Supreme Court orders ERC to review OK of Meralco’s unbundled rates

MANILA, Philippines—The Supreme Court has ordered the Energy Regulatory Commission (ERC) to review its approval of Manila Electric Company’s (Meralco) valuation of its regulatory asset base so it can provide consumers electricity at lower rates.

At its en banc session on Wednesday, Oct 9, the Supreme Court “voided the adoption of the current or replacement cost in the valuation of regulatory asset base” by Meralco, according to the SC Public Information Office.

“The court held that ERC’s order was in violation of its statutory mandate to approve rates that will provide electricity to consumers ‘in the least cost manner’,” the SC PIO said.

The court remanded, or returned, to the ERC the case for “determination of a reasonable and fair valuation of regulatory asset base that will provide electricity to consumers” at the lowest cost possible, the office said.

The National Association of Electricity Consumers for Reforms, Inc. (Nasecore) earlier filed a petition at the Court of Appeals to question ERC’s 2003 decision to grant Meralco’s application for the approval of its unbundled rates and proposed increase in rates.

Nasecore argued that the ERC disregarded findings of the Commission on Audit (COA) which showed that Meralco had “excess revenues” and “over-recovered” its investments.

The appellate court, however, upheld ERC’s decision, explaining that the ERC is not bound to accept and adopt any findings by COA.

READ: CA upholds ERC decision allowing Meralco to hike rates

The Nasecore then elevated the case to the Supreme Court.

In partially granting the Nasecore petition, the Supreme Court argued that “the ERC failed to properly consider COA’s findings as well as to comply with its statutory mandate to approve a rate that provides electricity to consumers ‘in the least cost manner’ as expressly provided in ERC’s charter.”

Citing the Government Auditing Code of the Philippines and the Administrative Code of 1987, the Supreme Court said that COA is authorized to examine “accounts of public utilities in connection with the fixing of rates of every nature.”

The Supreme Court decision, a copy of which has yet to be released, was penned by Senior Justice Antonio T. Carpio./TSB