It's final: SC orders bidding of power deals signed after June 2015

MANILA, Philippines – The Supreme Court (SC) finalized its decision ordering the Energy Regulatory Commission (ERC) to subject prior self-negotiated power deals to the competitive bidding process mandated by the Department of Energy (DOE).

The SC en banc denied with finality the appeal of the ERC to reconsider its decision. The en banc also denied the appeal of Panay Energy Development Corporation.

"No further pleadings or motions will be entertained. Let entry of judgment be made immediately," the en banc said in a notice dated July 23.

SC Spokesperson Brian Keith Hosaka confirmed the decision to reporters on Thursday, August 8.

The notice said that Associate Justice Henri Jean Paul Inting voted with the majority. Associate Justice Mariano del Castillo was on leave and Associate Justice Francis Jardeleza did not take part.

Associate Justices Benjamin Caguioa and Andres Reyes Jr dissented.

What it means

It means that the self-negotiated deals signed after June 2015 are invalid basis to determine the rates to be charged to consumers.

The SC in its earlier decision said: "All deals or power supply agreements (PSAs) submitted by distribution utilities or the power companies to the ERC on or after June 30, 2015, must undergo a competitive selection process."

The DOE directive to subject all power deals to competitive bidding took effect on June 30, 2015.

Petitioner Alyansa Para sa Bagong Pilipinas alleged that the self-negotiated deals, including those of the Manila Electric Company (Meralco), resulted in rates that will burden consumers for up to 20 years.

What happened

After the DOE issued the resolution on competitive bidding, the ERC issued its own resolution saying that while the DOE fine-tunes the process for bidding, power companies may adopt any form of accepted bidding.

The ERC resolution also allowed direct negotiation after two failed competitive selection processes. The ERC issued another resolution which pushed the deadline of compliance with the DOE to April 30, 2016, effectively delaying implementation by 305 days.

Alyansa alleged that this allowed Meralco to self-negotiate the deals before April 30, 2016.

The SC said the ERC committed grave abuse of discretion in issuing its resolutions.

"The Supreme Court further ordered that the power purchase cost after compliance with the competitive selection process shall retroact to the date of the effectivity of the PSA, but in no case earlier than 30 June 2015, for purposes of passing the purchase cost to the consumers," said the SC. –

Lian Buan

Lian Buan covers justice and corruption for Rappler. She is interested in decisions, pleadings, audits, contracts, and other documents that establish a trail. If you have leads, email or tweet @lianbuan.