Supreme Court voids Meralco rate increase

The Supreme Court (SC) ruled yesterday that a provisional rate increase authorized for the Manila Electric Co. (Meralco) was illegal, thus depriving the company of millions of pesos in revenues, television and radio reports said.

The SC ruled that the Energy Regulatory Commission (ERC) had the statutory authority to approve provisional rate increases under the Electric Power Industry Reform Act (EPIRA), but said it committed "grave abuse of discretion" when it allowed Meralco to provisionally increase its distribution rates last Nov. 27.

In issuing its new ruling, the court reportedly said the ERC reached the decision without conducting a public hearing, thereby preventing the public from opposing the rate increase.

Broadcast media reported the ruling last night although the official court decision is expected to be released only today.

The ERC ruling would have allowed Meralco to raise rates by 12 centavos per kilowatt-hour effective last January but the SC prevented this from taking effect, initially ordering Meralco to "observe the status quo" pending the resolution of a petition questioning the ERC’s provisional approval of the rate hike.

The publicly listed utility had expected the tariff increase to boost its revenue by P1.9 billion annually and help it undertake projects to improve its service and pay maturing loans.

Meralco, which retails electricity in Metro Manila and nearby provinces, is already under previous orders to refund an estimated P30.5 billion to customers, which regulators ruled had been overcharged in the 1990s.

A Meralco spokesman said the company has not yet received any notice from the SC regarding the rate increase issue.

In a one-page en banc resolution dated Jan. 13, the SC ordered Meralco and ERC to observe the status quo before the petition was filed in December by officials of the groups Freedom from Debt Coalition (FDC), Akbayan, Sanlakas, and Partido ng Manggagawa.

The provision rate increase took effect only from Jan. 1 to 13 on the basis of a provisional authority given to Meralco by the ERC last Nov. 27.

The five groups said in their petition that the provisional rate increase should be stopped because it lacks legal basis and concerned sectors were not consulted.

They urged the SC to issue either a temporary restraining order or a status quo order to save consumers from paying higher electricity bills until the high tribunal looks into the issues they raised.

The groups noted that Meralco does not have a good track record when it comes to refunding customers and the SC should not give credence to the ERC’s assurance that it will ask the power firm to return the excess charges collected once the increase is found to be unreasonable.

The petitioners said the EPIRA does not provide for ERC’s power to grant provisional authority to power firms to increase rates.

They questioned ERC’s decision to allow Meralco to increase its rates, saying the power firm did not even ask for a specific increase when it filed its application before the ERC.

The petitioners also assailed the commission for not conducting a hearing before granting Meralco the provisional authority to increase its rates.

The ERC, according to the petitioners, agreed to implement the increase Jan. 1 but set the hearing on Meralco’s application only last Dec. 22.

FDC officials said that even before the commission granted the provisional authority, they had already moved for Meralco to produce material documents that would enable the FDC to submit a comment on the application for rate increase.

But until now, the ERC has not granted the FDC’s request and has not compelled Meralco to produce the documents.

"It is clear that respondent ERC, mandated by law to protect the rights of the consuming public, cannot be counted upon to do so because it has thrown its lot with respondent Meralco," the petitioners said.

During the Dec. 22 hearing, the groups said the ERC refused to reconsider its Nov. 27 order and insisted it has the power to grant provisional authority.

The commission then set the next hearing for Jan. 5 — four days after Meralco started implementing the provisional increase — but later canceled the hearing, the petitioners said. — With AFP