Meralco: Petitioners erred in seeking relief with SC

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Tuesday, February 4, 2014

OPPONENTS of the record-high generation charge to be passed on the consumers of Manila Electric Company (Meralco) erred when it went to the Supreme Court (SC) to invalidate the increase, the country's largest power distributor said Tuesday.

At the resumption of the oral argument, retired SC Justice Florentino Feliciano said the three petitioners should have asked the Energy Regulatory Commission (ERC) to review Meralco's P4.15 per kilowatt-hour (kWh) rate hike.

"Under Epira (Electricity Power Industry Reform Act) and its implementing rules, Meralco has the right to charge at one time and if it was to implement this staggered, it has to get the consent of ERC," said fellow Meralco lawyer Victor Lazatin, adding the price hike is authorized under the automatic generation rate adjustment under the ERC rules.

It also asked the SC to lift the 60-day temporary restraining order (TRO) on the increase, arguing that an extension would only produce dire effects to the economy including brownouts during summer months, where demand is at its peak.

Rotational brownouts are possible if the unpaid fuel suppliers will stop delivering fuel to the generation companies, Lazatin said. These power generators will then halt supplying power to Meralco, which will have to ration power due to insufficient supply.

But if the Court decides to extend the life of the TRO, Lazatin said the stay order must also cover generation and transmission firms that have been "threatening" Meralco to pay its obligations.

Meralco earlier said it had to source expensive power at the Wholesale Electricity Spot Market (WESM) to meet the 2,700-megawatt supply shortfall as a result of the maintenance shutdown of the Malampaya natural gas facility off Palawan and other power plants.

However, the petitioners said in the first hearing on January 21 that Meralco bought power from WESM through its supplier Aboitiz-led Therma Mobile, Inc. for P62 a couple of times, which influenced the computation of the generation charge.

Asked by Senior Associate Justice Antonio Carpio why Meralco had to settle with the maximum price of P62, Lazatin said: "As a buyer of power, you just say the quantity that you want. You are just a price-taker. Whatever the price is, you take it."

Associate Justice Mariano del Castillo, meanwhile, called out Meralco for not exerting pressure on generation companies to delay the maintenance shutdown.

Lazatin thought otherwise, saying his client requested two plants, whose scheduled shutdown would overlap with Malampaya's, to delay their scheduled shutdowns. Meralco was successful in convincing one, he said.

"Notwithstanding Meralco's efforts, Meralco sourced more power from WESM (which is geared to clear at the highest marginal price) because of the extended shutdowns and forced outages during the months of November and December 2013," said Lazatin.

The third hearing is on February 11. (Virgil Lopez/Sunnex)

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