SC: Public bidding for PSAs a must
Credit to Author: JOMAR CANLAS, TMT| Date: Mon, 06 May 2019 16:22:07 +0000
THE Supreme Court (SC) has ruled that all power-supply agreements (PSAs) of the government should undergo public bidding.
In a 10-2 decision dated Friday but released only on Monday, the high court said PSAs submitted by distribution utilities (DUs) to the Energy Regulatory Commission (ERC) on or after June 30, 2015 must undergo a competitive selection process (CSP).
A CSP is a form of public bidding for the purchase of electricity by DUs, and was created to protect consumers.
Rules for it require distributors to get at least two offers for power supply before awarding a deal, ensuring that consumers get the least cost.
The high tribunal said the ERC committed grave abuse of discretion amounting to lack or excess of jurisdiction when it postponed the CSP requirement with resolutions issued in October 2015 and March 2016.
This postponement lasted between June 30, 2015 and April 29, 2016.
This requirement — provided in the implementing rules of the Electric Power Industry Reform Act of 2001 or Epira — aimed to ensure a fair, reasonable and cost-effective generation charge for consumers, under a transparent power sale mechanism between power-generation companies and DUs.
The high court said the ERC could only implement the process and had no authority to postpose its application.
The ruling stemmed from a complaint filed with the SC by the Alyansa ng Bagong Pilipinas Inc. consumer group against the Manila Electric Co. (Meralco).
It had asked the high court in 2016 to stop the commission from approving supply deals worth P12 billion annually between the country’s leading electricity provider and seven power plants, saying that, instead of undergoing competitive bidding, these were negotiated.
In response to the ruling, the Department of Energy (DoE) and the ERC saidit would follow it.
“We just have to respect and abide the decision of the SC,” DoE Secretary Alfonso Cusi said in a text message. “It will help [power projects] get going.”
In a statement, ERC Chairman Agnes Devanadera said her agency would start working on alleviating the decision’s possible implications.
“We assure the public that the commission would be doing everything within its legal mandate to protect consumers” in relation to the ruling, she added.
The National Association of Electricity Consumers for Reforms Inc. (Nasecore) hailed the high tribunal’s decision to uphold “consumer interest and [validate] the great abuse committed by the former ERC commissioners,” Nasecore said, referring to ERC commissioners Gloria Yap-Taruc, Alfredo Non, Josefina Patricia Magpale-Asirit and Geronimo Sta. Ana.
The Office of the Ombudsman had suspended the four for one year in December 2017 “conduct prejudicial to the best interest of the service aggravated by simple misconduct and simple neglect of duty.”
According to First Grade Finance Inc., the ruling may result in lower power rates and that firms have no other choice but to comply with this decision. WITH JORDEENE B. LAGARE
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