The jurisdiction of the Energy Regulatory Commission (ERC) on resolving contractual disputes involving retail electricity suppliers (RES) has been affirmed in a ruling rendered by the Court of Appeals (CA), including its power to issue cease and desist orders.

The decision of the 11th division of the appellate court had been anchored on the petitions lodged by Manila Electric Company (Meralco) and subsidiary-local RES MPower, which questioned the authority of the Commission in handling disputes relating to contracts in the retail market.

In a statement to the media, the ERC conveyed that the six petitions for certiorari filed by Meralco and MPower had been dismissed by the CA, stipulating that “decisions of administrative agencies are accorded great respect, owing to a traditional deference given to such administrative agencies equipped with the special knowledge, experience, and capability to hear and determine promptly disputes on technical matters.”

The Court further stated that “in the exercise of such powers, an agency has the authority to interpret and apply contracts and determine the rights of private parties under such contracts.”

The Office of the Solicitor General (OSG), which served as CA’s counsel, argued that the “ERC has jurisdiction over these disputes …and this carries with it the authority to go over the provisions of the RESA (Retail Electricity Service Agreement) and determine the rights of the parties therein, which requires the technical know-how of the ERC, having the best position to resolve the dispute.”

In the same vein, the CA established “the ERC to have acted pursuant to its statutory powers, as defined under Section 43(u) of the Electric Power Industry Reform Act (EPIRA)” -- primarily owing to the regulatory body’s original and exclusive jurisdiction over all cases involving disputes between and among participants or players in the energy sector.

“The CA pointed to the fact that the parties themselves recognized the authority of the ERC  by incorporating Clause 14.2. in the RESA which states that parties can bring disputes before the ERC for resolution,” the regulatory body narrated.

According to the ERC, the contractual disputes stemmed from Meralco and MPower’s move to enforce fuel adjustment costs in the contracts of end-users they have been servicing under the dictum of the Retail Competition and Open Access (RCOA) policy in the restructured power sector.

When the customers objected to the fuel pass-through imposition, the regulatory body emphasized that Meralco and MPower “threatened to disconnect and stop their electricity supply after their non-payment of the fuel adjustment costs.”

The ERC statement added “these costs passed on by MERALCO and MPower were allegedly caused by ‘unprecedented spikes’ in the global price of oil, coal, gas and other fuel sources.”

It was further alleged that the two firms’ service disconnection threats had been perceived as “an act of abuse of market power which should not be countenanced by the ERC to the detriment of electricity consumers in the Philippines.”