ERC appeals to Meralco: Don’t block retail competition

by Myrna Velasco – June 6, 2016

from Manila Bulletin

The Energy Regulatory Commission (ERC) has appealed to the Manila Electric Company (Meralco) that it should no longer block the restructured power industry’s foray into mandatory retail competition.

In a statement, ERC Chairman Jose Vicente B. Salazar forthrightly asked Meralco to “rethink its current position against the RCOA (retail competition and open access),” noting further his confidence that the utility firm “will see that the RCOA is good both for its customers and its business.”


He stressed “we can no longer set back gains of the power sector – it can only move forward and the direction is clearly that of competition.”

Salazar added “the RCOA is a big step towards putting the power of choice of electricity supplier in the hands of the customers.”

Meralco has earlier filed a petition for declaratory relief before a Pasig regional trial court (RTC) seeking to nullify the successive rules on retail electricity suppliers (RES) that were recently issued by the ERC.

In a filing with Pasig RTC Branch 157 which also impleaded the Department of Energy (DOE), the utility firm similarly sought for the issuance of temporary restraining order (TRO) or injunctive relief on the specified ERC resolutions and DOE Circular.

ERC Resolutions No. 5, 10, and 11 have technically voided the existence of local retail electricity suppliers (Local RES) duly institutionalizing the retail competitive arm of distribution utilities (DUs) like Meralco – which in previous resolutions of the same Commission were upheld and had been expressly provided under the Electric Power Industry Reform Act (EPIRA). Meralco’s local RES is MPower.

Meralco noted that this does not only circumvent the provisions of the EPIRA but it also stifles the very nature of competition that the restructured electricity market would want to promote.  In essence, it said that such shall be detrimental to contestable customers or those envisioned by law to have already gained that “power of choice” when it comes to their electricity suppliers.

“Meralco earnestly prays that this Honorable Court immediately issue a TRO and or a writ of preliminary injunction to enjoin the DOE and the ERC from implementing the assailed issuances,” the utility firm has emphasized in its petition.

It primarily stipulated that “administrative regulations cannot extend the law or amend a legislative enactment, for settled is the rule that administrative regulations must be in harmony with the provisions of the law.”

Meralco added that “administrative rules and regulations must be germane to the objects and purposes of the law, and they cannot be in contradiction to, but must be in conformity with the standards prescribed by law.” That, “in cases of conflict between the law and the rules and regulations implementing the law, the law shall always prevail.”

Meralco further reckoned that “permitting the implementation of the DOE Circular and the ERC Resolutions will violate the rights of Meralco and the other DUs and cause them to suffer grave and irreparable injury.”

It qualified that “in the event that Meralco’s local RES is unable to engage in the supply of electricity to the contestable customer, it will be unable to transfer its displaced contract cost brought about by the RCOA (retail competition and open access), resulting in additional burden to its captive customers.” This will also result on its failure to comply with “least cost supply obligation” to customers.

Meralco also noted “the directive to wind down business operations and the imposition of a market cap are confiscatory and are tantamount to deprivation of property rights.”

The utility firm stressed “there is clear possibility of damage to Meralco due to financial losses brought about by loss of significant business, loss in investments in capital, personnel, technical equipment, offices and system, and loss of time and effort that have been rendered wasted due to the sudden change in the system that is forcing MPower to shut down.”