CA stops power rate unbundling

The Court of Appeals has stopped the unbundling of rates by the Manila Electric Co. (Meralco), which was approved by the Energy Regulatory Commission (ERC) in June 2003.

This unbundling of rates caused an 8.65 centavo per kilowatt hour hike in electricity charges imposed on consumers.

In a 33-page decision penned by Justice Martin Villarama Jr., the CA remanded the case to the ERC for further proceedings.

It said the ERC should also direct the Commission on Audit (COA) to look into the books, records and accounts of Meralco to determine whether the power firm made reasonable adjustments when it was allowed to unbundle its rates.

The term "unbundled rate" refers to the modified structure in which the different power rates are broken down and made transparent to users.

The court said "it is certainly a grave abuse of discretion on the part of the ERC to simply brush aside" the issues raised by the petitioners composed of militant groups Bagong Alyansang Makabayan (Bayan), Kilusang Mayo Uno (KMU), Gabriela, Katipunan ng Mamamayang Mahihirap and party-list (group) Bayan Muna.

The CA said the ERC should have considered their evidence and ordered a COA audit to verify their claims.

The CA partly granted the groups’ petition insofar as the unbundling of rates was concerned when it nullified and set aside the ERC’s orders on March 20, 2003 and May 30, 2003, which approved the unbundled schedule of rates by Meralco.

In the rate unbundling, the generation charge, transmission charge, currency exchange rate adjustment (CERA), distribution charge, line loss charge, lifeline subsidy and power factor adjustments are enumerated in the consumers’ billing statements.

The petitioners aassailed the rulings because the purchased power adjustment (PPA) was bundled with other charges and hid them instead of making them transparent.

The petitioners made this statement even if the ERC ordered Meralco to discontinue charging the PPA upon the effectivity of the approved unbundled rates.

They said power rates before and after the unbundling should be the same, since the charges imposed were merely being broken down.

They also said the ERC committed grave abuse of discretion and abandoned its duty to regulate Meralco by allowing the utility firm to charge consumers for undelivered electricity and other charges that should no longer be passed on to consumers.

The Office of the Solitor General said the Electric Power Industry Reform Act (EPIRA) of 2001 permitted the recovery of the PPA and CERA.

The OSG also agreed with the ERC that unbundling of rates under Section 36 of the EPIRA would result in higher rate, although the unbundling process itself was generally revenue-neutral.

However, the CA said the issue of Meralco’s rate increase and unbundling could not be settled with finality untill "it is able to show by reliable, independent and satisfactory proof that the rate adjustments sought by it are reasonable, necessary and just." — Aurea Calica