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Gov’t justifies approval of Meralco rate hike

MANILA, Philippines - The Department of Energy (DOE) defended before the Supreme Court (SC) yesterday its approval of the Manila Electric Co. (Meralco)’s P4.15 per kilowatt-hour power rate increase.

The state-run Power Sector Assets and Liabilities Management (PSALM) could have violated the rules of the Wholesale Electricity Spot Market (WESM), the DOE said.

Energy Secretary Jericho Petilla told the high court PSALM could have engaged in anti-competitive behavior in offering the Malaya power plant capacity without transmitting power.

On questioning of Associate Justice Marvic Leonen, Petilla said under the rules, the “open breaker” status was illegal and anti-competitive behavior.

During oral arguments, Assistant Solicitor General Vida San Vicente asked the SC to dismiss the petitions assailing the record-high rate hike for being premature.

“Petitioners did not avail of the proper remedy,” she said.

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“It is respectfully submitted that petitioners should have contested before the ERC (Energy Regulatory Commission) the automatic adjustment of the November 2013 generation cost under section 43 of the EPIRA (Electric Power Industry Reform Act).”

San Vicente said petitioners failed to exhaust available administrative remedy with the ERC, which has jurisdiction over all cases contesting rates, fees and penalties imposed on cases involving disputes between and among participants in the energy sector.

The DOE and ERC did not commit grave abuse of discretion in approving the rate hike without publication of the adjustment in generation cost, she added.

San Vicente said the requirement of publication under Section 4 (e) Rule 3 of EPIRA Law does not apply, as exemption is provided by the Automatic Adjustment of Generation Rate (AGRA) rules.

“Under the AGRA rules, the adjusted generation cost was automatically computed using a prescribed formula without need of ERC verification and confirmation,” she said.

San Vicente rejected allegations that the DOE had violated due process, as a review of the supply contract and the determination of generation cost went through an evaluation process through notice and hearing.

“The safeguard is a rate fixing process, hence due process is observed,” she said.

San Vicente said the SC need not rule on the constitutionality of Sections 6 and 29 of the EPIRA Law.

“To declare said provisions unconstitutional would be tantamount to coming up of a policy direction on the matter,” she said

“The assailed provisions of Section 6 and 29 constitute a policy determination of Congress, which the courts cannot overturn without offending the Constitution.“

During interpellation, the justices grilled ERC executive director Francis Saturnino Juan over the agency’s approval of the rate hike.

Justice Leonen asked the ERC official why the ERC didn’t find anything strange with the high generation cost.

Juan replied: “When the Dec. 5 letter was issued, there was no indication of irregularity,” adding that it had no reason to suspect anything wrong since “there was reported sufficient capacity.”

Therma Mobile Inc. (TMO) backed Meralco’s claim that they did not benefit from the rate hike. It paid at contract price regardless of bid price, TMO added.

It only followed the nomination method “to comply with the must offer rule, observe technical limits of the plant and use the plant on peak hours,” the firm said.

The first oral argument was held last Jan. 21 with petitioners Bayan Muna and consumer group National Association of Electricity Consumers for Reforms (Nasecore) presenting their case.

The second oral argument was held last Feb. 4 with Meralco facing the SC.

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