Manila Electric Co. (Meralco), the country’s largest power distributor, has filed for writ of preliminary injunction in Regional Trial Court (RTC) Branch 157 in Pasig City to Department of Energy (DOE) and Energy Regulatory Commission (ERC) from enforcing and implementing: DOE Circular DC2015-06-0010 entitled Providing Policies to Facilitate the Full Implementation of Retail Competition and Open Access (RCOA) in the Philippine Electric Power Industry.
Based on Meralco’s documents filed to RTC on May 27, the DOE Circular attempts to deny Distribution Utilities (DU) the right to participate in retail supply of electricity by omitting them from the list of those with whom Contestable Customers may enter into Retail Service Contracts (RSC).
And prohibits DUs from ”engag[ing]in the Supply Business beyond [their]Captive Customers” and mandates that the Local Retail Electricity Supplier (Local RES) of DUs continue to perform their Local RES function only until the expiration of its subsisting RSCs.
Captive Market means for those electricity end-users who do not have a choice of a supplier of electricity while Contestable Market who have a choice of a supplier of electricity.
Under the DOE Circular, the DU will be absolutely prohibited from engaging in the Supply Business after the expiration of their subsisting RSCs.
Meanwhile, Under the ERC Resolutions: prohibit DUs from engaging in the Supply of Electricity to the Contestable Market except in its capacity as a Supplier of Last Resort (SOLR), mandate the DU’s Local RESs to wind down their supply businesses within a period of three years; impose upon all RES, including DU-affiliate RESs, a national market-share cap of thirty percent of the total average monthly peak demand of all contestable customers in the Competitive Retail Electricity Market.
“The validity of the DOE Circular and he ERC resolutions is doubtful since both are contra to the express provisions of Republic Act 916 or the Electric Power Industry Reform Act (EPIRA) and its Implementing Rules and Regulations (IRR), including the state policies declared therein, and violate Constitutional guarantees on equal protection, non-impairment of contracts, and prohibition against unlawful taking,” Meralco said in the documents.
Through establishing MPower, Meralco was able to establish its Local RES.
MPower was established as a separate business unit of Meralco pursuant to ERC Resolution 49, Series of 2006, or the Business Separation Guidelines, which required the operational separation between the DU’s regulated and non-regulated activities.
The establishment of MPower marks Meralco’s compliance with the structural and functional unbundling under Rule10, Section 4 of EPIRA IRR.
Meralco’s unbundling plan was approved by ERC in a decision dated 9 April 2008 in ERC Case 004-438. MPower, as Meralco’s Local RES, was thus set-up to cater to the non-regulated activity of retail supply of electricity to contestable customers within Meralco’s franchise area.
Pursuant to ERC Resolution 01, Series of 2011, Meralco sent a letter dated 17 June 2011 to ERC, notifying it of Meralco’s intent to operate a Local RES. In a reply
letter dated 30 June 2011, the ERC acknowledged receipt of Meralco’s notice of intent.
“Notably, the ERC did not object to Meralco’s establishing of a local RES; and instead reminded Meralco that it’s local RES should comply with the requirement set out in the revised rules on the issuances licenses to RES,” Meralco said.