SC restrains Pasig RTC over Meralco case

October 21, 2016

SC restrains Pasig RTC over Meralco case

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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