Court maintains ERC cannot regulate Wholesale Electricity Spot Market prices

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Court maintains ERC cannot regulate Wholesale Electricity Spot Market prices
The ruling nullifies a number of orders made by the ERC in 2014 declaring wholesale electricity spot market prices void for being unreasonable or otherwise uncompetitive


MANILA, Philippines – The Court of Appeals (CA) affirmed an earlier decision it made voiding orders from the Energy Regulatory Commission (ERC) to increase Wholesale Electricity Spot Market (WESM) prices. The price increases were imposed by a number of power producers during the 2013 shutdown of the Malampaya gas facility.

The 20-page ruling penned by Associate Justice Marlene Gonzales-Sison, said the CA’s former Fifteenth Division denied the motions for reconsideration filed by the ERC and Manila Electric Company (Meralco). The ruling nullifies a number of orders made by the ERC in 2014 declaring spot market prices void for being unreasonable or otherwise uncompetitive.

The ERC suspected the following power producers as having colluded to manipulate electricity prices on the WESM during the scheduled maintenance of the Malampaya facility:

  • San Miguel Energy Corporation
  • South Premiere Power Corporation
  • Strategic Power Development Corporation
  • SMC Powergen, Inc.
  • Petron Corporation
  • SN Aboitiz Power-Magat, Inc.
  • SN Aboitiz Power-Benguet, Inc.
  • 1590 Energy Corporation
  • AP Renewables, Inc.
  • Team (Phils.) Energy Corp.
  • SEM-Calaca Power Corp.
  • Masinloc Power Partners Company, Ltd.
  • Therma Luzon, Inc.
  • Therma Mobile, Inc.
  • Northwind Power Development Corp.

The appellate court held the ERC had no policing power for the purpose of WESM pricing intervention under the Electric Power Industry Reform Act or the constitution

Said the court, “It bears stressing that had the legislature intended the ERC to have such power, Congress would have expressly included the same in the plethora of prerogatives the EPIRA granted the ERC. However, the EPIRA is plainly silent on the matter.”

“There is thus, no cogent reason to reverse Our ruling on this matter,” the court added. 

The appelate court also did not hold to Meralco’s claim that “millions of comsumers” would suffer if the CA upheld the collection of fees in the WESM, explaining the validity of ERC’s orders are based on provisions of the constitution and other applicable laws, rather than on effects on consumers.

The Court of Appeals explained, “The intervenor (Meralco) would have us substantially infuse our decision with strands of concern for the populace. But these are simply matter invisible to the judicial eye. Contemplating further, We find that the urged consumers’ welfare, along the spectrum of State prerogatives, instead belongs to the range exclusively recognizable by the legislature. This reveals the argument to be one advocating the validity of the power by urging its practical wisdom, rather than its legal existence.”

Merlaco itself was also supposed to place a P4.15 per kilowatt-hour (kWh power rate increase on its users according the WESM price spike. This was, however, stopped by the Supreme Court based on a 2013 temporary restraining order issued based on a motion filed by Bayan Muna Rep. Neri Colmenares and Isagani Zarate, Gabriela Women’s Party Reps. Luz Ilagan and Emmie de Jesus, ACT Teachers Rep. Antonio Tinio, and Kabataan Rep. Terry Ridon.

They also petitioned the SC to check the legality of the approval of the increase by the ERC on December 9, 2013.

Meralco said power generation costs in this regard were previously attributed to the maintenance shutdown of the Malampaya facility, which brings natural gas to 3 major power plants – Ilijan, San Lorenzo and Sta Rita. The plants supply an aggregate capacity of 2700 megawatts (MW) of electricity to its franchise area.

Meralco also said the Malampaya shutdown coincided with the maintence schedules of the Pagbilao 2 and Sual 1, power plants, whcih collectively contribute over 950 MW to its requirements.

As a result of the events, Meralco said it purchased some of its power from the WESM to compensate. –

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