MANILA, Philippines – The Supreme Court (SC) ruled that electricity generation and power supply are not public utility operations but still regulated by the Energy Regulatory Commission (ERC).

In an En Banc resolution dated August 1, 2023 uploaded on January 7, 2025, Tuesday, the high court upheld Sections 6 and 29 of the Electric Power Industry Reform Act (EPIRA).

The SC said power generation and supply firms are not public utilities since they do not directly deal with the general public. Instead, these companies offer their services to a limited group of customers.

The court maintained that the firms are subject to ERC regulation. “However, they remain under government regulation because the EPIRA expressly provides safeguards against abuse or irregular activity, such as the requirement on these companies to secure from the ERC a certificate of compliance, among other regulations,” it said.

The SC also upheld provisions of the law which empower the ERC to fix charges, allowing distribution utilities to recover losses as Congress’ delegation of this power to the ERC was protected by sufficient standards and limitations under EPIRA.

The case stems from a 2013 letter penned by then-Anakpawis and Pamalakaya representative Fernando Hicap and others challenging the constitutionality of EPIRA provisions. The petition was filed after the ERC authorized the Manila Electric Company (Meralco) to recover its generation costs from consumers on a staggered basis.

Hicap and his fellow petitioners argued that the power industry’s generation and distribution sectors are not subject to ERC regulation since they are public utilities.

The petitioners also argued that universal charges are taxes and thus must be set by Congress. However, the SC ruled that universal charges are not taxes since these do not intend to generate revenue, but ensure the viability of the power sector.

“Under the EPIRA, the ERC was authorized by Congress to determine and approve the universal charge,” it said.

In its own letter to the high court dated December 5, 2013, Meralco attributed the unforeseen generation charge hike to the maintenance shutdown of the Shell Philippines B.V.-Malampaya facility.

The power distributor also explained that it was authorized to reflect the P22.64 billion generation cost in its December 2013 billing to customers. However, instead of reflecting the full P9.1070 per kilowatt-hour (kWh) rate, Meralco would reflect a lower generation charge of P7.90/kWh. The remaining generation costs would then be collected on a staggered basis from December 2013 to February 2014.

Meralco then requested the ERC that it be allowed to recover charges and carry costs from the move. – Rappler.com