G.R. No. 163935 – National Association of Electricity Consumers for Reforms (NASECORE), et al. v. Energy Regulatory Commission (ERC) and Manila Electric Company (MERALCO)

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SEPARATE OPINION

 

Tinga, J.:

 

 

I join the ponencia of our esteemed colleague, Mr. Justice Callejo, but should like to add a few thoughts on the main issue of publication especially as it relates significantly to my own ponencia in Freedom from Debt Coalition v. Energy Regulatory Commission.[1]

 

Among the insidious flaws of the Philippine electric power industry are the enormous cost of power and inadequate consumer protection.  To a large measure, especially in terms of the provisions concerning rate-fixing, these deficiencies are addressed by Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act (EPIRA). 

 

The EPIRA introduced significant reforms which, although procedural in character, bring about substantial benefits to consumers.  Specifically, the publication requirement under Sec. 4(e), Rule 3 of the EPIRA Implementing Rules and Regulations (IRR) is aimed to protect the public interest vis-ŕ-vis the rates and services of electric utilities and other providers of electric power; to ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability; and to balance the interests of the consumers and the public utilities providing electric power through the fair and non-discriminatory treatment of the two sectors.

 

Thus, in Freedom from Debt Coalition v. Energy Regulatory Commission, supra, we ruled that the publication of the application for provisional rate increase is an indispensable requirement, the inadequacy of which rendered the proceedings and subsequent decision of the Energy Regulatory Commission (ERC) void.

 

This same publication requirement is at issue here. 

 

On December 26, 2001, MERALCO filed with the ERC an application for the approval of its unbundled rates and appraisal of its properties. The case was docketed as ERC Case No. 2001-900 and consolidated with ERC Case No. 2001-646.  After a series of hearings, the ERC rendered a Decision dated March 20, 2003, approving MERALCO’s unbundled schedule of rates effective on the next billing cycle.  MERALCO was directed to recover the costs of power purchased from the National Power Corporation (NAPOCOR) through the Generation Rate Adjustment Mechanism (GRAM).

 

Apparently, there was another proceeding entitled “In the Matter of the Adoption of the Generation Rate Adjustment Mechanism (GRAM) and Incremental Currency Exchange Recovery Adjustment (ICERA)” docketed as ERC Case No. 2003-44 then being heard by the ERC.  In an Order dated February 24, 2003 in the said case, the ERC adopted the Implementing Rules for the Recovery of Fuel and Independent Power Producer Costs: Generation Rate Adjustment Mechanism (GRAM) and the Implementing Rules for the Recovery of the Incremental Currency Exchange Rate Adjustment (ICERA), both to take effect immediately.  These rules were formulated to replace the Purchased Power Adjustment (PPA) and the Currency Exchange Rate Adjustment (CERA), the automatic adjustment mechanisms then in effect.

 

In consonance with the ERC’s Decision dated March 20, 2003 and its Order dated February 24, 2003, Meralco filed an amended application entitled “In the Matter of the Application for the Recovery of the Independent Power Producer Costs under the Generation Rate Adjustment Mechanism (GRAM).”  In its Order dated June 2, 2004, the ERC approved the increase of MERALCO’s generation charge effective immediately.

 

Invoking Sec. 4(e), Rule 3 of the IRR and Freedom from Debt Coalition v. ERC, supra, petitioners assail the ERC’s Order for being violative of procedural due process as MERALCO’s amended application for the increase of its generation charge was not published in a newspaper of general circulation. As a result, petitioners were not able to file their respective comments on the amended application.

 

On the other hand, the ERC and MERALCO jointly argue that the cited provision of the EPIRA IRR has no application because MERALCO’s amended application for the increase of its generation charge is governed not by the EPIRA IRR but by the GRAM IRR, which does not require that the application of a distribution utility be published or that comments thereon of local government units and the consumers be solicited.  Allegedly, the procedure under the GRAM IRR is different from that under the EPIRA IRR because the GRAM was intended to be an adjustment mechanism and not an independent rate application within the contemplation of the EPIRA IRR.

 

The EPIRA mandated the creation of a comprehensive IRR by the Department of Energy (DOE) in consultation with relevant government agencies, electric power industry participants, non-government organizations, end-users and consumers.  The IRR thus promulgated specifically outlines, among others, the procedure to be followed with regard to applications for rate adjustment or for other relief affecting consumers.  It provides:

 

 

 

 

 

Sec. 4. Responsibilities of the ERC.

 

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(e) Any application or petition for rate adjustment or for any relief affecting the consumers must be verified, and accompanied with an acknowledgement of receipt of a copy thereof by the LGU Legislative Body of the locality where the applicant or petitioner principally operates together with the certification of the notice of publication thereof in a newspaper of general circulation in the same locality.

 

 

The ERC may grant provisionally or deny the relief prayed for not later than seventy-five (75) calendar days from the filing of the application or petition, based on the same and the supporting documents attached thereto and such comments or pleadings the consumers or the LGU concerned may have filed within thirty (30) calendar days from receipt of a copy of the application or petition or from the publication thereof as the case may be.

 

Thereafter, the ERC shall conduct a formal hearing on the application or petition, giving proper notices to all parties concerned, with at least one public hearing in the affected locality, and shall decide the matter on the merits not later than twelve (12) months from the issuance of the aforementioned provisional order.

 

This Section 4(e) shall not apply to those applications or petitions already filed as of 26 December 2001 in compliance with Section 36 of the Act. [Emphasis supplied]

 

 

MERALCO’s application for the increase in its generation charge is undoubtedly within the contemplation of the EPIRA IRR. The publication requirement applies indiscriminately to all petitions for rate adjustment whether as a result of an adjustment mechanism, as respondents posit, or as an independent application.  As long as the application would affect the consumers, or would result in any change in the cost of power paid by them, the EPIRA IRR shall come into play.

 

To reiterate the Court’s pronouncement in Freedom from Debt Coalition v. ERC, supra, “the publication requirement under the IRR has a dual purpose: first, it is jurisdictional because without it, the ERC would be powerless to assume jurisdiction over the petition; and second, it is a necessary component of procedural due process aimed at giving the petition as wide publicity as possible so that all persons having an interest in the proceedings may be notified thereof.”[2]

 

On account of this jurisdictional due process component, the publication requirement should be strictly complied with.  A petition for increase in generation charge, such as MERALCO’s application in this case, is, for all intents and purposes, just an application for rate adjustment by another name. 

 

 

DANTE O. TINGA

                                                                     Associate Justice

 


 

[1]G.R. No. 161113, June 15, 2004, 432 SCRA 157.

 

[2]Resolution dated August 9, 2005 in Freedom from Debt Coalition v. Energy Regulatory Commission.