Include 6 firms, ERC in Meralco case–SC

INQUIRER FILE PHOTO

The Supreme Court on Thursday ordered the groups that sued Manila Electric Co. (Meralco) for its controversial increase of P4.15 per kilowatt-hour (kWh) to implead the regulator of the country’s electricity market and six independent power producers as respondents in the case.

The high court also said the government must answer the allegations raised by the petitioners in the suit, including their claims that the Energy Regulatory Commission (ERC) colluded with the power firms and that the agency’s rule on the approval of generation cost increase was unconstitutional.

Supreme Court spokesman Theodore Te said the tribunal denied a motion by the Office of the Solicitor General (OSG) dated Jan. 2 seeking to be excused from commenting on the petitions. The OSG, which represents the ERC and the Department of Energy (DOE), was given until Jan. 17 to file its comment.

The OSG earlier said Meralco had the burden of defending the public respondents since the ERC and the DOE were merely “nominal parties.”

The ERC, however, disagreed with the OSG position and filed a 71-page comment on the suit on Wednesday.

Te said the high tribunal gave the petitioners until Jan. 13 to implead as “necessary parties” Philippine Electricity Market Corp. (PEMC), SEM-Calaca Power Corp., Masinloc Power Partners Co. Ltd., Therma Luzon Inc., San Miguel Energy Corp., South Premiere Power Corp. and Therma Mobile Inc.

The PEMC governs and administers the Wholesale Electricity Spot Market (WESM) while the other companies are suppliers of Meralco.

Shutdown

Meralco wanted to collect a P4.15/kWh rate adjustment from its 5.3 million customers to recover some P9.6 billion in power generation costs.

The Malampaya gas pipeline was shut down for maintenance operation from Nov. 11 to Dec. 10. The power generation plants also shut down during this time, prompting Meralco to buy more expensive supply from WESM and pass on the cost to its customers.

The shutdown of the pipeline also forced plants that use the cheaper natural gas from Malampaya and supply power to Meralco to utilize more expensive fuel.

TRO on increase

On Dec. 23, the high tribunal issued a temporary restraining order (TRO) stopping Meralco from collecting the increase in the next 60 days.

The court’s order for the petitioners to include the ERC and six power generators was signed by the clerk of court, Enriqueta Vidal, and given on the authority of Chief Justice

Ma. Lourdes Sereno upon the recommendation of the justice in charge of the case.

In its order, the court noted that public records showed that the six power firms had existing agreements with Meralco and supplied Meralco with power in November 2013 when the generation costs increased.

The tribunal also noted that while the petitioners questioned the “very high ceiling price” of P62/kWh sold on WESM, they did not implead the PEMC, which is the WESM’s governance arm.

The petitioners alleged that the ERC may be in collusion with the power firms but the petitioners did not implead the firms “for a complete determination or settlement of the claim subject of the action,” the court noted.

Necessary parties

The tribunal said the PEMC and power firms were “necessary parties” to the case. The Rules of Court define a necessary party as “one who is not indispensable but who ought to be joined as a party if complete relief is to be accorded as to those already parties, or for a complete determination or settlement of the claim subject of the action.”

The rules also state that parties “may be added by court order on its own initiative at any stage of the action and on such terms as are just.”

The petitioners were six party-list lawmakers comprising the Makabayan bloc in the House of Representatives and a group led by the National Association of Electricity Consumer for Reforms.

The Supreme Court scheduled oral arguments for Jan. 21.

In their suit, the petitioners claimed their constitutional right to due process was violated when the ERC approved the price adjustment without conducting public hearings.

They also asked why the ERC approved the rate increase, without notice or hearing, last Dec. 9, or merely four days after Meralco submitted its proposal.

The public was also not informed of the increase and had no time to contest it because it was not published.

Meralco already imposed the first tranche of the rate increase this December in the amount of P2.41/kWh by the time the TRO was issued.

Based on the ERC’s order, a P2.41/kWh increase in generation cost was included in the December billing month while the February and March bills will reflect increases of P1.21/kWh and P0.53/kWh, respectively.

Lawmakers welcomed the Supreme Court’s order impleading independent power producers.

Order welcomed

Sen. Francis Escudero said this would help the high court to piece the puzzle over the simultaneous shutdowns by the Malampaya gas pipeline and the power producers that resulted in the high power rate adjustment.

“I completely agree with the court, so that they can have a complete picture of the situation. They can’t get the complete picture if it’s only coming from the petitioners and Meralco,” he told reporters.

Escudero said he believed the high court impleaded the power producers because it was concerned about the issue of “who will foot the bill.”

Sen. Antonio Trillanes IV said the ruling indicated that there was basis for public complaints against the “unjust increase” in the power rate.

“But we have to wait for the final resolution,” he told reporters. “The truth is, the power producers reaped a windfall of profits here and they admitted that they did not invest in the windfall.”

The petitioners vowed to comply with the directive.

Bayan Muna Rep. Neri Colmenares said the implication of the court order was that monopoly and collusion could be included in the issues.

“We will allege in our amended petition that there is monopoly or collusion in the whole thing,” Colmenares said over the phone.

“The Supreme Court did the right thing against the power generation companies because they are the cause of all this,” he said in a statement.

While the DOE prepares to file comments on the Supreme Court’s TRO on the P4.15/kWh power rate hike, power generation firms have declined to bare plans on the matter.

Energy Secretary Carlos Jericho Petilla said in a text message: “We will answer as directed by [the Supreme Court]. We will most likely file our response either tomorrow (Jan. 10) or Monday.”

Another respondent, the ERC, said it already filed its comment on Jan. 8.

Power generation firms affiliated with the Philippine Independent Power Producers Association Inc. (PIPPA) have yet to make comments.

“None of us have read it (Supreme Court order),” PIPPA president Luis Miguel Aboitiz said in a text message.—With reports from TJ A. Burgonio, Leila B. Salaverria and Riza T. Olchondra

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