SC voids rules on mandatory power supplies

The Supreme Court declared as void the directives of the Department of Energy and the Energy Regulatory Commission on the mandatory compliance to the retail competition and open access rules.

RCOA allows power consumers to choose their own power suppliers under the Electric Power Industry Reform Act of 2001.

The high tribunal, in a 37-page decision, granted the consolidated petitions seeking to void DOE Circular 2015-06-0110 and ERC Resolutions 5, 10, 11 and 28 series of 2016 on the implementation of RCOA.

Several groups including the Philippine Chamber of Commerce and Industry claimed that the DOE and the ERC issuances–which had been the subject of a temporary restraining order issued in February 2017–were unconstitutional and went against consumers’ “power of choice.”

The groups said the issuances were “unconstitutional for usurping legislative authority, violating the right to due process, equal protection clause and non-impairment clause, as well as being an unreasonable exercise of police power.”

The issuances required large power users or those with consumption of 500 kilowatts and above to enter contracts with any of the 23 ERC-licensed retail electricity suppliers under the stipulated deadlines. Failure to comply would result in disconnection from their respective distribution utilities.

The issuances specifically ERC Resolution 11 imposed restrictions on distribution utilities and retail electricity suppliers and prohibited DUs from participating as suppliers in the contestable market and gave local retail electricity suppliers three years to wind down their business. It also barred them from entering into new retail supply contracts.

Respondents to the case included Energy Secretary Alfonso Cusi and defunct officials of the ERC then led by chairman Jose Vicente Salazar and commissioners Alfredo Non, Gloria Victoria Yap-Taruc, Josefina Patricia Asirit and Geronimo Sta. Ana.

The petitioners to the case, however, said migrating to another supplier should be “voluntary” as per the provisions of the EPIRA, making the issuances “patently unconstitutional” and in violation of free enterprise and anti-trust. They said the DOE and the ERC went beyond their legal authority with their interpretation and implementation of the EPIRA.

The DOE and ERC, for their part, claimed that “migration is mandatory”, insisting that that the DOE has the power and function to formulate rules to implement the EPIRA’s objectives.

They claimed that the phrase “shall allow” under Section 31 of the EPIRA should be read in relation to the provision’s entirety and mandatory migration will foster competition.

The SC said, however, that “respondents are mistaken” and EPIRA was clear when it used “shall allow” in relation to the transfer of a qualified end-user to the contestable market, which should not be automatic.

“It is well established that when the law is clear and unambiguous, ‘it should be applied as written’,” the decision read.

The SC decision stated that the EPIRA included public utilities like DUs and electric cooperatives to be suppliers in the contestable market, consistent with the DOE’s earlier issuances on the RCOA implementation.

The SC said the earlier issuances “emphasized customer choice” by giving the qualified consumers the “liberty to source from licensed and authorized” local RES in line with EPIRA’s underlying objective of “creating a free and competitive market that will provide reliable electricity at reasonable prices.”