The Court of Appeals has sustained with finality its decision issued last June 27, 2023 annulling the Energy Regulatory Commission’s decision denying the application for a rate hike jointly filed by the power units of Ramon Ang-led San Miguel Corporation and the Manila Electric Company.
In a decision dated Dec. 28, 2023, the CA’s Thirteenth Division denied the motion filed by ERC and National Association of Electricity Consumers For Reforms, Inc. (NASECOR) seeking the reversal of the said decision penned by Associate Justice Charlene Hernandez-Azura.
The appellate court held that respondents ERC and NASECOR failed to present new arguments that would warrant the reversal of its decision.
“A scrutiny of the Motions for Reconsideration reveals that the grounds relied upon by respondent-intervenor NASECOR and public respondent ERC were already thoroughly considered and passed upon in the decision being sought to be reconsidered; and that contrary to the claims of public respondent, the Court has clearly provided its basis in making its rulings,” the CA said.
“Accordingly, our decision dated June 27, 2023 stands,” the CA said.
On June 27, 2023, the appellate court granted the petition for certiorari filed by San Miguel Energy Corp. (SMEC) and South Premiere Power Corp. (SPPC) seeking to nullify the order of the ERC denying their bid for electricity rate hike.
It held that the ERC gravely abused its discretion when it rejected the joint motion for price adjustment filed by SMC’s power units and Manila Electric Company (Meralco) on September 29, 2022 despite the substantial evidence justifying the sme.
SPPC manages the natural gas-fired power plant in Ilijan, Batangas, while SMEC is responsible for the coal power plant in Sual, Pangasinan. Both units are subsidiaries of San Miguel Global Power, the power arm of San Miguel Corp.
SPPC and SMEC and Meralco sought the price adjustments to serve as temporary relief covering a combined P5.2 billion losses incurred from January to May 2022 due to the unprecedented spike in fuel prices.
They also prayed for ERC’s approval of the Power Supply Agreement (PSA) between Meralco and SMC power units.
In their respective PSAs, SPPC is required to supply power to Meralco with 670MW net baseload capacity, from the output of the 1,200 MW of Ilijan Power Plant, the Wholesale Electricity Spot Market (WESM), or any other source, while SMEC is required to supply power to MERALCO with 330MW net baseload capacity, from the output of the 1200 MW of Sual Power Plant, the WESM, or any other source.
Both PSAs cover a supply period of ten years from December 26, 2019 to December 25, 2029.
On August 5, 2022, Meralco informed ERC that it has received a notice of termination from SPCC and SMEC of the PSAs.
However, the CA also ruled that ERC’s order invalidating the notice of termination and directing Meralco to preserve the PSAs effectively denied SPPC and SMECs right to due process.
Furthermore, the CA said that the determination of the validity of the notices of termination is not within the scope of jurisdiction of the ERC as this should be addressed to the proper tribunal in accordance with the arbitration clause in the PSAs.
The CA also ruled that notices of termination against Meralco did not render moot the joint application for price adjustment.
Contrary to the claim of ERC, the CA ruled that the PSAs are not financial contracts with fixed rates.
It noted that the PSAs contain provisions that allow price adjustments for specific periods.
In its MR filed before the CA, ERC maintained lack of grave abuse of discretion in issuing its order denying the petitioners’ motion for price adjustment and Meralco.
It also argued that the CA failed to comply with the constitutional requirement under Section 14, Article VIII of the Constitution to give a clear and distinct expression of facts and laws forming the basis of a court decision.
“Thus, the Court finds no merit in the arguments set forth in their respective motions for reconsideration. Accordingly, there is no cogent reason to reverse the Court’s Decision dated June 27, 2023,” the CA declared.