Lower power rates seen

Regulators are making preparations to carry out a decision of the Supreme Court requiring electricity distributors to subject contracts with suppliers to competitive bidding.

The High Court yesterday said decisions that the Energy Regulatory Commission made in 2015, which extended the deadline for the requirement for competitive selection process (CSP) for power supply agreements (PSAs) were beyond the ERC’s authority.

In a special session on May 3, the Supreme Court voted 9-2 to strike down the ERC’s orders that postponed by nearly a year the policy requiring power distribution utilities like Meralco to undergo a CSP when securing power supply contracts.

The Department of Energy policy should have taken effect on June 30, 2015, but the ERC postponed its implementation to April 29, 2016. With PSAs that would last 20 years, the Supreme Court said the ERC “effectively suspend(ed) CSP for one entire generation of Filipinos.”

The Supreme Court said the ERC gravely abused its authority when it allowed Meralco and other power distribution utilities to skirt the process of undergoing competitive bidding, which was meant to ensure that customers get the lowest cost of electricity.

The tribunal said all PSA applications submitted by the distribution utilities to the ERC on or after June 30, 2015, are required to comply with the CSP.

The Supreme Court was acting on a case pursued by the Alyansa Para Sa Bagong Pilipinas against the ERC, the Department of Energy, the Philippine Competition Commission as well as Manila Electric Co. and its PSA partners.

The concerned power suppliers include Central Luzon Premier Power Corp., St. Raphael Power Generation Corp., Panay Energy Development Corp., Mariveles Power Generation Corp., Global Luzon Energy Development Corp., Atimonan One Energy Inc. and Redondo Peninsula Energy Inc.

PSAs between Meralco and these companies are pending at the ERC and were submitted after the original June 30 deadline.

ERC Chair Agnes Devanadera said that while the commission has not received a copy of the decision, it has decided to take the necessary plans and measures to preempt and mitigate possible implications of such decision.

“Meetings with the DOE and affected entities such as [distribution utilities and generation companies] and other power industry stakeholders will be carried out this week to jointly address the issues at hand,” Devanadera said.

Murang Kuryente Partylist, which is seeking seats in Congress for the first time, said the court’s decision effectively invalidated about 90 PSA applications pending at the ERC.

“If the provisions of the law are followed, this will result in lower generation charges levied on consumers by distribution utilities like Meralco,” it said.