SC upholds ruling on voiding of power supply deals after June 2015

MANILA, Philippines —  The Supreme Court stood by its earlier ruling that ordered the conduct of competitive selection process on power supply agreements.

The SC en banc voted on July 23 to dismiss the Energy Regulatory Commission’s motion for reconsideration. The latest action from the SC deems the ruling final.

JUST IN: Supreme Court has affirmed with finality its ruling voiding power supply agreements of Meralco, ordering ERC to conduct competitive selection process as it junked ERC's appeal. | @edupunay pic.twitter.com/zohbIInDBC

— The Philippine Star (@PhilippineStar) August 8, 2019

The court rejected the appeal as, it said, “the basic issues raised therein have been passed upon by this Court and no substantial arguments were presented to warrant the reversal of the questioned decision.”

READ: SC says energy regulatory body erred in delaying implementation of bidding rule

The case stemmed from a 2016 petition filed by the Alyansa Para sa Bagong Pilipinas that urged the SC to stop the ERC from approving a 20-year power supply agreement between utility giant Meralco and several general companies.

May 2 ruling

On May 2, the SC held that the ERC committed grave abuse of discretion amounting to lack or excess of jurisdiction in postponing the competitive selection process.

The said process is a form of public bidding for the purchase of electricity by distribution utilities. The bidding requirement aims to protect consumers.

In its earlier ruling, the SC held that all distribution utilities’ PSA applications on or before June 30, 2015 were required to comply with the CSP in accordance with the 2015 Department of Energy circular.

The said circular, which became effective on June 30, 2015, was issued following the Electric Power Industry Reform Act of 2001. It mandates all distribution utilities to undergo a competitive selection process in securing PSAs.

But the SC pointed out that the ERC issued a resolution on Oct 20, 2015, stating that “pending the issuance by the ERC of a prescribed CSP, a distribution utility may adopt any accepted form of CSP.

A later resolution issued by the ERC set the cut-off date for compliance of the competitive selection process requirement to Nov. 7, 2015, instead of June 30, 2015.

“Thereafter on March 15 2016, the ERC issued ERC Resolution No. 1. This time, the said resolution restated that the effectivity of the SP requirement for PSAs is on April 30, 2016 instead of November 7, 2015, as previously set in ERC Resolution No. 13,” the SC PIO said.

The SC, in the ruling penned by Senior Associate Justice Antonio Carpio, stressed that the ERC’s authority is “limited to implementing or executing CSP in accordance with the 2015 DOE Circular, not postponing CSP so as to freeze CASP for at least 20 years, effectively suspending CSP for one entire generation of Filipinos.”

The SC also ruled that the power purchase cost “after compliance with the CSP shall retroact to the date of effectivity of the PSA, but in no case earlier than 30 June 2015, for purposes of passing the purchase cost to the consumers.”

In May, the ERC said that over 90 PSAs were hit by the CSP directive, including seven contracts of Meralco with over 3,500 megawatts in capacity.

READ: DOE to release list of power deals covered by SC ruling

Energy Secretary Alfonso Cusi then said: “The decision of the Supreme Court is very clear. For Meralco, they have to do it fast. Don’t waste time.”

Meralco earlier warned of SC ruling’s massive implications in the power industry. — Kristine Joy Patag with a report from The STAR/Danessa Rivera