The Supreme Court sustained the ruling of the Energy Regulatory Board (now Energy Regulatory Commission) that the National Power Corporation has no basis to assess the East Asia Utilities Corporation and the Cebu Private Power Corporation for power delivery services (PDS) charges on ancilliary services (AS).
“We find no reason to modify or reverse the findings of the ERB and the ERC,” the 13-page SC decision reads, adding that findings of administrative or regulatory agencies on matters within their technical areas are generally accorded not only respect but finality if such findings are supported by substantial evidence.
SC further said that the matter of rate-fixing call for a technical examination and a specialized review of specific details are primarily entrusted to the administrative or regulating authority, which is the ERC, because the courts are ill-equipped for such to enter.
“In the absence of grave abuse of discretion on the part of ERC, its findings that there is no basis to assess respondents for PDS charges of AS is binding in this Court,” the SC ruled.
East Asia Utilities and Cebu Private Power are independent power producers accredited with the Deprtment of Energy as operators of diesel power generating units, and authorized by the then ERB to sell their excess power to the Visayan Electric Company Inc.
Sometime in 1999, Napocor billed East Asia the amount of P29,069,294.93 as PDS tariff for close to 4-month period, from December 26, 1998 to April 15, 1999. East Asia paid the amount but put it under protest, and contested the more than P17.5 million of the total amount.
Napocor also billed Cebu Power of P3,032,509.08 as PDS tariff for about a month-period, from March 26, 1999 to april 25, 1999. Cebu Power also paid the total amount but put it under protest and contested the over P1.32 million of the total amount.
Despite the protests from the two power producers, Napocor continued to bill them.
Contending that those were inapplicable or contested tariffs, the two power producers filed at the ERB, on August 24, 1999, a complaint against Napocor asking for a refund or credit or collection of these tariffs, and appealing to the ERB for a cease and desist order and preliminary injunction to stop Napocor.
Napocor, in its reply, argued that the use of its transmission and sub-transmission facilities is the reason why it charged PDS, under the approved tariffs for open access transmission services (AOTS), and AS.
Napocor added that the PDS charges were applied to East Asia and Cebu Power in conjunction with the AS provided by them.
Napocor also said the PDS charges are applicable to transmission customers, which are embedded generation. These were not also for the transfer of power and energy from the generating resources to the load but for the delivery to the generation-based AS being provided by it.
On January 11, 2000, East Asia and Cebu Power countered by contending that Napocor cannot, and must not, charge its transmission customers rates that have not been approved by ERB and, for independent power producers (IPPs) like them, Napocor cannot assert that the transmission facilities were used to provide AS.
The two IPPs said that justice and equity demand that customers be made to pay only for services that are actually rendered. The PDS is only applicable on those IPPS that use the transmission facilities in transporting power. The AS, on the other hand, is required only for maintaining grid reliability, they argued.
“An IPP, which is not using the transmission system to transport power should not be made to pay for the PDS,” East Asia and Cebu Power said.
Subsequently, the ERC, in its June 28, 2001 order, directed Napocor to stop charging PDS on the two IPPs. Napocor in turn sought for a reconsideration of the order but failed because on March 28, 2003, the ERC issued another order still directing Napocor to stop charging PDS.
Feeling aggrieved, Napocor elevated the case to the Court of Appeals asking for a review of the ERC decision. On December 14, 2005, the CA however affirmed the ERC decision.
Napocor went to the Supreme Court with the argument that the appellate court erred in affirming the two ERC decisions. This time, the power firm still failed to get a favorable ruling.. — Mitchelle L. Palaubsanon/RAE