ERC says CA ruling on SMC power rate hike appeals yet to have impact

Customers of the Manila Electric Company at this time should not worry over the likelihood of higher electricity bills after the Court of Appeals overturned the Energy Regulatory Commission's rejection of the power rate hike petitions.

ERC chairperson and CEO Monalisa Dimalanta said the appellate court’s verdict reversing the commission's turning down the power rate petitions of San Miguel Corp.'s power units and Meralco was not yet final.

“We can still file for a motion for reconsideration. If granted, that’s another discussion. If denied, we can go all the way to the Supreme Court,” Dimalanta told reporters in an interview on Thursday.

“There is no computation yet of the rate hike… I do not foresee any rate impact yet,” she said.

SMC on Wednesday disclosed that it received the CA 13th Division’s decision, dated June 27, 2023, granting the consolidated petitions of its power units San Miguel Energy Corp. (SMEC) and South Premiere Power Corp. (SPPC). 

The CA ruling annulled and set aside the ERC’s orders dated September 29, 2022 for “grave abuse of discretion amounting to lack or excess jurisdiction.”

The appellate court also granted the joint motions for price adjustment of SPPC (from June 2022 to January 25, 2023) and SMEC (from June 2022 to date).

To recall, in September 2022, the ERC denied the joint motions of Meralco, SMEC, and SPPC as the parties can find cheaper sources despite the increase in the operating cost of power plants.

Meralco and San Miguel earlier cited the higher prices of coal and natural gas materials used to produce electricity in petitions.

In denying the rate hike petition, the ERC argued that Meralco’s power supply agreements (PSAs) with SMEC and SPPC are fixed-price by nature and the grounds for increase cited were not among the exceptions that would allow for price adjustment.

The decision prompted the parties to file a petition before the CA, urging the appellate court grant the rate hike “without prejudice to any further requests for price adjustments for June 2022 onwards.”

In a separate statement, the ERC confirmed it received the CA 13th Division’s ruling and described the decision as “unfortunate” and “disconcerting” as it “remains committed to the rule of law in protecting the consumers.”

The ERC said it will determine the best legal recourse with its counsel, the Office of the Solicitor General (OSG), which will include “the filing of a Motion for Reconsideration of the CA’s joint decision.”

“The ERC hopes the CA will revisit the records of the case as well as the arguments of the parties and uphold the commission’s ruling,” the regulator said.

Sought for further details, Dimalanta said the ERC, in particular, will seek clarification on the authority of the CA to issue a permanent injunction since the Electric Power Industry Reform Act (EPIRA) only allows the Supreme Court to issue a temporary restraining order or injunction against the regulator’s decisions.

“That will affect everything in the industry. We wanted that to be clarified on that,” Dimalanta said.

“It’s okay that the CA reviews factual matters. It’s also correct that the CA resolves issues, but is it included in their authority to set aside [our] rulings..?  We wanted to clarify that,” she added.

In its ruling, the CA also made permanent the writ of preliminary injunction issued in favor of SPPC.

In January, the CA granted SPPC’s application for a writ of preliminary injunction as the temporary restraining order issued by the court last November 2022 was only good for 60 days.

In November 2022, the CA temporarily suspended the PSA between SPPC and Meralco, triggered by the company’s plea after the ERC rejected the parties’ petition to hike generation charge.

In a separate statement, San Miguel Global Power —SMC’s holding firm for its power ventures— said the CA’s decision “upholds the constitutional mandate of due process that guarantees the right to be treated fairly and effectively by quasi-judicial bodies like the ERC, and in the process, assure a fair and balanced regulatory environment that equally protects the rights and interests of all stakeholders involved.”

“It is regrettable that the ERC's unfair decision early on to reject our joint petition with Meralco for a temporary rate hike — despite proving to be the least cost option at that time for power consumers — resulted in consumers shouldering the burden of much higher electricity rates,” San Miguel Global Power said.

“However, we assure the public that we will continue to find ways to help ease the impact of the current power crisis we are facing along with other nations globally, while ensuring we sustain operations and meet our country’s evolving power needs,” the company added.

Meralco, in its earlier statement, said it will clarify some matters in the CA decision.

The power distributor said it shall start negotiating for an emergency power supply agreement to replace any capacity it might lose should San Miguel terminate its PSA with the power distributor as a result of the CA decision. —NB, GMA Integrated News