SC extends TRO on Meralco rate hike indefinitely

MANILA, Philippines – The Supreme Court on Tuesday, April 22, extended indefinitely the temporary restraining order (TRO) on the December 2013 rate hike of the Manila Electric Company (Meralco).

The Court was acting on an 8-page urgent motion for extension of TRO filed on April 15 by leftist legislators from the Makabayan coalition including Bayan Muna representatives Neri Colmenares and Carlos Zarate, Gabriela Representatives Luz Ilagan and Emmi de Jesus, Alliance of Concerned Teachers Representative Antonio Tinio, and Kabataan Representative Terry Ridon.

The legislators argued that if the TRO is lifted, “millions of Meralco’s captive market” would be left “unprotected” and will cause them “grave and irreparable injury.” 

Meralco said it will abide by the ruling.

“Meralco respects the order of the SC extending the TRO and shall fully comply with the same,” said company legal head William Pamintuan.

Watch this report below.

 

No automatic imposition

The power utility firm said, however, that the lifting of the TRO would not have led to the automatic imposition of the December generation charges.

Energy Regulatory Commission (ERC) executive director Francis Saturnino Juan said if the TRO was not extended, the ERC would have directed the Philippine Electricity Market Corporation (PEMC) to recalculate Meralco’s November wholesale electricity spot market (WESM) bill. 

The ERC had earlier issued an order for the recalculation of the WESM prices that affected the generation charge for the supply months of November and December 2013. Meralco had filed a petition with the ERC in February, seeking a recalculation of the affected supply months.

“Meralco shall await the new rate from PEMC and shall file with ERC the appropriate application for the reduced December generation charge,” said Meralco Utility Economics Head Lawrence Fernandez.

“This situation would most likely mirror the recalculation of the January 2014 billing, wherein a significant 90% reduction was realized on the original increase, from the P4.56/kWh to P0.45/kWh. Meralco shall respect any order that the SC may issue on this matter,” he added.

Palace, Petilla welcome TRO extension

Malacañang and Energy Secretary Jericho Petilla welcomed the TRO extension and hoped for a final ruling.

“We are also hoping that a final decision will eventually be issued so we can concentrate in moving forward,” Petilla said.

Malacanang lauded the decision, especially as it will cover the summer months when power consumption is higher.

“We welcome the decision of the Supreme Court that while we wait for a final decision on the case, an extension of the TRO would certainly provide comfort to our countrymen, especially at this time when there is more consumption demand during summer,” President Spokesman Edwin Lacierda said in a statement.

The SC on February 18 already extended its initial TRO on the record-high rate increase – an extension set to expire on April 22.

In the same February 18 resolution which the SC now extended, the High Court likewise temporarily restrained generation companies and the electricity spot market operator from demanding and collecting December generation charges from Meralco.

Generation charges represent the cost of producing the electricity, which generation companies collect from power distribution firm Meralco. Meralco, in turn, passes on this cost to consumers. (READ: What Meralco’s rate hike tells us about the power sector)

Meralco’s P4.15/kWh December rate increase is the highest ever to be imposed by the power company. Of the amount, P3.44 represented generation costs.

The increase had resulted from the shutdown of the Malampaya gas field and outages of power plants where Meralco draws its power requirements.

The simultaneous outages forced Meralco to buy power from the WESM where electricity prices fluctuate on an hourly basis, depending on bids offered by suppliers.

Oral arguments heard

The High Tribunal is set to decide on whether the rate increase and its approval by the ERC is constitutional, after it heard oral arguments on the issue.

Petitioners allege that Meralco unnecessarily inflated the charges passed on to consumers. (READ: Meralco inflated charges, SC told)

During the first day of oral arguments, Colmenares said that Meralco’s contracted power supplier Therma Mobile sold power at the WESM at P62/kWh – the price ceiling at that time – which caused prices to inflate.

Meralco, however, said that it was simply complying with the WESM’s must-offer rule that required its contracted power supplier Therma Mobile to offer power at WESM.

Meralco also argued that petitioners were raising regulatory issues that the ERC, and not the High Court, should address. (READ: Meralco asks SC to lift TRO on rate hike)

It added that the continued TRO puts Meralco at risk, even warning against rotational black-outs. (READ: ‘TRO on price hike puts Meralco at risk’)

The power distribution company said it was simply a victim of arbitrary bids that messed up pricing at WESM. (READ: Meralco decries arbitrary WESM bids) 

Outside the Supreme Court in Manila, a consumer group calling itself POWER! Metro Manila staged a protest on Tuesday, calling on the SC to junk all petitions for power rate hikes including the P0.65/kwH (January), P0.89/kwH (April), and another proposed price increase in May.

“Consumers have yet to be refunded from the overcharging made by Meralco. This should be prioritized and not the new round of power rate increases proposed by Meralco,” he added. 

The group warned of more protests whatever the SC’s decision on the Meralco case would be since the cost of electricity in the Philippines remains one of the highest in the world. – with a report from Jose Del/Rappler.com