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 remain unresolved for years under ERC’s existing regulatory powers.

Photo Insert: The Energy Regulatory Commission (ERC) Faces Criticism as Consumers Decry Long-standing Failures in Energy Regulation.

The 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 a number of pending ERC cases.

Earlier, the ERC, through Dimalanta, submitted to the Department of Energy (DOE) inputs for an amendment to RA 9136, the Electric Power Industry Reform Act (EPIRA), that included raising fines and penalties from P50M to as much as P500M.

ERC initiatives on this front, against the background of cases that have languished before the Commission for its inability to exercise 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 (7) years, contrary to an ERC rule that provisionally approved rates are good for one (1) year only and must be made final within that year. No hearings were called or conducted for the better part of six (6) years, he said.

Fortunately for MERALCO customers, on June 7, 2023, Pete Ilagan of NASECORE filed a motion for the refund of the provisional rate that was cited as having been 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 (12) 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 (12) 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.

Thus, 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 (7) years from 2015, initiated belatedly in 2022, and has now left stalled and grounded on the wayside for over one (1) 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 (8) months is beyond belief, considering that none but ERC has the say on that order, Junia wondered aloud.

Earlier in March this year, Junia said, he sought clarification of the case status but did not get a response from ERC. A motion for documents filed on April 3, 2023, has remained unresolved for over three (3) months, an unfortunate delay given the importance of the data and information to the proper scrutiny of MERALCO’s application.

According to Junia, as many as 12 pleadings have been filed on his motion by all parties, including MERALCO and NASECORE, but nothing has been heard from ERC except for the system-generated acknowledgment of every filing. Not one of the motions has been addressed or resolved by ERC.

Clearly, according to Junia, this failure to timely discharge a power already granted can be considered a dereliction of duty that sadly is now the point of a plea for more powers from the ERC chief.

The painful reality here, Junia said, is that all the elements for implementing PBR are in ERC’s control and are within its current powers; they made the rules, and they only needed to implement them. But ERC did not.

The painful irony now is, ERC goes to Congress asking for additional powers without being bothered by its egregious failure to exercise the powers it already has – which is rate-setting under PBR.

If there is any amendment or change to be made in EPIRA, it is to put in accountability provisions for ERC to answer for unreasonable delays in its decisions and orders, and to answer for its failure to enforce its own rules like the PBR rate reset.

Directly for consumer benefit, EPIRA should create an Office of Consumer Protection that will research, educate, advocate, and litigate for electricity consumers, to be funded out of the rates. As of now, utilities charge all rate litigation costs to consumers, and in the case of MERALCO, its regulatory liaison and compliance charges for 2012 to 2022 were an estimated P4.8 billion.

In other regimes, they have rate-funded consumer advocates.

That office should bring us closer to par with the utilities battery of lawyers that we pay for. They will also be the hands to keep ERC’s feet on the fire. But that should be for another discussion.

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