Philippines: SC restrains Pasig RTC over Meralco case

Philippines: SC restrains Pasig RTC over Meralco case

A temporary restraining order (TRO) issued by the Supreme Court will
effectively prevent the Pasig Regional Trial Court Branch 157 for the
meantime from enforcing its injunctive relief and in continuing with its
proceedings on the case filed by Manila Electric Company (Meralco)
questioning the Retail Electricity Supplier (RES) rules previously issued by
the Energy Regulatory Commission and the corresponding policy issuances of
the Department of Energy.

The high court in its retraining order, has enjoined respondent Pasig RTC,
its agents and "other person acting on their behalf from continuing the
legal proceedings in Special Civil Action No, 4149-PSG and from enforcing
all orders, resolutions and decisions rendered until the instant petition is
finally resolved.

The TRO was granted by Senior Associate Justice Antonio T. Carpio,
chairperson of the high court's second division. It was issued on October
10, 2016 to a petition filed by the DOE.

Power utility giant Meralco earlier questioned before the Pasig regional
trial court why the newly-crafted RES Rules had dislodged it from its
business as local RES or an entity that could continually serve or make
retail electricity offer to customers within its franchise area.

In the ERC rules, it had been stipulated that Meralco can only participate
in the mandatory regime of power industry's competition if done through an
affiliate company, but will no longer be through its existing local RES
under MPower.

The lower court has stipulated in its ruling that "the prohibition or
restriction imposed on the petitioner (Meralco) and MPower directly
translates into a major loss of its investments in capital, personnel,
technical equipment and other related peripherals arising out of the
unbundling of its regulated and unregulated activities in compliance with
requirements earlier issued by DOE/ERC."

As of press time, Meralco First Vice President and Head of Legal William S.
Pamintuan noted that the company "will look into all available legal
options."

ERC Resolution Numbers 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, in a case lodged with the Pasig RTC, has 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.

The utility firm further opined 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."

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Ref: http://www.mb.com.ph/sc-restrains-pasig-rtc-over-meralco-case/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com