Rate hike wakes up after 8 years

Reliable power supply is important for the country’s economic growth. We have seen in the past just how fragile our power supplies can be. When electricity goes out, households are greatly inconvenienced and businesses grind to a halt. Post-pandemic, the country’s annual power consumption is seen growing at a compound annual growth rate of 5.8 percent from 82.5 terawatthour (TWH) in 2020 to 145.1TWH by 2030. To meet this growing demand, we need investors that can help increase current installed power capacity.

The Electric Power Industry Reform Act (Republic Act 9136) was signed in 2001 to bring about greater efficiency in the generation, transmission and distribution of electricity. Under the Epira, only transmission and distribution utilities need a franchise authority from Congress in order to operate. Generation utilities and electricity suppliers simply have to obtain a license from the Energy Regulatory Commission (ERC) to engage in their economic activities.

Meralco is the country’s largest electric distribution utility company, covering 36 cities and 75 municipalities. It provides electricity to more than 5 million customers in Metro Manila, representing approximately 55 percent of the country’s total power requirements. Under RA 9136, Meralco buys contracted power from the independent power plants. The ERC approves electric power rates charged by Meralco.

On Tuesday, the Supreme Court put closure to the case that assailed the ERC’S approval of Meralco’s request to stagger collection of its rate adjustments for the November 2013 supply month. The ruling lifted a permanent injunction against the rate increase that the high court granted in April 2014 after the issuance of a series of temporary restraining orders, paving the way for Meralco to collect the rate hike after eight years.

Power costs went up in November 2013 because of several factors: The Malampaya facility was on scheduled maintenance shutdown and shaved off supply from the natural gas plants, which supplies about a third of Luzon power requirements. This was aggravated by the simultaneous and unplanned outages of various generating plants.

Former Bayan Muna Rep. Carlos Isagani Zarate said the Supreme Court’s decision lifting the eight-year-old injunction against a P22.64-billion rate hike sought by Meralco 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 rates—may already break the Filipino consumers’ back,” Zarate said.

Bayan Muna and the National Association of Electricity Consumers for Reforms filed the case at the High Court, challenging the supposed lack of due process and the ERC’S alleged grave abuse of discretion in approving the power rate hike.

In a close 6-5 vote, the tribunal said the ERC did not commit grave abuse of discretion when it approved the staggered increase, since it acted within the confines of its authority.

The Alyansa ng mga Grupong Haligi ng Agham at Teknolohiya para sa Mamamayan said the Supreme Court’s decision considered the welfare of consumers. AGHAM President Angelo Palmones said the ruling recognized that the ERC protected consumers’ interests when it allowed the staggered recovery of the adjustment charges and, at the same time, denied the request for carrying costs.

Disagreeing with the Supreme Court verdict, Zarate said: “We still maintain our position that the energy players then gamed the electricity stock market that resulted in the highest rate hike at additional P4.15 per kwh. Meralco, as a monopoly in its big area of operation, also abused its dominant position to the prejudice of consumers.”

Defeated at the Supreme Court, the petitioners are now trying to bring their case to the court of public opinion. We respect their right to criticize the SC decision and say what they like. But they should stop throwing serious allegation of collusion with no clear basis, as this not only disparages the energy industry but also sows the seed of distrust among consumers.

Distrust adversely impacts how society functions, as poet Anthony Liccione said: “Distrust is like a vicious fire that keeps going and going, even put out, it will reignite itself, devouring the good with the bad, and still feeding on empty.”