Electricity generation, supply subject to ERC regulation — SC

The Supreme Court (SC) has upheld some provisions of the Electric Power Industry Reform Act (EPIRA), stating that electricity generation and supply are subject to the regulation of the Energy Regulatory Commission (ERC) despite not being public utility operations.

In a 68-page decision promulgated in July, the SC En Banc upheld the constitutionality of Section 6 and 29 of EPIRA, which declares that power generation or supply of electricity is not a public utility operation, as well as Section 34 and 43(b)(iI), which empowers the ERC to determine, fix, and approve the universal charge imposed.

The SC also upheld the constitutionality of Section 43(f), which empowers the ERC to fix the system loss charges for recovery of the distribution utilities.

The decision stemmed from a petition that challenged the constitutionality of some EPIRA provisions.

The petition was filed after the ERC authorized the Manila Electric Company (Meralco) to recover its generation costs from consumers on a staggered basis.

According to the court, the petitioners argued that the generation and supply sectors of the electric power industry are not public utilities and thus, are not subject to the ERC’s regulation.

The SC, however, found that the provisions of EPIRA are valid.

It said that for a business to be considered public utility, it must provide a service essential to the general public. 

“Power generation and supply companies are not public utilities because they offer their services to limited customers and do not deal directly with the general public,” the SC said in its statement.

“However, they remain under government regulation because the EPIRA expressly provides safeguards against abuse or irregular activity, such as the requirement on these companies to secure from the ERC a certificate of compliance, among other regulations,” it added.

Aside from this, the SC ruled that the universal charge is not a tax because it is not intended to generate revenue but to ensure the viability of the electric power industry. —AOL, GMA Integrated News