THE SUPREME Court (SC) has ordered the Energy Regulatory Commission (ERC) to review the unbundled rates of Manila Electric Co. (Meralco) to ensure that consumers pay “in the least cost manner.”

In a statement on Thursday, the SC Public Information Office (PIO) said the country’s highest court ruled on Oct. 8 that ERC’s 2011 affirmation of its 2003 approval of Meralco’s unbundled rates “was in violation of its statutory mandate to approve rates that will provide electricity to consumers in the least cost manner.”

The ERC has been directed in particular to determine “a reasonable and fair valuation of the regulatory asset base” of Meralco.

Further, the ERC must review the parameters for determining expenses that are directly related to the distribution company’s operations and can be passed on fully or partially to consumers.

The case stems from the petition filed by consumer group National Association of Electricity Consumers for Reforms, Inc. (NASECORE) questioning the 2016 decision and resolution of the Court of Appeals (CA), which upheld the ERC orders in 2011 and 2013 declaring Meralco’s unbundled rates as final.

Meralco filed in 2001 its application for its unbundled rates, appraisal of properties, and proposed rate increase of P1.1228 per kilowatt-hour pursuant to the Electric Power Industry Reform Act (EPIRA) of 2001.

It was approved by the ERC in an order on May 30, 2003.

The ERC approval was nullified by the appellate court in 2004 on the ground that the Commission on Audit (CoA) should first conduct an audit of Meralco before the ERC sets the rates.

The SC reversed the CA decision in 2006 but still directed the ERC to request CoA to complete the audit of Meralco.

CoA submitted its report to the ERC in 2009, and ERC ruled in June 2011 the finality of Meralco’s unbundled rates.

NASECORE elevated this to the CA, saying the ERC erred in disregarding the findings of CoA.

Among the CoA’s findings was the inclusion by Meralco of its employee’s pension and benefits amounting to P3.479 billion in 2004 and P2.916 billion in 2007 under its operating expenses.

The CoA report also cited that certain properties and equipment worth P3.701 billion in 2004 and P3.586 billion in 2007 “should not be considered as part of the rate base as they were not used and useful in the distribution operation.”

The CA dismissed the petition and the following motion for reconsideration in 2016, prompting NASECORE to raise the case before the high court.

The SC PIO said the court found that ERC failed to “properly consider” CoA’s findings.

Under the Government Auditing Code of the Philippines and the Administrative Code of 1987, CoA is authorized to examine the accounts of public utilities in connection with fixing of rates.

The ruling was penned by Associate Justice Antonio T. Carpio but an official copy of the decision has yet to be released.

ERC Chairman and Chief Executive Officer Agnes VST Devanadera said the commission has not been served yet with a copy of the decision.

“Ang kailangan natin, mabasa muna natin ‘yung full text ng decision (What we need is to read the full text of the decision). We cannot be picking up portions of whatever in news releases. We have to come up with a legal decision and we have to consult our statutory counsel, the Office of the Solicitor General,” she told reporters.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. — Vann Marlo M. Villegas with Victor V. Saulon

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