Meralco: Only ERC can rule on rate hike

The Manila Electric Co. (Meralco) asked the Supreme Court yesterday to allow the power distribution giant to raise its rates after its petition for a rate hike was granted by the Energy Regulatory Commission (ERC).

During oral arguments on the case, Meralco lawyer Benjamin Santos said the ERC did not commit grave abuse of discretion when it granted Meralco’s request last Nov. 27 for a rate increase of 12 centavos per kilowatt hour.

The increase took effect on Jan. 1 but it was stopped by the Supreme Court on Jan. 14 following a petition filed by several leftist groups questioning the hike.

The petitioners — Akbayan, Freedom from Debt Coalition, Partido ng Manggagawa and Sanlakas — said the ERC did not consult consumers before granting the increase, Meralco’s first major rate hike since 1994.

Santos argued that the law authorizes the ERC to issue provisional orders without a public hearing.

The 12-centavo increase was considered an "emergency remedy granted where the utility demonstrates clearly and convincingly that it is the only practical way to avoid probably, immediate and irreparable harm either to its business or to the interests of its consumers," Santos said.

"Given this purpose of a provisional relief, full
hearing is not required," Santos said, explaining that the increase was "a right that Meralco has under the law" to recover costs and make its operations viable.

The ERC’s Nov. 27, 2003, order also provided that the rate hike "shall be subject to refund in the event that this Commission finds, after completion of the hearings of this case, that the same is unjust and unreasonable," Santos added.

Representing the ERC, Assistant Solicitor General Nestor Ballacillo argued the commission should resolve the issue before elevating it to the Supreme Court.

Santos said the commission has the authority to set rates and the jurisdiction to resolve issues and disputes involving power rates.

Meralco, which supplies power to about four million homes and businesses in Metro Manila and nearby provinces, said it expected the two-percent rate hike to deliver a revenue boost of P1.9 billion this year.

The power firm, whose key shareholders are the government and a joint venture of energy firm First Philippine Holdings and Spain’s Union Fenosa SA, returned to profit in the second quarter of 2003 after losing P2 billion in 2002.

The ruling on the rate hike was not the first brush Meralco has had with the Supreme Court.

In 2002, the high tribunal ordered the group to pay back some P30 billion to customers for years of overbilling.

Meralco, which is making refunds in stages, also faces maturing debts of around P24.6 billion by 2006.