ERC Chief Chided; ERC Failures Decried

Energy Regulatory Commission (ERC) chairperson Monalisa Dimalanta’s plea for enhanced enforcement powers via higher fines and prison terms was met with sneers and jeers from consumers whose cases have remained unresolved for years under ERC’s existing regulatory powers.

According to earlier reports, ERC, through Chairperson Dimalanta, submitted to the Department of Energy (DOE) inputs for amendments to RA 9136, the Electric Power Industry Reform Act, which included raising fines and penalties from P50-M to as much as P500-M. I Photo: Energy Regulatory Commission X

"ERC must first show that it has wielded and used the powers and duties it is already given before it goes shopping for enhancements," said Romeo Junia, a consumer intervenor in several pending ERC cases.

According to earlier reports, ERC, through Dimalanta, submitted to the Department of Energy (DOE) inputs for amendments to RA 9136, the Electric Power Industry Reform Act, which included raising fines and penalties from P50-M to as much as P500-M.

ERC initiatives on this front, against the backdrop of cases that have languished in delay because the Commission has not exercised its vested powers and given duties, could simply be shrugged off as harmless posturing if ERC’s delays were not inimical to consumer interest, Junia said.

Junia cited the case of MERALCO’s provisional rate granted in July 2015 that remained provisional for seven years, contrary to an ERC rule that provisionally approved rates are good for one year only and must be made final within that year.

No hearings were called or conducted for the better part of six years.

Fortunately for MERALCO customers, last June 7, 2023, Pete Ilagan of NASECORE filed a motion for the refund of the provisional rate illegally imposed by MERALCO beyond one year after its approval.

According to Ilagan, “under Section 3, Rule 14 of ERC Rules of Procedure, in the event that a provisional authority is issued, the main application should be resolved within twelve months from the issuance of the provisional authority.”

From July 2016 onwards, he said, MERALCO’s continued imposition of the provisional rate is illegal and must therefore be refunded, together with the corresponding fine per violation.

Ilagan also cited the case of Freedom from Debt Coalition vs. ERC, GR No. 161113, where the Supreme Court ruled that a provisional authority is effective only for twelve months.

In that case, the highest court warned against abuse of the power to grant provisional relief or authority and set notice, publication, hearing, and the one-year resolution timeline as guardrails.

Junia, for his part, cited delays in the ongoing MERALCO rate reset case to highlight ERC’s failure to observe its own rules and discharge its present regulatory functions. According to him, ERC in 2003 sold consumers a new rate regime called Performance-Based Regulation (PBR) to replace Return on Rate Base (RORB).

The promise to consumers was reasonable rates in a transparent process with the added prospect of sharing with the utilities any efficiency gains from their investments.

For the utilities, one-time approval of their four-year budget in the rate reset secured their investments and closed the regulatory lag, which was their principal problem with RORB.

Clearly, the rate reset is the element or step of PBR that is key and crucial to maintaining fair and just rates, especially for consumers or captive customers. But in MERALCO’s case, this was the step ERC skipped for seven years from 2015, initiated belatedly in 2022, and has now left stalled and grounded in the wayside for over one year.

According to Junia, the already late rate reset ground to a full stop in November last year because ERC could not issue the pre-trial order, which is merely the summary of the issues ERC processed in the pre-trial conference.

How this can be stalled for eight months is beyond belief, considering that none but ERC has the say on that order, Junia said.