Supreme Court issues TRO against contestable-customer power scheme

THE SUPREME COURT (SC) on Tuesday issued a halt order on several issuances of the Department of Energy (DoE) and the Energy Regulatory Commission (ERC) on the government’s retail competition and open access (RCOA) policies.

Acting on a petition filed by the Philippine Chamber of Commerce and Industry (PCCI), San Beda College Alabang, Inc., Ateneo de Manila University, and Riverbanks Development Corp., the high court issued a temporary restraining order (TRO) on the following issuances of the DoE and ERC:

a. DoE Circular No. DC201506- 0010 ( Providing Policies to Facilitate the Full Implementation of Retail Competition and Open Access in the Philippine Electric Power Industry);

b. ERC Resolution No. 05 (Series of 2016) (A Resolution Adopting the 2016 Rules Governing the Issuances of the Licenses to Retail Electricity Suppliers (RES) and Prescribing the Requirements and Conditions Therefore);

c. ERC Resolution No. 10 (Series of 2016) ( Adopting the Revised Rules for Contestability);

d. ERC Resolution No. 11 ( Series of 2016) ( Imposing Restrictions on the Operations of Distribution Utilities and Retail Electricity Suppliers in the Competitive Retail Electricity Market); and

e. ERC Resolution No. 28 (Series of 2016) (Revised Timeframe for Mandatory Contestability, Amending Resolution No. 10)

Supreme Court Public Information Office (PIO) Chief Theodore O. Te, in a media briefing following the high court’s en banc session, said: “The Court noted that petitioners have established a clear, legal right to the TRO considering that the EPIRA Law provides for the voluntary migration of end- users to the contestable market and there appears to be no basis for the mandatory migration being ordered by the DoE and the ERC through the questioned issuances.”

The petitioners assailed the issuances for being “unconstitutional for usurping legislative authority, violating the right to due process and equal protection and the non-impairment clause as well as for being unreasonable exercise of police power.”

PCCI — in an earlier e- mail through Rhuby R. Conel, manager of the Advocacy and Research Department, sent to BusinessWorld — said: “PCCI’s position refers to granting the Contestable Accounts the option to stay with their current distribution utility or negotiate with retail electricity suppliers (RES) [and not] giving them a deadline within which to go look and entertain other RES who want to supply them.”

The RCOA makes it mandatory for big power consumers to source their electricity supply from licensed RES.

Resolution No. 10 adopts the revised rules on what is a “contestable customer” or those who are required to source power from a RES. This would have covered end-users with an average demand of at least 1 megawatt starting Dec. 26, 2016. The aim is to gradually lower the threshold until it reaches the households.

The Court noted that petitioners have established a clear, legal right to the TRO considering that the EPIRA Law provides for the voluntary migration of end-users to the contestable market and there appears to be no basis for the mandatory migration being ordered by the DoE and the ERC through the questioned issuances.

The court also noted the urgency of issuing the TRO due to the Feb. 26, 2017 deadline imposed by the ERC to enter into a retail supply contract. “If a TRO is not issued, the petition will become moot and petitioners stand to suffer grave and irreparable injury because they will be disconnected from the distribution utility or made to pay a supplier of last resort a 10% premium between the higher contract cost and the wholesale electricity spot market,” the Court said.

The RCOA policies have also been questioned by distribution utility Manila Electric Co. ( Meralco) and other advocacy groups for allegedly depriving “electricity consumers of their basic constitutional right to freedom of choice.”

However, proceedings on the lower court case were subject to a temporary restraining order from the SC. On Oct. 10, the Supreme Court issued a temporary restraining order prohibiting all orders, resolutions and decisions relating to the case filed by the Meralco assailing the same issuances of the DoE and ERC, pending before a Pasig regional trial court.

A Pasig regional trial court previously ruled in favor of Meralco, which questioned the ERC and DoE provisions that include a directive for all “local RES” to wind down business and instead form an aff iliate with limits on ownership, operation and market share. The high tribunal temporarily blocked the preliminary injunction issued by the lower court.

Sought for comment on the SC decision, ERC Chairman Jose Vicente B. Salazar, in a text message to BusinessWorld said: “We will continue to explore all legal options available to us. We hold firmly to our position that the reforms are good for the country.”

“We hold out hope that the High Court would see the wisdom and merit of our position on these reforms,” Mr. Salazar added.

Energy Undersecretary Felix William B. Fuentebella, for his part, said: “We will check with our legal about this.”

The PCCI was also sought for comment, but chamber has yet to reply.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. —