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ERC prepares legal strategies after SC ruling on power supply deals

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By Victor V. Saulon, Sub-editor

The Energy Regulatory Commission (ERC) is preparing “legal strategies” in response to the Supreme Court decision requiring all power supply agreements (PSAs) forged after June 30, 2015 to undergo a competitive selection process (CSP) to arrive at the least-cost power for consumers, its chairman said.

ERC Chairperson and Chief Executive Officer Agnes VST Devanadera said her office would go back to the high court and present the “big picture translated into statistics.” She said the commission was ready to present the possible implication of its decision in hopes of opening the justices’ mind.

“We have had decisions before by the Supreme Court that really affected many people or many institutions and then on MR (motion for reconsideration) or on clarification, when the parties fleshed out in details with statistics, documents, the Supreme Court opened its minds,” she told reporters in a briefing on Friday at the agency’s head office.

“I cannot believe that the Supreme Court would go for something that’s disastrous,” she added.

She said the ERC had yet to receive a copy of the decision and was basing its statement on the press release issued by the High Court’s public information unit.




The case stemmed from an announcement made by Manila Electric Co. (Meralco) in May 2016 that it had sought regulatory approval for seven PSAs, covering 3,551 megawatts (MW) to meet the expected increase in power demand and number of customers. The company also said the contracts were in preparation for the impending expiry of existing PSAs from 2019 to 2020.

The contracts were forged on April 29, 2016 or just before the April 30, 2016 deadline set by the ERC. After that date, contracting parties are required to first undergo a CSP before forging a PSA.

CSP requires contracts between power generation companies and distribution utilities to be subjected to price challengers, a process that is aimed at lowering electricity cost.

The ERC promulgated CSP in November 2015 but had to restate its effective date until April 30, 2016 through a resolution in March 2016. It said the move was prompted by letter-inquiries from distribution utilities and generation companies assailing the legal implication of the CSP to existing power supply deals.

A group called Alyansa para sa Bagong Pilipinas on Nov. 10, 2016 raised the issue before the Supreme Court, leading to the latter’s issuance on May 6, 2019. The court has yet to release the complete document containing its decision.

‘MASSIVE’ IMPLICATIONS
ERC Commissioner Catherine P. Maceda described the implication of the SC decision to be “massive both in a positive and a negative way.” On the positive side, the decision called for greater transparency, she said.

“In a negative way, because it will affect supply and considering the problems that we have now as manifested by the outages this summer season, you can just imagine kung ang sasabihin (if they say), stop all those that are already supplying that are affected by the decision of the Supreme Court,” she said.

The ERC officials that what they know so far is that the court decision meant all PSAs filed on or after June 30, 2015 need to go through CSP. The ruling also meant that all cost recovery would retroact to the effectivity of the new contract but in no case earlier than June 30, 2015.

“What if the results of the CSP will be that they will not be the winning bidder,” she said, referring to generation companies that delivered power under a certain set of terms and based on an agreed rate.

Ms. Maceda said this early, and even before the ERC gets hold of the actual decision, the agency was already anticipating the “worst-case scenario,” so that Ms. Devanadara, a former Justice secretary, could prepare the legal strategies while reviewing the technical aspects of the affected PSAs.

Ms. Devanadera said the court decision will not only concern officers of Meralco and electric cooperatives, or their contracts, but the number of people that they serve.

“It will affect many millions of people,” she said. “This will really be a real, acute shortage in [power] supply,” she said.

“I still believe that we will be able to present statistics and clarification of the situation, and the Supreme Court, as I’ve said, they have shown that they are not after bringing in disasters,” she added.

“They mean well,” she said. “Duty namin ipakita ano ‘yung magiging implication (Our duty is to show what will be the implication).”