High Court to energy execs: Explain rate hike


THE Supreme Court (SC) on Thursday summoned Energy Secretary Carlos Jericho Petilla, Energy Regulatory Commission (ERC) Chairman Zenaida Ducut and Philippine Electricity Market Corporation (PEMC) President Melinda Ocampo to explain why the Manila Electric Co. (Meralco) was allowed to increase its rates by P4.15 per kilowatt-hour late last year.
In its four-page order, the Court ordered the officials to give their expert opinions on the case, particularly to “answer questions related to, among others, their processes and procedures.”

The Court will hear oral arguments on January 21 on the petitions questioning the rate increase that the ERC approved in December. A temporary restraining order from the Court stopped Meralco from implementing the rate hike.

The petitions were filed by several members of the House of Representatives and civic groups.

In their petition, Bayan Muna’s Neri Javier Colmenares and Carlos Isagani Zarate; Gabriela’s Luz Ilagan and Emmi de Jesus; ACT Teachers Party’s Antonio Tinio, and Kabataan’s Terry Ridon said Meralco and power producers connived to manipulate the price of electricity to justify the rate increase.

The original respondents were Meralco, the Department of Energy and ERC. But the SC granted Meralco’s plea to include the National Grid Corporation of the Philippines (NGCP), Power Sector Assets and Liabilities Management Corp (PSALM), Philippine Electricity Market Corp. (PEMC) and several power suppliers and generation companies (GenCos) as respondents.

The suppliers are PEMC, First Gas Power Corp., South Premiere Power Corp., San Miguel Energy Corp., Masinloc Power Partners Co. Ltd., Quezon Power (Phils.) Ltd. Co., Therma Luzon Inc., Sem-Calaca Power Corporation, FGP Corp. and National Grid Corporation of the Philippines.

The Court itself included several companies who trade at the PEMC as parties to the case.

They are AP Renewables Inc., Bac-Man Energy Development Corporation/Bac-Man Geothermal Inc., First Gen Hydro Power Corp., GNPower Mariveles Coal Plant Ltd. Co., PANASIA Energy Holdings Inc., Power Sector Assets and Liabilities Management Corp., SN Aboitiz Power, Strategic Power Development Corp., Trans-Asia Power Generation Corp. and Vivant Sta. Clara Northern Renewables Generation Corp.

In the guidelines agreed on by all parties in the case, the oral arguments which focus on:

• Whether the ERC violated the consumer’s right to due process and a provision in the Electric Power Industry Reform Act (EPIRA) requiring it to protect the public from market abuse.

• Whether the amendment to Section 4(e), Rule 3 of the EPIRA’s Implementing Rules and
Regulation which allows automatic rate adjustments or increases to recover generation cost violates due process of law is valid.

• Whether the ERC resolution allowing rate adjustments proposed by Meralco last Dec. 9 is valid.

• Whether automatic rate adjustments to recover generation cost amount to a surrender of ERCs regulatory function in violation of the EPIRA.

• Whether Section 6 and 29 of the EPIRA are unconstitutional in declaring that (a) power generation supply are not public utilities and (b) their charges are beyond regulation by the ERC.

Also on Thursday, Malacañang said it will study the possibility of slashing the value-added tax (VAT) on electricity.

Presidential Communications Secretary Herminio Coloma Jr. said the government has to balance proposals to remove the VAT on electricity with the need to raise revenues.

“The value added tax is a major source of revenue for the government, that’s why it requires further study by the BIR [Bureau of Internal Revenue] and DOF [Department of Finance],” Coloma told reporters.

“We will wait for the response of the BIR and the DOF,” he added.

Several lawmakers have proposed that the VAT on the power industry be reviewed with a view to bringing down power costs.

Meanwhile, Quezon City Rep. Winston Castelo on Thursday urged Malacañang to certify as urgent measures amending the EPIRA or Republic Act 9136.

“Measures proposing to extend the provision implementing subsidized rates for marginalized end-users would minimize the impact of electricity rate hikes on the poor,” Castelo said.

Section 73 of RA 9136 provides for a “Lifeline Rate,” a socialized pricing mechanism for low-income power consumers, but which is effective only for 10 years.

The Lifeline Rate provision expired in 2011, “which spurred the skyrocketing of power rates in the country,” Castelo said.

“This 2014, when the general direction of the government is to uplift the economic welfare of the poor who were recently blighted by natural calamities and man-made strife, legislative agenda should be crafted so as to favor them,” he said.

With A Report From Jing Villamente


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