SC orders DOE, ERC to answer petitions against new regulations

The Supreme Court (SC) ordered yesterday the Department of Energy (DOE) and the Energy Regulatory Commission (ERC) to answer in 10 days the petition against the regulations that compel big electricity consumers with at least one megawatt monthly demand to abandon their current contracts and deal only with any of the power suppliers chosen by the ERC.

In a full court resolution issued during its full court session, the SC also directed the DOE and the ERC to comment on the plea for a temporary restraining order (TRO).

It took note of the Feb. 26, 2017 deadline imposed by the ERC on end-users to enter into retail supply contracts with accredited retail electricity suppliers (RESs).

The SC acted on the petition filed by the Philippine Chamber of Commerce and Industry (PCCI), Ateneo De Manila University, San Beda College (Alabang), and mall owner Riverbanks Development Corporation.

The petitioners told the SC that the new regulations will not promote free competition among power suppliers and will lead to higher prices of electricity that would impact negatively on the economy.

Challenged as violative of the right to due process and equal protection, and for being an unreasonable exercise of police power were:

1. DOE Circular No. DC2015-060010 – Providing Policies to Facilitate the Full Implementation of Retail Competition and Open Access (RCOA) in the Philippine Electric Power Industry.

2. ERC Resolution No. 05, Series of 2016 – A Resolution Adopting the 2016 Rules Governing the Issuance of Licenses to Retail Electricity Suppliers (RES) and Prescribing the Requirements and Conditions Therefor.

3. ERC Resolution No. 10, Series of 2016 – Adopting the Revised Rules for Contestability.

4. 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.

5. ERC Resolution No. 28, Series of 2016 – Revised Timeframe for Mandatory Contestability, amending Resolution No. 10.

The petitioners said that the DOE and ERC regulations prohibit a distribution utility from engaging in the supply business as a “local RES” or a retail supplier within its franchise.

It described as arbitrary the deadline imposed on big power consumers to enter into new contracts not later than Feb. 26, 2017 or be slapped with a penalty of disconnection of service or payment of 10 per cent premium on their contract price or the Wholesale Electricity Spot Market (WESM) price, whichever is higher.

They pleaded for the issuance of a temporary restraining order (TRO) from the SC.

Named respondents in the petition were Department of Energy (DOE) Secretary Alfonso Cusi, ERC Chair Jose Vicente Salazar, and ERC Commissioners Alfredo Non, Gloria Victoria Yap-Taruc, Josefina Patricia Asirit and Geronimo Sta. Ana.

The petition pointed out that the DOE and ERC violated the Constitution and the provisions of the provisions of Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA).

It said the new regulations abandoned a previous policy that allows distribution utilities and their retail supply units to compete for large consumers in the contestable electricity market.