By Vann Marlo M. Villegas, July 31 2019; Business World

Image Credit to Philippine Star

THE Office of the Solicitor-General (OSG) has appealed a Supreme Court (SC) decision ordering a competitive selection process (CSP) on all power supply agreements (PSA) submitted by distribution utilities (DUs) to the Energy Regulatory Commission (ERC) on or after June 30, 2015.

In 74-page motion for reconsideration, the OSG, representing ERC, asked the court to deny for lack of merit the November 2016 petition of consumer group Alyansa Para sa Bagong Pilipinas, Inc. which sought to nullify ERC resolutions which effectively postponed CSP requirements for PSAs.

It also asked to remand the case to the Court of Appeals to determine PSA compliance with CSP.

The OSG said the court mistakenly found ERC to have committed grave abuse of discretion in issuing its 2016 Clarificatory Resolution restating the effectivity of 2015 ERC CSP Guidelines, saying it did not postpone the conduct of CSP or allow DUs to avoid the requirement.

“The 2016 Clarificatory Resolution merely postponed the applicability of the ERC’s prescribed guidelines for the conduct of said CSP, particularly the minimum provisions that should be contained in the Terms of Reference, the conditions which allowed for a direct negotiation, and other parameters which are contained in the 2015 CSP Guidelines,” according to the motion.

“In short, what the ERC suspended is not the mandatory requirement for the conduct of the CSP itself but the rules or guidelines on how said CSP should be undertaken,” it added.

The high court on May 3 ruled the ERC committed “grave abuse of discretion amounting to lack or excess of jurisdiction” when it postponed the effectivity of the CSP requirement in the Department of Energy (DoE) in Circular No. DC 2015-06-0008.

The SC said ERC resolutions in October 2015 and March 2016 postponed the effectivity of the auction requirement for 305 days from June 30, 2015 to April 29, 2016, and noted that 90 PSAs were submitted for the Commission’s approval from April 16 to 29, 2016 with some having terms spanning more than 20 years.

The OSG also said ERC did not commit grave abuse of discretion with the two resolutions as the Electric Power Industry Reform Act has “granted the ERC quasi-legislative powers” to issue rules and regulations on various matters including guidelines, standards, and procedures for CSP.

It also maintained that the 2015 ERC CSP guidelines did not exempt PSAs from being procured through CSP as Section 4 of the guidelines it issued refers only to the minimum terms of reference or conditions and it only took effect on Nov. 7, 2015.

“(P)SAs entered into prior to this date could not be expected to comply with the 2015 ERC CSP Guidelines, as they were inexistent at that time. Moreover, this is consistent with the general rule requiring prospective application of rules and regulations issued by administrative agencies such as ERC-a regulatory body,” the OSG said.

It noted that while the 2015 DoE Circular took effect on June 30, 2015 and prescribed standards in the conduct of CSP such as the conduct of bidding through a third party, it could not be enforced at that time as there were no concrete implementing guidelines, among other reasons.

The OSG also said the PSAs filed during the period of the implementation of the ERC’s resolutions complied with the 2015 ERC CSP Guidelines. PSAs filed on June 30, 2015 until Nov. 6, 2015 has also complied with the selection process.

The DoE last month urged the power distribution utilities to comply with the Supreme Court’s decision requiring CSP for their PSAs. — Vann Marlo M. Villegas