By Benjamin Pulta/Philippine News Agency
MANILA — A ruling by the Supreme Court (SC) has required that power supply agreements worth more than an estimated PHP12 billion a year for 20 years first entered by the previous administration must undergo mandatory bidding process.
The SC-Public Information (PIO) said the Court en banc granted the petition in a decision penned by Senior Associate Justice Antonio Carpio, directing the conduct of competitive selection process (CSP) on all power supply agreements (PSAs) submitted by distribution utilities on or after June 30, 2015.
In granting the petition filed by Alyansa Para Sa Bagong Pilipinas, Inc., the Court en banc held that the Energy Regulatory Commission (ERC) committed grave abuse of discretion amounting to lack or excess of jurisdiction when it unilaterally postponed the effectivity of the CSP requirement by issuing ERC Resolution No. 13 and ERC Resolution No. 1.
Sought for comment, the office of former ERC chair Jose Vicente Salazar, who is now a private lawyer, said as a collegial body, he was outvoted by four other commissioners who wanted the bidding system put off, contrary to his position that the CSP system be implemented.
Aside from Carpio, ruling in favor of the petition were Chief Justice Lucas P. Bersamin, Associate Justices Diosdado Peralta, Mariano Del Castillo, Estela Perlas-Bernabe, Marvic M.V.F. Leonen, Jose Reyes, Jr., Ramon Paul Hernando, Rosmari Carandang and Amy Lazaro-Javier.
Two magistrates voted to deny the petition — Alfredo Benjamin Caguioa and Andres Reyes Jr. Francis Jardeleza abstained, while Alexander Gesmundo did not take part.
The CSP rules require power distributors to get at least two offers for supply of electricity before awarding a PSA, ensuring the least cost for electricity consumers.
The Court pointed out that the authority of the ERC was limited only to the implementation of the CSP, and that the ERC had no power and authority to postpone the CSP’s application.
As a consequence of the SC ruling, all PSA applications submitted by distribution utilities (DUs) on or after June 30, 2015 were required to comply with the CSP in accordance with a 2015 circular issued by the Department of Energy (DOE).
The 2015 DOE circular, which became effective on June 30, 2015, mandated all DUs to undergo CSP in securing PSAs.
Furthermore, the court said the power purchase cost after compliance with the CSP shall retroact to the date of the effectivity of the PSA, “but in no case earlier than June 30, 2015, for purposes of passing the purchase cost to the consumers.”
The implementation of the 2015 DOE Circular was set aside after the ERC, on Oct. 20, 2015, issued Resolution No. 13, which stated that pending the issuance by the ERC of a prescribed CSP, a DU may adopt any accepted form of CSP, subject to certain minimum requirements or standards to be incorporated in the terms of reference.
It also allowed direct negotiation after at least two failed CSPs and set the cut-off date for the compliance of the CSP requirement to Nov. 7, 2015 instead of June 30, 2015, effectively postponing the implementation of the DOE circular.
However, on March 15, 2016, the ERC issued Resolution No. 1 which restated that the effectivity of the CSP requirement for PSAs is on April 30, 2016 instead of Nov. 7, 2015, as previously set in ERC Resolution No. 13.
With the issuance of ERC Resolution No. 13 and ERC Resolution No. 1, the implementation of the CSP under the 2015 DOE circular was effectively postponed for a total of 305 days, from June 30, 2015 to April 29, 2016.
“The delegated authority to implement CSP does not include the authority to postpone or suspend CSP for 20 years, beyond the seven-year terms of office of the ERC Commissioners postponing or suspending the CSP, and beyond the seven-year terms of office of their next successors, as well as beyond the six-year terms of office of three Presidents of the Republic,” the court said in ruling against the ERC.
The court noted that a total of 90 PSAs were submitted for approval with the ERC for the period April 16, 2016 to April 29, 2016, with terms spanning more than 20 years.
The petitioner, Alyansa Para Sa Bagong Pilipinas, claimed that the intention for the issuance of the assailed ERC resolutions is to give more time to Meralco and respondent generation companies and other players to enter into self-negotiated PSAs in violation of the CSP policy of the State.
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