General & Misc

CA affirms Legality of 2014 WESM Price Spike

Date: 03 April 2019; Type: Legal News; Source: Philippine News Agency

MANILA, Apr 3 (PNA) - The Court of Appeals (CA) affirmed its decision voiding orders issued by the Energy Regulatory Commission (ERC) nullifying the increase in prices at the Wholesale Electricity Spot Market (WESM) imposed by power producers during the shutdown of the Malampaya gas facility in 2013.

In a 20-page resolution dated March 29 penned by Associate Justice Marlene Gonzales-Sison, the CA’s Former Fifteenth Division denied the motions for reconsideration filed by the ERC and giant power distributor Manila Electric Company (Meralco).

The CA nullified the orders issued by the ERC in 2014 which declared WESM prices void for being uncompetitive and unreasonable.

In its decision, ERC said power producers - San Miguel Energy Corporation, South Premiere Power Corporation, Strategic Power Development Corporation, SMC Powergen, Inc., and Petron Corporation, SN Aboitiz Power-Magat, Inc. and SN Aboitiz Power-Benguet, Inc., 1590 Energy Corporation, AP Renewables, Inc., Team (Phils.) Energy Corp., SEM-Calaca Power Corp., Masinloc Power Partners Company, Ltd., Therma Luzon, Inc., Therma Mobile, Inc., and Northwind Power Development Corp. - colluded to manipulate prices of electricity in the spot market during the Malampaya facility’s scheduled maintenance.

The CA, in its ruling, however explained that the ERC does not has not have police power under the Electric Power Industry Reform Act (EPIRA) or even by the Constitution to intervene in the WESM and impose its own prices.

“It bears stressing that had the legislature intended the ERC to have such power, Congress would have expressly included the same in the plethora of prerogatives the EPIRA granted the ERC. However, the EPIRA is plainly silent on the matter,” the CA ruled. “There is thus, no cogent reason to reverse Our ruling on this matter,” it added.

The CA said the standards determining the validity of ERC’s orders must be the provisions of the Constitution and applicable laws and not based on its effect on the consumers.

“The intervenor (Meralco) would have us substantially infuse our decision with strands of concern for the populace. But these are simply matter invisible to the judicial eye. Contemplating further, we find that the urged consumers' welfare, along the spectrum of State prerogatives, instead belongs to the range exclusively recognizable by the legislature. This reveals the argument to be one advocating the validity of the power by urging its practical wisdom, rather than its legal existence,” the CA said.

Meralco was supposed to impose a PHP4.15 per kilowatt-hour (kWh) power rate increase on its customers due to spike in WESM prices but this was stopped by the Supreme Court through a Temporary Restraining Order (TRO) issued in 2013.

Meralco earlier attributed the abrupt increase in the generation cost to supposed maintenance shutdown of the Malampaya facility that supplies natural gas to three major power plants - Ilijan, San Lorenzo and Sta Rita - which supply an aggregate capacity of 2,700 MW electricity to its franchise area.

It also said that the shutdown of Malampaya coincided with the scheduled maintenance of two other plants, Pagbilao 2 and Sual 1, which also collectively contribute over 950 MW to its requirements.

Meralco said because of these events, it was forced to buy expensive power from WESM.

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