SC says energy regulatory body erred in delaying implementation of bidding rule

MANILA, Philippines (Updated: 1:32 p.m.) — The Supreme Court said power supply deals submitted by distribution utilities before June 30, 2015 must undergo a competitive selection process, a form of public bidding, after finding that the Energy Regulatory Commission committed grave abuse of discretion when it put off this rule.

The SC said the ERC committed grave abuse of discretion amounting to lack or excess of jurisdiction in postponing the competitive selection process, a form of public bidding for the purchase of electricity by distribution utilities, the SC PIO explained. The bidding requirement aims to protect consumers.

The SC Public Information Office said in a statement Monday that the SC en banc voted 10-2 last Friday and ruled that: “All PSA applications submitted by the DUs (distribution utilities) on or after 30 June 2015 were required to comply with the CSP (competitive selection process) in accordance with 2015 [Department of Energy] Circular.”

The 2015 DOE circular, issued following the Electric Power Industry Reform Act of 2001, mandates all distribution utilities to undergo a competitive selection process in securing Power Supply Agreements. It became effective on June 30, 2015.

But the SC said the ERC issued a resolution on Oct. 20, 2015 stating that “pending the issuance by the ERC of a prescribed CSP, a DU may adopt any accepted form of CSP.”

A later resolution issued by the ERC set the cut-off date for compliance of the competitive selection process requirement to Nov. 7, 2015, instead of June 30, 2015.

“Thereafter on March 15 2016, the ERC issued ERC Resolution No. 1. This time, the said resolution restated that the effectivity of the SP requirement for PSAs is on April 30, 2016 instead of Nov. 7, 2015, as previously set in ERC Resolution No. 13,” the SC PIO said.

Bidding rule delayed for 305 days

Due to the two ERC resolutions, the implementation of the CSP was postponed for a total of 305 days, from June 30, 2015 to April 29, 2016.

“The ERC’s delegated authority is limited to implementing or executing Competitive Selection Process (CSP) in accordance with the 2015 DOE Circular, not postponing CSP so as to freeze CSP for at least 20 years, effectively suspending CSP for one entire generation of Filipinos,” the ruling, penned by Senior Associate Justice Antonio Carpio, read.

“The delegated authority to implement CSP does not include the authority to postpone or suspend CSP for 20 years, beyond the seven-year terms of office of the ERC Commissioners postponing or suspending the CSP, and beyond the seven-year terms of office of their next successors, as well as beyond the six-year terms of office of three Presidents of the Republic,” it added.

The SC also ruled that the power purchase cost “after compliance with the CSP shall retroact to the date of effectivity of the PSA, but in no case earlier than 30 June 2015, for purposes of passing the purchase cost to the consumers.”

The SC acted on a 2016 petition filed by the Alyansa Para sa Bagong Pilipinas on 2016 that urged the SC to stop the ERC from approving a 20-year power supply agreement between utility giant Meralco and several general companies.

SC spokesperson Brian Hosaka also explained that the petition was questioning the ERC resolutions which postponed the implementation of the CSP.

The full copy of the court ruling has yet to be released as of this story’s posting.

The following justices concurred with Carpio’s ruling:

• Chief Justice Lucas Bersamin
• Associate Justice Diosdado Peralta
• Associate Justice Mariano del Castillo
• Associate Justice Estela Perlas-Bernabe
• Associate Justice Marvic Leonen
• Associate Justice Jose Reyes Jr.
• Associate Justice Ramon Paul Hernando
• Associate Justice Rosmari Carandang
• Associate Justice Amy Lazaro-Javier

Associate Justices Alfredo Benjamin Caguioa and Andres Reyes Jr. dissented from the majority.

Meanwhile, Associate Justice Francis Jardeleza abstained from the voting, and Associate Justice Alexander Gesmundo took no part as he was on official leave. — Kristine Joy Patag