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CA upholds 2017 ruling nullifying ERC order on electricity rates

ca upholds 2017 ruling nullifying erc order on electricity rates - CA upholds 2017 ruling nullifying ERC order on electricity rates
electric meter 040419 - CA upholds 2017 ruling nullifying ERC order on electricity rates

THE Court of Appeals (CA) upheld its 2017 decision nullifying the orders of the Energy and Regulation Commission (ERC) in 2014 which regulated the surge in prices at the Wholesale Electricity Spot Market (WESM) during the Malampaya shutdown in 2013 for maintenance.

In a 20-page resolution on March 29, the CA former fifteenth division denied the motion for reconsideration of the ERC, saying there is no “delegated authority” in the Constitution or in the Electric Power Industry Reform Act (EPIRA) which grants ERC the authority to regulate electricity rates.

“The absence of delegated authority empowering the ERC to impose agency rates as an exercise of police power ordinarily moots any need to determine the concurrence of a lawful subject and lawful means to justify the power’s exercise,” the CA ruled.

“Movants insist that the power to replace rates must be recognized. However, it bears stressing that had the legislature intended the ERC to have such power, Congress would have expressly included the same in the plethora of prerogatives the EPIRA granted the ERC. However, the EPIRA is plainly silent on the matter,” the CA added.

The CA also disputed the agency’s failure to exercise validly the fixing of rates as a “quasi-judicial function” as no notice and hearing with the parties were conducted. “(E)RC’s investigations were still ongoing when the ERC issued the challenged Orders. The inevitable conclusion is that the parties were not heard.”

The court also denied the “police power contention” on the issuance of the assailed orders as it failed to comply with the requirements that there should be a lawful subject and lawful method.

“As We have found, the imposition of ERC rates in lieu of WESM prices was a penalty levied prematurely. Its investigations into abusive and competitive behavior was still ongoing. Therefore, there were no offenses justifying such penalty, rendering the method unfounded and illegal,” the CA ruled.

The CA in November 2017 nullified the four orders issued by ERC on 2014 which declared void the price increases for the November and December 2013 supply months in the WESM for Luzon.

The ERC on March 3, 2014 issued an order following “hints that certain power industry players may have breached the aforementioned market rules.”

The ERC said that the prices on WESM during the November and December 2013 were not “reasonable, rational and competitive.”

The appellate court also denied the motion for intervention of Manila Electric Company (Meralco) which claimed that voiding the orders of ERC would impact “millions of consumers.”

Meralco then was supposed to increase its power rate to P4.15 per kilowatt-hour for the December 2013 bill. However, it was unable to pass to the consumers the said increase following the Supreme Court’s issuance of a temporary restraining order (TRO) against ERC’s approval of Meralco’s increase following a petition led by Bayan Muna Rep. Neri J. Colmenares and Carlos Isagani T. Zarate, along with other party-lists.

The Supreme Court in May 2014 extended the TRO indefinitely.

Petitioners are San Miguel Energy Corp., South Premier Power Corp., Strategic Power Development Corp., SMC Powergen Inc., Petron Corp., SN Aboitiz Power-Magat, Inc., SN Aboitiz Power-Benguet, 1590 Energy Corp., AP Renewables, Inc., Team (Phils.) Energy Corp., Sem-Calaca Power Corp., Masinloc Power Partners Co. Ltd., Therma Luzon, Inc., Therma Mobile, Inc., and Northwind Power Development Corp.

The resolution was written by Associate Justice Marlene B. Gonzales-Sison and was concurred in by associate justices Mariflor P. Punzalan-Castillo and Rafael Antonio M. Santos. — Vann Marlo M. Villegas

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