We welcome the Supreme Court decision to reject the orders of the Energy Regulatory Commission that allowed power supply agreements between Manila Electric Co. and power generation companies without public bidding. The decision should put an end to sweetheart deals between Meralco and its sister companies engaged in power generation that could disadvantage millions of its customers.
Voting 9-2 in a special session on May 3, the Court granted the petitions of consumer group Alyansa Para Sa Bagong Pilipinas Inc. and the Bayan Muna Party-list group to strike down the 2015 resolutions of the ERC that postponed the implementation of a Department of Energy policy requiring the competitive selection process for all power supply agreements.
The Court ruled that the ERC committed grave abuse of discretion in issuing resolutions that postponed the implementation of a circular that mandated all distribution utilities to undergo a competitive selection process in securing power supply agreements.
The ERC’s authority is limited to carrying out the competitive selection process in accordance with a 2015 Department of Energy circular, said Senior Associate Justice Antonio Carpio, who wrote the majority decision.
“The delegated authority to implement CSP does not include the authority to postpone or suspend CSP for 20 years, beyond the seven-year terms of office of the ERC commissioners postponing or suspending the CSP, and beyond the seven-year terms of office of their next successors, as well as beyond the six-year terms of office of three Presidents of the Republic,” the Court said.
This will compel distribution utilities like the Meralco to enter into a competitive selection process instead of earlier deals that advocates say could burden consumers for 20 years.
The decision stemmed from a November 2016 petition by the Alyansa Para sa Bagong Pilipinas that questioned ERC resolutions that effectively allowed power distributors like Meralco to escape the competitive selection process and enter into negotiated deals.
Alyansa said that at the time, Meralco had seven applications with the ERC that were results of self-negotiated deals. Alyansa said Meralco consumers could be burdened for 20 years because the deals would supposedly allow the company to "pass on to consumers self-negotiated rates with sister generators," when the Electric Power Industry Reform Act intended to provide the least cost to consumers.
The Court decision represents a major victory for consumers, but we have yet to see how this will play out in a power supply industry dominated by large private corporations that, by their nature, are driven by profit.
The larger question remains, as well, on why Epira has failed so miserably in its goal to bring down power costs to consumers since the law was passed in 2001.