The Energy Regulatory Commission (ERC) welcomed the Supreme Court’s ruling affirming the commission’s authority to regulate the generation and supply sectors of the electric power industry.
The Supreme Court, in G.R. No. 210334 dated Aug. 1, 2023, reiterated and emphasized the ERC’s mandate, pursuant to Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA), in ensuring a fair, efficient and reliable electric power industry for the Filipino people.
It affirmed the well-established doctrine of upholding the technical expertise of regulatory agencies. “Prefatorily, courts have accorded great respect and will generally stay its hand from interfering into matters addressed to the sound discretion of government agencies, such as the ERC, which are entrusted with the regulation of activities that require special technical knowledge and training,” the SC said.
The SC also upheld the ERC’s authority to issue and implement the guidelines for the automatic adjustment of generation rate and system loss rates by distribution utilities (AGRA Rules) and ruled that the ERC’s issuance of the AGRA rules, which provides the methodology for distribution utilities (DUs) to arrive at their respective monthly generation rates, is clearly within the scope of its powers as defined under Section 43 of the EPIRA.
EPIRA provides that the ERC has the power to “establish and enforce a methodology for setting transmission and distribution wheeling rates and retail rates for the captive market of a distribution utility” and to perform “regulatory functions as are appropriate and necessary in order to ensure the successful restructuring and modernization of the electric power industry.”
The SC also upheld the ERC’s authority to order a staggered payment scheme to protect consumer interests, which the court said is well within the ambit of the AGRA rules.
The AGRA rules grant the ERC the power and discretion to allow an exemption from the requirement that a DU should bill the generation rate as computed for each calendar month where good cause exists and if there is a public interest to be protected, for as long as it is not contrary to law or any other related rules and regulations.
The Supreme Court further affirmed that generation and supply sectors are not public utilities but remain subject to ERC regulation.
It said that “while the generation and supply sectors are not public utilities, this by no means removes them from the ambit of governmental regulation.”
The SC also upheld the ERC’s authority to order the passing on of systems loss to consumers. The court observes that the EPIRA, specifically Section 43(f), taken in conjunction with related provisions, provide sufficient ascertainable standards and well-defined parameters to allow the ERC to determine the benefit of imposing systems loss charges not only to the DUs, but also to its end-users or customers.
“As the country’s sole regulator of the electric power industry, the Commission remains firm in its commitment to uphold the mandates set forth by the EPIRA. Through the implementation of our stringent regulatory measures, we ensure that our regulated entities adhere to the law. These efforts not only promote accountability within the industry, but also safeguard it against abuse and irregularities,” ERC chairperson and chief executive Monalisa Dimalanta said.