Meralco awaits ERC order on implementing SC ruling

The Manila Electric Co. (Meralco) said Tuesday it would ask the Energy Regulatory Commission (ERC) for guidance after the Supreme Court (SC) voided the agency’s March 2014 order that imposed regulated prices.

Meralco head of regulatory affairs Jose Ronald Valles said in a text message that the utility firm will wait for the ERC to issue any directive on how power rates will be affected by the SC order.

“The SC also voided the order of ERC to impose regulated prices during the same period pending result of its investigation over allegations of market power abuse. We will seek clarification with ERC on how and when it will implement this decision in light of the continuing increase in fuel prices today which may be an additional burden on our consumers.

We are hoping that any upward adjustment in the generation cost as a result of the SC decision can be implemented at some future time to allow ERC to finish its investigation,” Valles said when sought for comment.

The ERC order regulated the Wholesale electricity Spot Market (WESM) prices for the supply months of November and December 2013 in a bid to protect public interest by not allowing excessive and unreasonable power prices as a result of the Malampaya gas facility shutdown.

It added that the March 3, 2014 order was primarily intended to address the abnormal spike and unreasonable prices of electricity imposed by power generation companies (gencos) during the said period.

however, the SC noted that the ERC order was issued even if it was still in the process of completing its findings on the possible abuse of market power that could have affected the prices of electricity in the market.

The SC was referring to the erc’s probe on alleged collusion among gencos to manipulate WESM prices.

The Court noted that the ERC also did not notify the affected parties about its investigation, in violation of their right to due process.

The ERC refused to comment until it has received the SC order. “For the record, we have not received a copy of the decision. Upon receipt, we will study the SC ruling and come up with appropriate way forward,” ERC Commissioner Rexie Digal replied via Viber.

The same SC order affirmed the erc’s December 2013 letter-approval to the request of Meralco for a staggered collection of automatic rate adjustments arising from generation costs for November 2013.

The SC said the ERC merely follows existing guidelines on the imposition of the generation rate in approving Meralco’s request.

In a letter dated December 5, 2013, Meralco informed the ERC that the total cost of generation to be passed on to its nearly 5 million captive customers amounted to P22.64 billion, equivalent to a generation charge for the December 2013 billing of P9.1070 per kilowatt-hour (kwh). This is an increase of P3.44 per kwh from the P5.67 per kwh that was billed in the previous month.

“The SC decision allows Meralco to collect the price increase in November 2013 on staggered basis as proposed by Meralco and approved by ERC for the protection of consumers. That would be a big win for consumers especially if that would be implemented today when fuel prices are skyrocketing,” said Valles.

‘Ill-timed’

PETITIONERS slammed the SC’S decision which upheld the order of the ERC approving Meralco’s request for a staggered collection of automatic rate adjustments from generation costs.

In a statement, former Bayan Muna Rep. Carlos Isagani Zarate who is one of the petitioners in the case, said the SC decision allowing the increase in power rate “could not have come at a worse time.”

“With the prices of basic commodities still skyrocketing due to continued big time oil price hikes and the weakening of the peso, this is another unwanted burden on our people. Financial burden like this once Meralco imposes this new power rate hike on top of the already high electricity rate, may already break the Filipino consumers’ back,” Zarate said.

Former Kabataan Partylist Rep. Terry Ridon, also one of the petitioners, said the Court’s decision should pave the way for the ERC to once and for all determine the existence of collusion and price-fixing among power generators.

“This is a win for power generators in the context of limited supply now,” Ridon said.

“The onus is now on the ERC to enact penalty provisions on generators that undertake unplanned or forced outages, which correspondingly spiked prices in the electricity spot market.”

In a decision made public last July 1, the SC held that the ERC’S decision to allow the staggered recovery of the adjustment charges while denying the request of Meralco for carrying costs was intended “to protect the interest of the consumers.”

The power firm attributed the increase in the generation cost to the supposed maintenance shutdown of the Malampaya facility that supplies natural gas to three major power plants—ilijan, San Lorenzo and Sta Rita—which supply an aggregate capacity of 2700 MW electricity to its franchise area.

It also said that the shutdown of Malampaya coincided with the scheduled maintenance of two other plants, Pagbilao 2 and Sual 1, which also collectively contribute over 950 MW to its requirements.

Meralco said because of the events, it was forced to buy expensive power from WESM.

Greenpeace campaigner Khevin Yu, meanwhile, said the SC decision further exposes the consequences of the dependence of Meralco and other energy firms on fossil fuels.

“Meralco earned a net income of P24.6 billion last year. There is no excuse for them to put higher generation costs on consumers’ tabs. Further, Greenpeace’s 2021 Decarbonizing Meralco report found that 97 percent of Meralco’s energy mix consists of fossil fuels, which we know are not only inflexible energy sources, but are also contributing significantly to the worsening climate crisis,” he said.

“Our continued dependence on fossil fuels means we are subject to price volatilities we cannot control, and to finite fuel sources—such as the Malampaya gas field—which will betray us when supplies run out. At this point, RE [renewable energy] is undoubtedly the cleaner, more reliable, and more cost-efficient way to generate power in the Philippines. Only in shifting to RE can Meralco truly show Filipinos that they have our best interests in mind.”