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Friday, February 03, 2006
High court junks Manila electric firm power hike
MANILA -- The Supreme Court denied Thursday the petition of the Manila Electric Company to increase generation rates from P3.1886 per kilowatt-hour to P3.3213 per kilowatt-hour or by 13 centavos.
In a unanimous decision penned by Associate Justice Romeo Callejo Sr., the high court declared null and void the June 2, 2004 order of the Energy Regulatory Commission approving the increase in the power firm's generation charge.
It said the commission "committed grave abuse of discretion" when it issued the order and allowed the electric company to implement the increase without first informing the public about it as required under the Electric Power Industry Reform Act (Epira).
The court said the publication and comment requirements are in keeping with the policies of Epira, which created the commission.
It added that the processes required under the power law include the publication of the application for an increase and for the commission to consider the comments or pleadings of the customers and local government units concerned in its action on the application for rate adjustment.
Failure to publicize the impending rate increases, the court added, deprived the consuming public of due process, of their right to be notified of any application and be apprised of its content, resulting in their compounded economic burden.
"On account of this jurisdictional due process component, the publication requirement should be strictly complied with. The lack of publication of respondent Meralco's amended application for the increase of its generation charge is thus fatal. By this omission, the consumers were deprived of the right to file their comments thereon," the high court ruled.
The petition to nullify the hike in the electric company's generation charge was filed by the National Association of Electricity Consumers for Reforms (Nasecore), Federation of Village Associations (Fova), and Federation of Las Piñas Homeowners Associations (Flopha).
The court dismissed the electric company's arguments that requiring it to comply with the publication requirement violated its right to due process because it would be subjected to a long and tedious process of recovering its fuel and purchased power costs.
It also dismissed Meralco's contention that the publication requirement applies only to independent rate applications and not to adjustment mechanisms like the Generation Rate Adjustment Mechanism (Gram).
It said the records do not show that the rules have been published in the Official Gazette or in a newspaper of general circulation, adding that Executive Order (EO) 200 repealed Article 2 of the Civil Code.
This provision states "laws shall take effect after 15 days following the completion of their publication either in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise provided."
"In this case, the Gram implementing rules and regulations must be declared ineffective as the same was never published or filed with the National Administrative Register. The public, not only the parties to the cases before the (commission), has the right to be apprised of the contents of the Gram implementing rules by publication of the same in the office gazette or in a newspaper of general circulation in the Philippines to the end that it be given amplest opportunity to voice out whatever opposition it may have, and to ventilate its stance on the matter," the SC ruled.
The electric company and the commission argued that the order is valid because it was issued in accordance with the Gram implementing rules and regulations (IRR), which did not require publication of Meralco's amended application for increase in the generation charge.
The respondents said their amended application for the increase in the generation charge was excluded and/or exempted from the application of the publication requirements, among others, in Rule 3, Section 4 (e) of the IRR of the Epira; the applicable rules being the Gram implementing rules embodied the commission order dated February 24, 2003.
They said the rules govern any petition for the recovery of fuel and purchased power costs.
Meralco said the Gram is an adjustment recovery mechanism, which replaced the automatic recovery adjustment mechanisms (Fuel and Purchased Power Cost Adjustments) of the National Power Corporation and the Purchased Power Adjustment (PPA) of the distribution utilities.
The Gram, according to the electric company, would allow the quarterly adjustment of the generation charge to reflect the changes in fuel and purchased power costs after review by the commission and before the costs are passed on to the consumers. (ECV/Sunnex)
(February 3, 2006 issue)
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