CA ruling on WESM price spike to cost consumers P17 B

MANILA, Philippines — Customers are expected to bear the brunt of the Court of Appeals’ decision reversing the Energy Regulatory Commission’s (ERC) order which voided the sharp spike in spot market rates in December 2013 .

Advocacy group Citizen Watch said the CA decision would pass on some P17 billion of charges to power consumers in Luzon.

“Electricity consumers in Luzon will bear the burden of the CA decision as it would force distribution utilities to collect from end-users more than P17 billion just so the generation companies can get additional profits,” Citizen Watch convenor Tim Abejo said.

The CA declared ERC’s orders null and void and reinstated the prices for the November and December 2013 supply months in the wholesale electricity spot market (WESM) for Luzon.

According to the CA, ERC’s orders were “tainted wth factual errors and legal absurdities” since there was no credible basis to conclude that power generators withheld capacity during the period.

The intervention by the ERC reduced rates to more than a third from P24 billion to P7 billion.

Citizen Watch said a typical household would have to pay an average of P700 on top of its monthly electric bill, while commercial and manufacturing establishments could expect hikes of up to P10,000 and P350,000, respectively.

“Some P50 billion profits were made by power generation companies in 2013, which is set to increase even more given the additional multi-billion windfall,” Abejo said.

In its March 2014 decision, the ERC said there was “market failure” in the WESM that had pushed rates by more than half of what was justified during the period.

During that time, the Malampaya project shut down its gas pipeline for maintenance from Nov. 11 to Dec. 10, leaving gas-fired power plants running on limited capacity and distribution utilities to source from WESM, the country’s trading floor for electricity.