SC nullifies Meralco's 13.27-centavo/kWh hike in '04
Friday, February 03, 2006
By Armand N. Nocum
Inquirer
Editor's Note: Published on page A1 of the Feb. 3, 2006 issue of the Philippine Daily Inquirer
TH
E SUPREME COURT yesterday declared null and void the 13.27-centavo per kilowatt-hour increase in generation charge that the Energy Regulatory Commission (ERC) granted Manila Electric Co. in 2004 because the company did not notify customers about the rate increase.
The high court also ordered that the ERC decision approving the increase in Meralco's rate from P3.1886 per kWh to P 3.3213 per kWh be "immediately" set aside "for having been issued with grave abuse of discretion."
The decision was silent on whether Meralco customers would get a refund.
The ruling penned by Associate Justice Romeo Callejo was approved unanimously by all 14 justices, with Associate Justice Dante Tinga filing a separate concurring opinion on the case.
The tribunal ruled against the ERC and Meralco for their failure to publish Meralco's application for a rate increase in newspapers of general circulation.
"The lack of publication of respondent Meralco's amended application for the increase of its generation charge is ... fatal. By this omission, the consumers were deprived of the right to file their comments thereon," the high court said.
The Supreme Court said due process required "that the consumers be notified of any application, and be apprised of its contents, that would result in compounding their economic burden.
"In this case, the consumers have the right to be informed of ... Meralco's application for the increase of its generation charge," the high tribunal said.
It was the second time in as many years that the Supreme Court had nullified an increase in Meralco rates.
In June 2004, the court voided a 12-centavo per kWh provisional rate increase granted by the ERC to Meralco in the case of the Freedom from Debt Coalition vs ERC.
Voting 8-5, the Supreme Court overruled the decision of the ERC, saying that it was a product of a "blatant and inexcusable" breach of the law.
Among the bases for the decision were Meralco's failure to publish its application for the rate hike and the ERC's failure to resolve the motion of the FDC before acting on Meralco's application.
Homeowners' association
The second case stemmed from a suit filed in 2004 by the National Association of Electricity Consumers for Reforms, the Federation of Village Associations and the Federation of Las Piñas Homeowners Associations.
The petitioners claimed that the rate increase was approved without, among other things, the required publication of Meralco's amended application, which deprived the consumers of a notice to contest it.
Publication is required by the Implementing Rules and Regulations of the Energy Power Industry Reform Act (EPIRA) of 2001.
In line with EPIRA, the ERC required all distribution utilities to file applications for the unbundling of rates.
Meralco filed its application for the approval of its unbundled rates and the appraisal of its assets on Dec. 26, 2001.
After hearings, the ERC approved on March 20, 2003, Meralco's unbundled schedule of rates effective in the next billing cycle. The ERC also directed Meralco to stop charging the purchased power adjustment (PPA) upon effectivity of the unbundled rates.
Adjustment mechanism
The commission said any change in the cost of purchased power shall be reflected as deferred charges, which could be recovered through the Generation Rate Adjustment Mechanism (GRAM).
Meralco, at the time, claimed that the proposed generation charge, which was subsequently approved by the ERC, conformed with the generation rate formula under the implementing rules for the recovery of fuel and independent power producer costs.
In its defense, Meralco said "it would be violative of due process to require it to comply [with the publication requirement] ... [because] it would be subjected to a long and tedious process of recovering its fuel and purchased power costs."
The company said GRAM "pays for the fuel and purchased power costs to its suppliers even before it could fully collect from its consumers."
Except for the carrying cost, not a single centavo of GRAM is retained by Meralco. The money is turned over to National Power Corp. and independent power producers from which Meralco buys the electricity it retails to customers.
GRAM allows the quarterly adjustment of the generation charge to reflect the changes in fuel and purchased power costs after a review by the ERC.
posted by philpower @ 8:41 AM,
