MANILA – Supreme Court ruling, placing power supply agreements submitted by Meralco and other distribution utilities under the Competitive Selection Process (CSP), will likely place more than 13 million consumers at a disadvantage, the Energy Regulatory Commission (ERC) said Friday.
The SC decision covers agreements filed on or after June 30, 2015.
“The High Court’s decision will result in the possible immediate termination of 99 affected PSA contracts, which will result in the cessation of power supply to 52 Distribution Utilities (DUs) that are serving 13 million electricity consumers composed of 9.371 million from Luzon, 1.767 million from Visayas, and 1.978 million from Mindanao,” the commission said.
“In the advent of the said scenario, a total of 743 megawatts (MW) will have to be sourced from the electricity spot market, particularly: 370 MW in Luzon, 86 MW in Visayas, and 287 MW in Mindanao,” it said.
While current prices at the Wholesale Electricity Spot Market range from P5.00 to P8.00 per kilowatt hour, some of the contracts affected by the SC decision were priced at P3.00 to P6.00 per kWh.
“Thus, an increase in the Generation Charge may be inevitable,” the commission said.
The ERC will now seek clarification from the High Court regarding its ruling which declared all PSAs filed on or before June 30, 2015 to undergo CSP.
The selection process is a form of competitive public bidding for distribution companies’ electricity supply. The Department of Energy (DOE) adopted it as policy on June 30, 2015 to ensure transparency in the process of securing power supply contracts.
Last May, the SC ruled that the ERC acted with grave abuse of discretion when it postponed the implementation of the CSP from June 30, 2015 to Nov. 7, 2015, and again to April 30, 2016. Ninety power supply agreements, several of them having terms spanning more than 20 years, were submitted to the ERC while the requirement was not in effect.
The SC ruled that the commission had no power to postpone or suspend the CSP requirement for what it said was effectively one generation of Filipinos.
“We have not yet received a copy of the Supreme Court’s Resolution purportedly denying our Motion for Reconsideration. Nevertheless, should that be the case, we will comply with the directive of the Supreme Court,” ERC Chairperson Agnes Devanadera said.
“We only need to seek guidance through a Motion for Clarification on how to implement their decision particularly on the rates and the continued supply of electricity to the affected public utilities,” Devenadera said.
For Mindanao, there is no electricity market that may serve as default supply source for distribution utilities, the ERC noted.
Without the supply agreements, DUs will have no other means of providing enough supply to their consumers, a situation that may result in brownouts, it said.
“We will also need guidance on how prior settlements based on the affected contracts will be evaluated considering the rates that were implemented,” Devenadera said.
“Our initial calculations disclosed that about P50 billion worth of generated power is involved in the PSAs that were filed within the period covering June 30, 2015 to April 29, 2016, which we (the ERC) subsequently approved, and were implemented by the concerned parties in the PSAs,” the ERC chief noted.
“Therefore, the P50 billion will be translated to rate adjustments in the consumers’ electricity bill on top of the rate adjustment resulting from sourcing power from the electricity spot market,” she said. (GMA News)
