Customers of Manila Electric Co. (Meralco) will have to brace for higher power costs following a Supreme Court (SC) decision voiding an order issued by the Energy Regulatory Commission (ERC) regulating prices in the Wholesale Electricity Spot Market (WESM) for November to December in 2013.
The amount to be passed on to customers could be anywhere from P17 billion to P22.4 billion based on previous computations though the final amount is yet to be determined.
In the same decision, the SC upheld the ERC order approving the request of Meralco for a staggered collection of automatic rate adjustments arising from generation costs for November 2013.
In a 32-page en banc decision released this week, the SC faulted the ERC’s decision saying it issued the order even if it was still in the process of completing its findings on the possible abuse of market power which could affect the prices of electricity in the market.
In issuing the assailed order, the ERC said it was primarily intended to address the abnormal spike and unreasonable prices of electricity imposed by generation companies (gencos) during the said period.
The move from the ERC capped WESM prices for the said period and reduced rates and impact to consumers to more than a third, from P24 billion to P7 billion.
The regulatory body at the time was probing alleged collusion among gencos to manipulate prices of electricity in the spot market during the maintenance shutdown of the Malampaya gas facility.
The SC added the ERC failed to notify the affected parties about its probe which violated gencos’ right to due process.
“The SC decision, on one hand, allows Meralco to collect the price increase in November 2013 on staggered basis as proposed by Meralco and approved by ERC for the protection of consumers,” said Jose Ronald Valles, Meralco’s head of regulatory management, in a statement.
The SC decision said Meralco informed the ERC the total cost of generation to be passed on customers amounted to P22.64 billion, equivalent to a generation charge for December 2013 billing of P9.1070 per kwh, which is an increase of P3.44 per kwh from the P5.67 per kwh that was billed in the previous month.
Valles said the SC voided the order of ERC to impose regulated prices during the same period in 2013 pending result of its investigation over allegations of market power abuse.
But he said Meralco will have to seek clarification on how and when it will implement the decision “in light of the continuing increase in fuel prices today which may be an additional burden on our consumers.”
“We are hoping that any upward adjustment in the generation cost as a result of the SC decision can be implemented at some future time to allow ERC to finish its investigation,” Valles added.
The ERC declined to comment as it is yet to receive a copy of the ruling.
In 2017, consumer group, Citizen Watch warned a reversal of the ERC order that was voided by the SC in relation to WESM prices, can translate to P17 billion pass- on charges or an average of P700 additional cost for residential consumers of Meralco while commercial and manufacturing establishments can expect hikes of P10,000 and P350,000, respectively.
