The Supreme Court has upheld the decision of the Court of Appeals that allowed the Manila Electric Company (Meralco) to increase its rate.
In a decision dated Oct. 10, 2016 but released only on Thursday, the high court’s First Division denied the petition of the National Association of Electric Consumers (Naseco), the Federation of Village Associations (Fova), and the Federation of Las Piñas Village Associations (Folva) against the rate increase sought by Meralco.
It affirmed the Jan. 29, 2010 decision of the appellate court approving the Meralco rate increase.
Naseco and the other petitioners assailed the Court of Appeals’ decision, claiming that with the approved adjustment, Meralco would generate an average annual return of investment of 51 percent which would be above the 12 percent ROI that it is allowed.
Furthermore, the adjustment would mean a 30-centavo increase in power rates, they said.
“Due to ERC’s [Energy Regulatory Commission] unbridled approval of the new rates, Meralco was able to amass excess profits of P39,208,556,000 for the period 2003 to 2010,” derived from 4.3 million consumers, the petitioners said.
But the high court said the petitioners failed to show the unreasonableness of the approval of the new rates for Meralco. It said the case was moot and academic because of the shift from the former method of computing the rates—the Rate on Return Base, or RORB–to a new one called the Performance-Based Regulation, or PBR.
The case stemmed from the approval by the ERC on March 20, 2003 of a 15 percent rate adjustment sought by Meralco. The high court said the ERC, in line with the PBR methodology, had used macroeconomics forecasts available for the Philippines.
It said the ERC had the authority to adopt alternative forms of internationally accepted rate-setting methods as provided by the Electric Power Industry Reform Act of 2001, also known as the Epira law.
The First Division is composed of Associate Justice Teresita Leonardo-De Castro as acting chairman and Associate Justices Alfredo Benjamin Caguioa, Estela Perlas-Bernabe, Lucas Bersamin and Chief Justice Maria Lourdes Sereno as members. Perlas-Bernabe wrote the decision. Jaime R. Pilapil