Power rate hike contravenes Constitutional mandate to protect common good

The unconscionable rate hike in power rates proposed by distribution utility Meralco last year exposes gaps, lapses and violations of an already questionable law, human rights group National Union of Peoples’ Lawyers (NUPL) will assert in court today.

NUPL lawyers will attack in the Supreme Court the P4.15 increase in generation charges incurred from Meralco’s suspicious power purchases in November and December 2013. Both Bayan Muna representatives who will argue on behalf of petitioners and consumers to void the present proposed and prevent future rate hikes are NUPL officers.  Neri Javier Colmenares is NUPL President, while Carlos Isagani Zarate is former Vice President for Mindanao and now Adviser to the NUPL National Executive Board.

“This is the largest electricity rate increase ever approved in history. It will not only double the electricity bill of consumers of Metro Manila and nearby provinces, but will also further escalate inflation all over the country due to adverse spillover effect,” NUPL secretary-general Atty. Edre Olalia, who is part of the main petitioners’ legal team, asserted.

“Affordable electricity is a common good. Our Constitution mandates the State to intervene when the common good so demands. Bound by its anti-people policies,when will this government be able to bring us relief? Why can it not shield the many from the greed of the few?,” he added.

“The approval of this power rate hike was attended by government negligence, a haphazard policy of liberalization and deregulation to favor big business, and a systemic failure to protect the public interest,” said Atty. Olalia. The lawyers contend that certain provisions of the Electric Power Industry Reform Act or EPIRA, which expressly declares the industry open and competitive, allows Meralco to source electricity solely according to its corporate interests, and ties the hands of power “regulators” to approve electricity price increases even if unconscionable.

“Power firms should be considered a public utility because they supply a basic and essential service to the public. This is an industry which is “regulated”, absurdly, piecemeal: while the distribution and transmission companies must secure franchises and agree to caps on still-lucrative rates of return, the generation companies can bill exorbitant fees and enjoy excessive and windfall profits to the prejudice of the public. For the State’s failure to assert otherwise, the power industry has spawned  private monopolies and oligopolies,” he said.

The legal team which includes NUPL lawyers and is led by Bayan Muna general counsel Atty. Maria Cristina Yambot, also NUPL Rizal Chapter secretary-general, will make a case against Meralco for highly irregular and unprecedented acts in procuring electricity and the Energy Regulatory Board for grave abuse of discretion.

The rate increase came about not because there was a substantial increase in production cost nor was there a lack of supply, but only because some opportunistic generation companies exploited the highly suspect simultaneous unscheduled and scheduled shutdowns, and made staggeringly high bids in the spot market called WESM, the legal team analyzed.

The legal team also assailed why Meralco sources around 10%of its electricity from the spot market and refuses to contract closer to 100%, a fact which makes more prone to such market volatilities. These acts, and in particular the price manipulation, violate Meralco’s duty under its franchise which says it must supply electricity to its captive market in the “least cost manner”. (kc)

Edre U. Olalia
Secretary General


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