SC junks govt corporation’s petition vs power producer

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THE Supreme Court (SC) has affirmed a decision of the Court of Appeals (CA) that upheld rulings of the Energy Regulatory Commission (ERC) specifying SEM-Calaca Power Corporation’s (SCPC) capacity allocation as a power producer.

In the decision, the SC’s Third Division junked a petition for review on certiorari filed by the Power Sector Assets and Liabilities Management Corporation (PSALM) seeking to annul and set aside the CA ruling.

The Electric Power Industry Reform Act of 2001 (Epira), or Republic Act (RA) 9136, which was signed into law by then-President Gloria Macapagal Arroyo on June 8, 2001, was intended to provide a framework for the restructuring of the electric power industry, including the privatization of the assets of the National Power Corporation (NPC), the transition to the desired competitive structure and the definition of the responsibilities of the various government agencies and private entities with respect to the reform of the electric power industry.

The Epira also provided for the creation of petitioner PSALM, a government-owned and controlled corporation that took over ownership of the generation assets, liabilities, independent power producer (IPP) contracts, real estate and other disposable assets of the NPC.


Among the assets put on sale by PSALM was the 600-MW Batangas Coal-Fired Thermal Power Plant in Calaca, Batangas (Calaca Power Plant).

In July 2009, DMCI Holdings Inc. (DMCI) was declared the highest bidder in the sale.

The sale was effected through an Asset Purchase Agreement (APA) executed by PSALM and DMCI on July 29, 2009, and became effective on August 3, 2009.

On December 2, 2009, DMCI transferred all of its rights and obligations under the APA and the Land Lease Agreement (also called Final Transaction Documents) to SCPC by entering into an Amendment, Accession and Assumption Agreement that was signed by PSALM, DMCI and SCPC.

The SCPC initiated the case by filing a petition for dispute resolution (with prayer for provisional remedies) before the ERC against NPC and PSALM.

The Court of Appeals sustained the ERC’s interpretation of the APA that SCPC’s obligation was to supply 10.841 percent of Meralco’s energy requirement but not to exceed 169,000 kW at any given hour, as such interpretation would reconcile the presence of the two figures in Schedule W and harmonize the provisions of the contract.

Also, the appellate court upheld the ERC in explaining why a cap of 169,000 kW is placed on SCPC’s obligation to supply electricity to Meralco, the country’s biggest power distributor.

The ruling was penned by Associate Justice Diosdao Peralta and concurred in by Associate Justices Prebitero Velasco, Bienvenido Reyes, Jose Portugal Perez and Francis Jardeleza.

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