Hamstrung by CA

The House Committee on Energy raised a valid observation about the need for the Office of the Solicitor General to remind the Court of Appeals (CA) not to take its sweet time in issuing a final decision in the case pitting the Energy Regulatory Commission (ERC) against a dominant power firm.

A final CA ruling is needed before the OSG can elevate the petition to the Supreme Court, which could reverse the CA.

The CA’s move resulted in higher electricity rates seemingly just to rescue San Miguel Global Power Holdings Corp. (SMGPH) from a financial drain.

The ERC had dismissed petitions of SMGPH units to temporarily raise charges on electricity supplied from the Ilijan natural gas plant and the Sual coal plant since allowing these would violate the provisions of the straight pricing contracts both had entered into.

Both SMGPH units cited “change in circumstance” in terms of higher fuel prices in their petitions. The ERC said the appeals were not justified since their contracts did not provide for rate adjustments due to a spike in fuel costs.

The ERC did not even have to institute the decision for the enforcement of a contract that was the result of a bid, or what is termed a competitive selection process, in which SMGPH edged out other offers with more realistic provisions.

Nonetheless, the CA usurped the quasi-judicial authority of the ERC by overturning its decision to deny the SMGPH petitions.

The ERC has a strong chance in an appeal considering the circumstances prior to the CA ruling promulgated by the 13th Division, in which the cases of SMGPH units San Miguel Energy Corp. (SMEC) which operates Sual and South Premiere Power Corp. (SPPC) that runs Ilijan were consolidated.

The 16th Division, which heard the petition of SMEC, denied a temporary restraining order on the power supply agreement (PSA) that it sought to get out of. The OSG has referred to the 16th Division ruling as being pro-consumer and thus the correct appreciation of the ERC action.

The CA issued a resolution junking the SMEC petition on 13 January 2023 in which it said SMEC failed to prove its right to a restraining order since ERC’s denial of a price adjustment preserved the status quo. The status quo referred to was the contract price in the PSA.

Granting SMEC a TRO will “not serve its purpose, since it will have the effect, not of maintaining the contract price, but of setting aside the assailed order itself, thereby rendering the main case, the petition for certiorari, moot.”

In petitioning for certiorari, SMGPH sought to invalidate the ERC decision through the CA.

The appellate court also emphasized vthat, if granted, “the writ of injunction will give SMEC the unrestricted power to terminate, at its own will, the PSA to the detriment of public consumers.”

The CA division further stated that a TRO should not be issued since there is a need for an extensive determination of the merits of SMEC’s case.

A collateral petition, however, was granted in favor of SMGPH that doomed the ERC’s ruling. It favored SMEC’s motion to consolidate its case with that of SPPC, which obtained a favorable decision from the 13th Division.

Shortly after, the CA ruled to grant a permanent injunction against ERC on both the SMEC and SPPC cases, effectively voiding the ERC decision and granting the price increases to SMGPH.

The CA, in holding on to a final decision on the OSG appeal to reconsider its ruling, blocked the government from making its next move, which is to challenge the CA verdict before the Supreme Court.

Meanwhile, consumers are suffering the scourge of higher electricity prices to pay for the costs of SMGPH’s bad business decision.