G.R. No. 227670, May 3, 2019
Alyansa Para Sa Bagong Pilipinas, Inc. (ABP) vs. Energy Regulatory Commission, et al.

FACTS

The Department of Energy (DOE) issued Circular No. DC2015-06-0008 on June 11, 2015, mandating all Distribution Utilities (DUs) to procure Power Supply Agreements (PSAs) only through a Competitive Selection Process (CSP) conducted by a recognized third party. The Energy Regulatory Commission (ERC) subsequently issued its own CSP Guidelines through Resolution No. 13, Series of 2015, setting the effectivity on November 7, 2015. However, on March 15, 2016, the ERC issued Resolution No. 1, Series of 2016, which moved the effectivity date of the CSP requirement to April 30, 2016. This postponement allowed several DUs, including MERALCO, to execute and file PSAs with the ERC without undergoing CSP during the interim period. Petitioner Alyansa para sa Bagong Pilipinas, Inc. (ABP) filed this petition, arguing that the ERC’s postponement was issued with grave abuse of discretion, as it contravened the earlier DOE Circular and ERC’s own guidelines, effectively exempting numerous long-term PSAs from competitive bidding.

ISSUE

Whether the Energy Regulatory Commission committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing Resolution No. 1, Series of 2016, which postponed the effectivity of the Competitive Selection Process requirement.

RULING

Yes, the ERC committed grave abuse of discretion. The Court ruled that the ERC’s unilateral postponement of the CSP effectivity date was issued beyond its authority and in violation of its statutory mandate under the EPIRA (Electric Power Industry Reform Act). The EPIRA charges the ERC to promote competition, ensure affordable power, and prevent market abuse. The CSP is a crucial regulatory mechanism to fulfill this mandate by ensuring transparent and least-cost power procurement, the cost of which is entirely passed on to consumers. By delaying the CSP’s implementation, the ERC created an artificial window that allowed DUs to avoid competitive bidding for PSAs with 20 to 21-year terms, thereby insulating these contracts from scrutiny for decades and potentially burdening consumers with non-competitive generation charges. This action contradicted the clear policy of the DOE Circular and the ERC’s own prior resolution, and it abdicated the ERC’s constitutional and statutory duty to protect the public interest. Consequently, the Court declared ERC Resolution No. 1, Series of 2016 void and directed the ERC to subject all PSAs executed after the original November 7, 2015 deadline to a CSP.