ERC reacts on SC Ruling
“Manila Electric Company (MERALCO) should stop collecting from its consumers adjustments in its generation charge authorized under an automatic mechanism. The recovery of said adjustments should be implemented only after its filing of appropriate application before the Energy Regulatory Commission (ERC),” Chairman Rodolfo B. Albano, Jr. said pursuant to the ERC Order issued on September 1, 2006. “ Also, within ten (10) days from receipt of the said Order, MERALCO should submit to the ERC a refund scheme for purposes of returning to the consumers the amount collected therefrom,” the ERC Chair added.
The August 16, 2006 Supreme Court (SC) ruling declared invalid the June 2, 2004 Order of the ERC on MERALCO’s recovery of the Independent Power Producer Costs and the Generation Rate Adjustment Mechanism (GRAM) under ERC Case No. 2004-112. Fully aware of the urgent need to act on the matter, the ERC convened in a meeting to address the matter and reacted to the SC ruling by way of the two (2) directives for MERALCO.
As it can be recalled, prior to the August 16, 2006 SC ruling, a distribution utility (DU) like MERALCO was allowed to recover from consumers the generation charge under an automatic mechanism called GRAM. This mechanism, which formula had undergone public consultations and hearings, lessens the regulatory lag and facilitates the process of recovery of generation costs that had been paid in advance to its power generators by a DU, after ERC’s review and verification thereof. With the SC ruling, however, the recovery of said adjustments can be implemented only after the filing of an appropriate application thereon, compliant with Section 4 (e), Rule 3 of the Implementing Rules and Regulation (IRR) of the Electric Power Industry Reform Act (EPIRA) of 2001.
“The ERC hopes that a DU like MERALCO will be able to cope up with the effects of the SC ruling and that ERC will be likewise provided with enough resources to meet the demands of the said ruling,” Chairman Albano concluded
September 11, 2006