proceed with the rate increase, the company is asking regulators to allow it to defer payments to Philippine Electricity Market Corp. (PEMC), operator of the Wholesale Electricity Spot Market (WESM), so it could cope with the P9.6 billion in dues to power producers.

Last week, six party-list lawmakers from the Makabayan bloc in the House—Bayan Muna, Gabriela Women’s Party, ACT Teachers and Kabataan Party—and a group composed of the National Association of Electricity Consumers for Reform (Nasecore), Federation of Village Associations, and the Federation of Las Piñas Homeowners brought the petitions opposing the rate increase.

Probe continues

Justice Secretary Leila de Lima said the Supreme Court order would not affect the investigation by her department’s Office for Competition of a possible collusion among the power producers to jack up the cost of the electricity they were selling to Meralco.

De Lima told reporters that she believed the investigation was one of the things the Supreme Court considered in halting the rate increase.

The Senate committees on energy and trade and the Department of Energy are also investigating the simultaneous shutdown of seven power plants from Nov. 11 to Dec. 10, during which the Malampaya gas pipeline was closed for maintenance.

The shutdowns forced Meralco to buy electricity at higher prices from the WESM, where the power producers who closed their plants were also the traders, a conflict of interest that Sen. Antonio Trillanes IV observed at the energy committee hearing on Wednesday.

Christmas gift

Bayan Muna Rep. Neri Colmenares, one of the petitioners, said the TRO was a “Christmas gift of the [Supreme Court] to the much burdened consumers.”

“Besides, even with the statement of the Department of Energy, we cannot trust the supposed goodwill of the power cartel to defer their collection because without a clear TRO they would argue that they could collect the rate hike anytime,” Colmenares said in a statement issued hours after Te announced the court’s order.

“The TRO is legally stronger than a mere DOE-ERC announcement,” he said.

Another petitioner, Petronilo Ilagan of Nasecore, praised the Supreme Court’s decision.

“We hail with great respect and gratitude the decision upholding consumer interest and we look forward to a favorable resolution granting our prayers,” Ilagan said in a text message.

Partial victory

Bayan Muna Rep. Carlos Isagani Zarate said the TRO was only a “partial victory.”

“We still have to continue the fight for the consumers’ rights so this unprecedented and just TROed increase could be totally nullified, as well as the culprit provisions of the Epira,” Zarate said.

ACT Teachers Rep. Antonio Tinio said he hoped the Supreme Court would hand down a decision that would “curb the cartel-like practices in the power generation industry, Meralco’s connivance leading to predatory rates and the ERC’s failure to exercise its powers and functions on behalf of the public.”

“We hope the Supreme Court will take this opportunity to rule that power generation is a public utility and key portions of the Epira unconstitutional, paving the way for a reversal of decades of privatization and a return of the national government to the energy sector,” Tinio said in a statement.

Investor sentiment

But Oriental Mindoro Rep. Reynaldo Umali, head of the House committee on energy, feared that the Supreme Court’s intervention could lead to an unstable energy supply and more power outages.

Umali said the TRO was good for consumers, but his concern was long-term stability of the power supply.

“The TRO cast a cloud of uncertainty on Meralco’s supply contracts with generation companies that have provisions that allow them to automatically pass fuel rate fluctuations on to customers. Without this guarantee, the generation companies will likely balk at any long-term supply agreements,” Umali said in a phone interview.

He said he was surprised that the Supreme Court acted on the petitions for a TRO, which could affect investor sentiment.

Going for keeps

Senators welcomed the Supreme Court order, with Trillanes calling it a “victory for the consumers.”

“We should sustain the pressure so the freeze would become permanent,” said Trillanes, who sought the Senate investigation of the Meralco rate increase.

“In the meantime, we will find ways to avert future spikes in power rates,” he said. “We will also continue the investigation and the auditing to make sure we are not being manipulated by Meralco.”

Trillanes on Sunday threatened Meralco with an audit after seeing indications of overcharging in Meralco’s P4.15/kWh rate increase.

Sen. Sergio Osmeña III, head of the Senate energy committee, said the TRO was an opportunity for the government to deal with the steep cost of power in the country.

“I am very happy about the injunction. I hope the government moves faster to make corrections on this market failure,” Osmeña said.

Sen. Benigno Aquino IV, head of the committee on trade, said the order was a welcome development as the investigation into possible collusion among the power producers had yet to be completed. With reports from Gil C. Cabacungan, Norman Bordadora and Riza T. Olchondra