Energy council airs concern over CA rule on Meralco rate hike issue

The Energy Council of the Philippines (ECP) has expressed concern over the recent decision of the Court of Appeals which annulled and set aside orders of the Energy Regulatory Commission (ERC) approving Meralco’s unbundled rates and directed the ERC to require a Commission on Audit (COA) an audit of the company’s books and records.

In a statement, the ECP emphasized that regulatory stability is of paramount importance for the electricity industry to continue to provide safe and reliable service to the country’s industrial, commercial, and residential users and the Court of Appeals decision is a step backward.

According to ECP, the ERC is the regulatory agency vested with the powers and the expertise to evaluate rate decisions.

"These judgments have complicated technical and financial considerations and must weigh the different demands of the consumer and the service providers. The unbundling of electricity prices is a major step in providing consumers with a clearer understanding of how their electricity rates are computed. Its early implementation is clearly important and the ERC is uniquely qualified to make this determination," the group said.

The energy group also stressed that the Court of Appeals ruling was released more than a year after the ERC decision.

"That delay inevitably contributes to the growing consensus that decisions of the ERC do not stand on solid ground for they are at times reversed by the Courts; thus, they cannot serve as the basis for future investments and vital loans from international lenders. The Court ruling directing the ERC to require a COA audit also now raises questions about previous unbundling decisions of the ERC and about delays in future applications by other distribution utilities. If the COA is to be involved at all, it should be in helping establish the Framework Analysis for unbundling requests that the ERC will decide on," ECP said.

The ECP said it feels it is unfortunate that this Court decision is made now when power shortages have already hit the Visayas, and more are forecast for Luzon in 2007 and 2008.

"To avert these shortages, it is critical that the distribution utilities are technically and financially healthy and that the economic basis for their continued operations is predictable. The unbundling of the rates helps clarify electricity prices and the reinforcement of ERC and its decisions will be a major step forward in providing more regulatory stability that is so vital to the industry," it added.