CA Upholds ERC's Authority to Impose Fines for Unapproved Capital Projects

The Court of Appeals (CA) recently upheld the Energy Regulatory Commission’s (ERC) authority to impose fines on distribution utilities for implementing capital projects without first securing its approval. In its Decision dated December 28, 2006 in the petition filed by the Manila Electric Company (MERALCO) questioning the ERC decision to penalize MERALCO for implementing capital projects without prior authority, the CA affirmed the ruling of the ERC that imposed a fine of PhP331, 900.00 upon Manila Electric Company (MERALCO) for the unauthorized construction of three (3) electric utility projects, namely, the unloading of Gaya-Gaya Bank 1, flexibility improvement of Taguig 49ZL and Dolores 44XM and unloading of North Port 405H.

The ERC discovered that the three projects were implemented without its formal approval, contrary to Section 20 (b) of the Public Service Act, during the public hearing of MERALCO’s application for approval of its 2004 electric capital projects. In its decision to penalize MERALCO, the ERC emphasized the need to comply with the legal requirement in order to protect the consumers who ultimately share in the costs of these projects.

“The law on the matter is clear and the ERC is mandated to enforce such, and that is what it did. This CA Decision sends a message to all, particularly the Distribution Utilities, that the law must be obeyed and should they violate the law, the appropriate penalties would be imposed”, ERC Chairman and CEO Rodolfo B. Albano, Jr. stated.

“This legal victory is a boost to the consumers and ringing reminder to all electric utilities. The ERC shall always strictly implement and enforce the laws of the land and dutifully adhere to its mission of promoting and protecting the long-term interests of consumers through quality, reliable, and reasonably-priced electricity,” Chairman Albano concluded.

January 24, 2007