Power rates poised to go up as SC ruling voids regulated spot market rates in 2013

Electricity prices may go up after the Supreme Court declared as “null and void” an order by the Energy Regulatory Commission imposing regulated power rates at the Wholesale Electricity Spot Market (WESM) for the November and December 2013 supply months.

In a decision penned by SC Associate Justice Jhoseph Y. Lopez and concurred by Chief Justice Alexander Gesmundo and Associate Justices Estela Perlas -Bernabe and Marivic Leonen, the High Court said the ERC order, which voided the Luzon rates in 2013 and instead imposed regulated prices, was based on “unfinished investigation”

ERC, in its order, said the rates during the period “could not qualify as reasonable, rationale and competitive due to the confluence of factors.”

The ERC was investigating the cause of the high power rates and allegations of anti competitive behavior and possible market abuse by some industry players after WESM prices surged to unprecedented levels.

The SC said the ERC did not notify the affected parties about ERC Case No. 2014-021 in violation of their right to due process.

“Most of them manifested before this Court that they filed petitions to intervene in the ERC case, and motions for reconsideration of the March 3, 2014 Order, to challenge the premature and erroneous findings,” the court said.

The ERC order voided the rates at the WESM and ordered the Philippine Electricity Market Corp., then operator of the WESM, to recalculate the rates.

The SC en banc acted on the consolidated petitions filed before the court assailing the ERC’s approval of Meralco’s request to stagger the collection of automatic rate adjustments arising from generation costs for November 2013 to protect consumers from the high electricity prices approved by the power regulator.

It can be recalled that Meralco wrote the ERC stating that as early as October 10, 2013, it sought an audience with the agency on the projected impact of the Spex-Malampaya shutdown on its blended generation charge as it coincided with the shutdown of the other plants.

Meralco said the total generation cost to be passed on to its customers stood at P22.64 billion translating to a generation rate of P9.10 per kWh, up P3.44 per KWh from P5.67 per kWh billed the previous month.

The staggered increase and the imposition of regulated prices, however, was opposed by the power generators.

Meanwhile, the SC affirmed the December 9, 2013 order of the ERC to stagger the collection of the generation costs for the said supply months as there is no basis that the regulator committed grave abuse of discretion.

Former Kabataan partylist Terry Ridon said the SC decision would essentially return the question to the ERC to determine the existence of collusion and price-fixing among power generators.

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

Meralco, for its part, has yet to receive the official copy of the decision.

“Once we receive it though, we will need to study the reported SC decision to understand and see what the actual impact will be,” Meralco said.