ERC slams SC ruling on Meralco
Sunday, February 05, 2006
By Donnabelle Gatdula
The Philippine Star
The Energy Regulatory Commission (ERC) warned yesterday of the adverse impact of the Supreme Court’s recent decision to junk the rate increase of 13.27 centavos per kilowatt-hour (kwh) granted earlier to the Manila Electric Co. (Meralco) under the generation rate adjustment mechanism (GRAM). "It will create havoc in the power industry.
The SC order indicates that ERC decisions are not stable," ERC Chairman Rodolfo Albano Jr. said. He said since GRAM is not actually a basic rate increase but only a recovery mechanism, this will "just prolong the agony and prejudice the consumers. The payment of the GRAM was already advanced by the distribution utilities to the generation company.
In the case of Meralco, it had already paid this GRAM to the National Power Corp. (Napocor)." Albano also pointed out that contrary to reports, the ERC had conducted a series of hearings with various consumer groups regarding the 13.27-centavo per kwh increase it granted Meralco.
"It is not true that we did not conduct public hearings on this. Our records would show that we had consultations with several consumer groups on February 17 and 23, 2003," he said. Albano said they will ask the high court to reconsider its ruling.
Meralco, on the other hand, said it has yet to study the implications of the Supreme Court’s ruling nullifying the ERC’s June 2, 2004 order that had approved the power firm’s second GRAM. Under the GRAM, distribution utilities such as Meralco accumulated three months’ worth of payments to its power supplies, such as Napocor and independent power producers.
The distribution utilities then apply for recovery of these costs with the ERC, which must act on the application within 45 days. If not acted upon, the application is deemed granted. "The utilities, in fact, advance the payments before collecting from customers. ERC also had to confirm the costs before these were authorized for collection from customers," Meralco corporate communications head Elpi Cuna said.
Since the GRAM is simply a deferred cost recovery mechanism, Cuna said the ERC’s GRAM approvals can result in either an increase or a decrease in the generation charge of customers, depending on the actual generation cost payments the utility has made. Cuna said Meralco’s first GRAM application, approved by the ERC on Jan. 21, 2004, resulted in a 21.43-centavo reduction in the generation charge.
The Supreme Court ruling, according to Cuna, had revoked the second GRAM because it was not announced in advance in daily newspapers. "As there was also no publication of (the first GRAM) application, will that also be similarly revoked?" Cuna said. Cuna pointed out that the required publication of GRAM applications "may also affect Napocor and other distribution utilities that have made similar applications for generation cost-recovery under the GRAM rules which did not mandate publication.
Cuna said Meralco officials will meet with the ERC very soon to discuss the various implications of the Supreme Court’s decision. Meanwhile, workers yesterday demanded a full refund and an immediate rollback in power rates following the Supreme Court ruling nullifying the GRAM rate increase. "We assume Meralco actually implemented the nullified rate increase, thus a quick refund and rate rollback are in order," said former senator and Trade Union Congress of the Philippines secretary general Ernesto Herrera.
Although the Supreme Court was silent on whether Meralco customers should get a refund, Herrera said the power firm must automatically return illegally collected payments. "Both regulators and utilities cannot just arbitrarily impose rate increases at will, so it is just right for Meralco to refund the money to consumers," he said. Herrera called on consumers to be vigilant and protect their rights since they cannot depend on the ERC to provide them with adequate protection. — With Mayen Jaymalin
posted by philpower @ 9:34 PM,
