The Office of the Ombudsman has again ordered the suspension of four commissioners of the Energy Regulatory Commission (ERC), the second time it has done so in the last six months.
Acting on a syndicated estafa complaint by a consumer group, the Ombudsman ordered the ERC commissioners suspended for simple neglect of duty for tolerating the misuse of bill deposits by the Manila Electric Co. (Meralco), which were co-mingled with capital or operating costs.
In December 2017, the ERC suspended all four commissioners for a year over alleged anomalous power supply deals with 38 companies, seven of which were affiliated with Meralco.
The Court of Appeals, however, issued a temporary restraining order to stay their suspension.
In the new case, Graft Investigation and Prosecution Officer III Cherry Bautista-Bolo recommended the suspension of ERC Commissioners Alfredo S. Non, Gloria Victoria C. Yap-Taruc, Josefina Patricia M. Asirit and Geronimo D. Sta. Ana for three months. The recommendation was approved by Overall Deputy Ombudsman Melchor Arthur Carandang.
The suspension is in response to a complaint filed by the National Association of Electricity Consumers for Reforms, Inc. (Nasecore) against the four ERC commissioners over the alleged unauthorized use by Meralco of the bill deposits of customers, and the unjust fixing of its interest rates and the non-crediting of interest in favor of the consumers.
While the Ombudsman found the respondents not liable for estafa or misappropriation of funds relative to the management of bill deposits, it held that the four ERC commissioners failed to strictly implement the rules defining the nature of bill deposits as mere “mere guarantee in payment of bills,” which must be returned upon termination of the distribution utilities (DUs) service.
The anti-graft body said the respondents also failed to perform their mandate to issue rules or policies such as the creation of a separate escrow account to avoid commingling of bill deposits with the capital or operational expenses of Meralco or any other utility for that matter.
“Meralco treated the bill deposits as part of its capital without the benefit of a reasonable return of interest to accrue to consumers – a practice which respondents appeared to have acquiesced in,” the Ombudsman resolution said.
“In fact, without the letter of Nasecore… respondents will continue to ignore their mandate in promoting, safeguarding and protecting the interest of the public consumers by regulating, monitoring or checking Meralco’s utilization of the bill deposits, at the very least,” the resolution said.
Nasecore claimed that based on its projection, the total consumers’ deposits now amount to P61.36 billion from 2006 to 2016 but Meralco accounted for the balance of only P26.5 billion in its financial statement.
Thus, the group said the consumers have been robbed a total of P34.84 billion or more considering that the amount will still increase after due accounting by the ERC and Commission on Audit (COA) to determine the actual amount accrued compounded interest earned by the bill deposits.
Although the respondents argued that the utilization of the bill deposits for DUs or Meralco’s operation is an acceptable practice, the Ombudsman pointed out that it does not mean that such practice is legal or advantageous to the public.
The four commissioners have filed an appeal.
Rolly Faller, private legal counsel for the commissioners said the suspension order (signed on May 18 but approved on May 22) is executory but the Supreme Court held in one case that CA may issue a temporary restraining order versus the Ombudsman decision as it did in February and April 2108.
“The suspension order is now the subject of a petition we filed with the Court of Appeals. We will await the action of the CA on our request for TRO. We stated the need for TRO because the ERC, as a collegial body, cannot act on matters concerning public interest because the law requires a quorum of three to discharge the functions of the commission,” Faller said.
Faller said the commissions are also waiting for the decision of the Office of the President on the implementation of the order.
“Since the four commissioners are under the OP, we will also wait for the disposition of the OP as to whether it will cause the implementation of the suspension order,” he said.
Faller said that pending the implementation order from the OP, the commissions “can still discharge the functions of the office.”
Senator Sherwin Gatchalian, head of the Senate committee on energy, also scored the ERC allowing Meralco to appropriate billions of pesos worth of consumer deposits for its own purposes.
Gatchalian said ERC was created to safeguard the rights and welfare of power consumers, who would otherwise be defenseless against unfair, anti-competitive, and outright anti-consumer practices of powerful, well-moneyed energy industry players – a perfect example of which was the “outrageous misuse” of bill deposits by distribution utilities.
“Unfortunately, instead of standing up for the consumers, the ERC allowed an energy industry titan to appropriate billions of pesos worth of consumer deposits for its own corporate purposes. This is absolutely unacceptable,” he said.
“What is even more unacceptable is the fact that this is the second time within the past seven months that the Ombudsman has found the ERC commissioners administratively liable for failing to fulfill their duty to protect the interests of the consumers. Quite frankly, it’s an embarrassment,” he added.
Gatchalian called for the implementation of sweeping reforms that will restore the institutional integrity of the ERC and rebuild the public confidence in the commission that has been virtually eliminated by the never-ending list of recent scandals.