TRO vs Meralco rate increase extended

Edu Punay (The Philippine Star) - April 23, 2014 - 12:00am

MANILA, Philippines - The Supreme Court (SC) yesterday extended for the second time the temporary restraining order (TRO) against Manila Electric Co. (Meralco)’s P4.15 per kilowatt-hour rate increase.

In summer session in Baguio City, the justices voted 10-4 to grant the motion of petitioners led by Bayan Muna party-list Reps. Neri Colmenares and Isagani Zarate to extend the TRO that also expired yesterday.

This time, the SC extended the halt order for an indefinite period.

The high court also extended “until further orders” the other TRO enjoining generation companies (Gencos) and power suppliers from demanding and collecting generation charges from Meralco, which the latter failed to pay after the court stopped its P4.15 power hike.

The TRO was first issued by the high court on Dec. 23 last year for an initial period of 60 days and extended for another 60 days last February also upon similar plea of petitioners.

In their urgent motion last week, petitioners argued that not extending the TRO “will leave the petitioners, together with millions of Meralco’s captive market, unprotected, as respondents will be free to charge the consumers with P4.15/kwh rate increase despite prima facie findings of collusion, anti-competitive behavior and abuse of market power prevailing in the market during the period questioned and despite the pendency of these consolidated cases.”

Petitioners reiterated their warning that lifting the TRO would immediately lead to inflation as the rate hike would add billions to production cost of manufacturers, which would push the prices of goods and services up.

They also rebutted the warning of Meralco in oral argument last Feb. 4 of power outages should it fail to collect the generation costs from customers, which it owes respondent Gencos.

The petitioners insisted that Meralco’s warnings of blackouts are baseless, especially since the Department of Energy publicly announced that there is no undersupply of electricity and the supply situation during summer will not result in blackouts.

Gencos, on the other hand, continued to threaten Meralco with very high penalties, interest rates and legal actions for the delay in the payment of the generation costs that the latter has not paid them on the basis of the TRO, they added.

Other petitioners in the case are Gabriela Women’s Party Reps. Luz Ilagan and Emmie de Jesus, ACT Teachers Rep. Antonio Tinio and Kabataan Rep. Terry Ridon.

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

The second was held last Feb. 4 with Meralco facing the high court while the third had the Department of Energy and Energy Regulatory Commission (ERC) taking the podium.

The SC has already submitted the case for resolution.

Meralco, the country’s top power distributor, said it respects the order of the SC extending the TRO on its December generation charge hike of P3.44 per kwh and the firm shall fully comply with the ruling, said Meralco first vice president and deputy general counsel and head of legal William Pamintuan.

Energy Secretary Carlos Jericho Petilla expressed hopes that the SC would soon issue a final decision on the matter.

“We respect the decision of the SC but we are also hoping that a final decision will eventually be issued so we can concentrate on moving forward,” Petilla said yesterday.

The SC issued a TRO against Meralco’s December 2013 generation charge, which rose to P9.10 per kwh from only P5.67 per kwh in November.

The generation charge accounts for roughly 65 percent of the total electricity bill. It is the cost of power purchased by Meralco from power generators.

With the extended TRO, Meralco still cannot implement the order of power regulator ERC. 

The ERC earlier voided the rates at the Wholesale Electricity Spot Market (WESM), the trading floor for electricity, for the November 2013 and December 2013 supply months, citing market failure and instead ordered market operator Philippine Electricity Market Corp. (PEMC) to issue recalculated rates.

In a press briefing last month, Meralco chief finance officer Betty Siy-Yap said based on the company’s estimates, the generation charge for the month of December will go up by P0.2715 per kwh instead of the original P3.44 per kwh.

This means that generation charge for the December bill will be at P5.9388 per kwh instead of the original P9.10 per kwh.

This developed as Meralco clarified that for its Interruptible Load Program (ILP), typically, a customer consuming 200 kilowatt-hours will pay an extra 52 centavos in the total monthly electricity bill if the ILP is implemented where 10 ILP customers will de-load 10 MW for 10 hours.

Under the ILP, customers with large loads, like commercial establishments, will be asked to operate their own generator sets if the grid operator projects a need to augment generation capacity in the Luzon Grid.

Through this, the aggregate demand for power from the system will be reduced to a more manageable level, helping ensure the availability of supply during the season.


SC order welcomed

Malacañang welcomed yesterday the decision of the SC indefinitely extending the TRO on the December 2013 rate hike of Meralco.

While waiting for a final decision on the case, presidential spokesman Edwin Lacierda said an extension of the TRO would “certainly provide comfort to our countrymen especially at this time when there is more consumption demand during summer.”

Earlier, the Palace said it was expecting lower electricity rates with the ERC’s March 3 order stating that prices in the WESM during the period covering the Malampaya shutdown could not qualify as “reasonable, rational and competitive.”

The ERC also made the manifestation to the SC, which issued a TRO against the high power rate hike imposed by Meralco because of the spike in WESM prices.

The ERC ordered the imposition of regulated prices in lieu of the voided rates. This ruling covers Luzon WESM prices and excludes Meralco in view of the SC’s TRO.

Bayan Muna also welcomed yesterday’s SC decision.

“This is indeed a welcome development so that electricity consumers would not have to bear the unjust power rate hike of Meralco. We just hope that the SC will eventually declare the P4.15 rate hike void as well as the subsequent proposed increases connected to the market manipulation and collusion of power industry players,” Colmenares said.

“We also hope that the Supreme Court would finally declare the Electric Power Industry Reform Act (EPIRA) unconstitutional so that this type of unjust rate hikes would not happen again,” he said. – With Iris Gonzales, Aurea Calica, Jess Diaz, Paolo Romero, Artemio Dumlao

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