G.R. No. 210245/G.R. No. 210255/G.R. No. 210502, August 3, 2021
BAYAN MUNA REPRESENTATIVES NERI JAVIER COLMENARES AND CARLOS ISAGANI ZARATE, GABRIELA WOMEN’S PARTY REPRESENTATIVES LUZ ILAGAN AND EMMI DE JESUS, ACT TEACHERS PARTY-LIST REPRESENTATIVE ANTONIO TINIO, AND KABATAAN PARTY-LIST REPRESENTATIVE TERRY RIDON, PETITIONERS, VS. ENERGY REGULATORY COMMISSION (ERC) AND MANILA ELECTRIC COMPANY (MERALCO), RESPONDENTS. [G.R. No. 210255] NATIONAL ASSOCIATION OF ELECTRICITY CONSUMERS FOR REFORMS (NASECORE), REPRESENTED BY PETRONILO L. ILAGAN, FEDERATION OF VILLAGE ASSOCIATIONS (FOYA), REPRESENTED BY SIEGFRIEDO A. VELOSO, FEDERATION OF LAS PIÑAS HOMEOWNERS ASSOCIATION (FOLPHA), REPRESENTED BY BONIFACIO DAZO AND RODRIGO C. DOMINGO, JR., PETITIONERS, VS. MANILA ELECTRIC COMPANY (MERALCO), ENERGY REGULATORY COMMISSION (ERC) AND DEPARTMENT OF ENERGY (DOE), RESPONDENTS. [G.R. No. 210502] MANILA ELECTRIC COMPANY (MERALCO), PETITIONER, VS. PHILIPPINE ELECTRICITY MARKET CORPORATION, FIRST GAS POWER CORPORATION, SOUTH PREMIERE POWER CORPORATION, SAN MIGUEL ENERGY CORPORATION, MASINLOC POWER PARTNERS, CO., LTD., QUEZON POWER (PHILS.) LTD. CO., THERMA LUZON, INC., SEM-CALACA POWER CORPORATION, FGP CORPORATION AND NATIONAL GRID CORPORATION OF THE PHILIPPINES, AND THE FOLLOWING GENERATION COMPANIES THAT TRADE IN THE WESM NAMELY: 1590 ENERGY CORPORATION, AP RENEWABLES, INC., BAC-MAN ENERGY DEVELOPMENT CORPORATION/BAC-MAN GEOTHERMAL, INC., FIRST GEN HYDRO POWER CORPORATION, GNPOWER MARIVELES COAL PLANT LTD. CO., PANASIA ENERGY HOLDINGS, INC., POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORPORATION, SN ABOITIZ POWER, STRATEGIC POWER DEVELOPMENT CORPORATION, BULACAN POWER GENERATION CORPORATION AND VIVANT STA. CLARA NORTHERN RENEWABLES GENERATION CORPORATION, RESPONDENTS.

FACTS

On December 5, 2013, MERALCO wrote to the Energy Regulatory Commission (ERC) proposing to charge consumers higher generation rates to recover P22.64 billion in generation costs for November 2013, translating to a P4.15 per kWh increase. MERALCO cited the shutdown of the SPEX-Malampaya natural gas facility and maintenance of other power plants. While the Automatic Adjustment of Generation Rate and System Loss Rates (AGRA) Rules authorized automatic reflection of this cost, MERALCO proposed an exception: to implement a lower charge in December 2013 and defer recovery of the remaining balance to February 2014 billing, with carrying costs. On December 9, 2013, the ERC approved MERALCO’s proposal for staggered collection, authorizing a generation charge of P7.67/kWh for December 2013 and adding P1.00/kWh for February 2014, with the balance to be included in March 2014 without carrying costs. The ERC stated this was not a confirmation of the costs, which would remain subject to post-verification. MERALCO then billed and collected from its captive consumers based on this approval. The legal framework involves Republic Act No. 9136 (EPIRA) and its Implementing Rules. Initially, Rule 3, Section 4(e) of the IRR mandated a rigid process for any rate adjustment application, requiring verification, notice to LGUs, publication, a provisional grant or denial within 75 days, and a formal hearing with a public hearing before a final decision within 12 months. This was amended in June 2007 to introduce exceptions, including for generation charges computed using ERC-instituted mechanisms like the Automatic Generation Rate Adjustment Mechanism.

ISSUE

Whether the Energy Regulatory Commission (ERC) acted with grave abuse of discretion in the manner or process by which it acted on MERALCO’s proposal for a generation rate increase, not on the substantive outcome of that decision.

RULING

The dissenting opinion posits that the ERC acted with grave abuse of discretion. The issue revolves around how the ERC should have acted on MERALCO’s proposal, not what its decision should have been. The process followed by the ERC ignored bedrock principles that should have animated its discretion. The ERC’s action—granting approval via a letter within days without the rigorous process initially outlined in the IRR (such as verification, publication, and public hearing)—was tainted. Consequently, because the process was flawed, the outcome must also be set aside. The dissent emphasizes that MERALCO’s consumers are a captive market with no alternative, making the regulatory role of the ERC crucial. The ERC failed to exercise its discretion judicially by not adhering to proper procedural safeguards designed to protect consumer interests.