THE Supreme Court (SC) has affirmed the earlier decision of Court of Appeals (CA) allowing Manila Electric Company (Meralco) to increase its rate for the years 2007-2011.
In a 14-page decision of the SC's first division penned by Associate Justice Estela Perlas-Bernabe, the Court junked the petition for certiorari filed by the National Association of Electricity Consumers For Reform (Nasecore) questioning the decision of the Energy Regulatory Commission (ERC) to grant Meralco's application for rate hike.
In April 14, 2000, Meralco filed an application for approval of the revision of its current rate schedules and an appraisal of its properties which would allow an increase of its basic charge by about P0.30 Kilowatt per hour (KPH).
In March 2003, the ERC approved Meralco's application which made its rate of return from 12% to 15.5%. The ERC used as basis in approving the application the Performance Based-Regulation (PBR) methodology and not the Rate on Return Base (RORB), the main issue petitioners in the case assailed.
Under the RORB methodology, rates are set to recover the cost of service incurred by the distribution utility plus a reasonable rate of return; while under the PBR, the price of the utility is controlled by a "price cap mechanism" under which a limit is placed upon the average revenue per KWH at a particular period that the utility is allowed to earn.
According to the petitioners in the case, the ERC ruling in 2003 and the CA ruling dated January 29, 2010 must be junked as the PBR methodology used by the ERC violates the Electric Power Reform Act of 2011 or the Epira law.
But the CA in its decision affirmed the ERC ruling. They stated in its decision that the RORB rate methodology used therein was already abandoned with the adoption of PBR methodology in 2003. It also denied the petitioners' appeal for rate roll back and refunds for lack of basis.
The SC has warranted the decision of the CA and denied the petition for certiorari filed by the Nasecore.
"Because of the variances in its premises and assumptions, the ERC's shift from RORB to PBR should therefore be deemed as a supervening circumstance that rendered inconsequential this Court's provisional approval of the rate increase applied by Meralco," the Court stated.
"Wherefore, the petition is denied. The decision dated January 29, 2010 is hereby affirmed," the first division ruled.
The decision of the SC's first division dated October 10 was released on Thursday, November 3. (Sunnex)