SC to gov’t: Explain Meralco rate hike

MANILA, Philippines (2nd UPDATE) – The Supreme Court (SC) has asked regulators, through the Office of the Solicitor General (OSG), to explain why they approved Manila Electric Company’s (Meralco) controversial rate hike now subject of petitions filed before the court.

In a 5-page order released Thursday, January 9, the High Court also ordered the inclusion of the operator of the electricity spot market and 6 other Meralco power suppliers in said petitions.

The SC denied the motion of the OSG asking to be excused from filing a comment on the petitions in behalf of the Department of Energy (DOE) and the Energy Regulatory Commission (ERC).

Citing rules of the court, the OSG earlier said it was the duty of Meralco, as private respondent, to defend itself and the public respondents in the case. It said public respondents would only mount a defense when specifically ordered by the court.

In the meantime, the SC asked petitioners, among them leftists lawmakers, to include in their complaints parties with supply agreements with Meralco in November, the month when power generation costs spiked.

It noted this is necessary “for a complete determination or settlement of the claim subject of the action.”

The parties that were ordered included are the Philippine Electricity Market Corporation (PEMC), the operator of the Wholesale Electricity Spot Market (WESM), and power plant operators, namely, SEM-Calaca Power Corporation, Masinloc Power Partners Corporation, Therma Luzon Inc., San Miguel Energy Corporation, South Premiere Power Corporation, and Therma Mobile Inc.

Two petitions against the hike – ordered consolidated by the SC – are set for oral arguments on January 21.

The power suppliers and the OSG are required to file their comments on the petitions on or before January 20 and January 17, respectively. They must also attend a preliminary conference on January 13 that is meant to identify pertinent issues to be discussed on January 21.

Meralco: Include PESM

Meralco, the country’s largest power retailer distributing electricity in Luzon, announced in December that it was raising charges by P4.15 per kilowatt-hour (kWh), the biggest power rate hike in recent history.

With ERC’s go signal, Meralco planned to implement the charges in 3 tranches: P2.41 per kWh in December, P1.21 per kWh in February 2014 and P.053 per kWh in March. (READ: 13 things Meralco consumers should know about the hike)

But the SC issued a 60-day restraining order on the implementation of the rate hike following petitions filed by various groups.

Meralco had said it was forced to buy more expensive power from WESM due to supply constraints brought about by simultaneous outages of its power plant suppliers. The outages coincided with the maintenance shutdown of the Malampaya natural gas facility, the biggest source of Meralco’s power requirements.

Petitioners slammed the “very high ceiling price” of P62/kWh of power sold at the WESM.

Meralco previously raised that WESM operator PEMC must also be included as respondent in the petitions.

The utility firm explained that the rate hike stemmed from higher generation costs and not from distribution costs. Generation costs are pass-through charges, meaning Meralco passes them on to consumers and remits payments directly to power suppliers. It said it does not earn from generation charges.

“Case should not be filed versus Meralco only but should be directed to PEMC who is billing Meralco for the increase in generation costs,” explained Meralco Senior Vice President and Head of Customer Retail Services and Corporate Communications Alfredo Panlilio.

The petitioners also raised the issue of an alleged collusion among the power companies that implemented simultaneous outages.

The Senate and a tripartite committee composed of the DOE, ERC and PEMC are probing Meralco’s rate hike and the plant outages. – With report from Buena Bernal/Rappler.com