ECCT worried over SC ruling on Meralco
Manila Bulletin, 19 January 2004
By MYRNA M. VELASCO
The European Chamber of Commerce of the Philippines (ECCP) has expressed serious concern over forecasted adverse impact of the new ruling of the Supreme Court (SC) temporarily stopping the implementation of its P0.12 per kilowatt-hour (kwh) recently granted provisional authority by the Energy Regulatory Commission.
"The European Chamber of Commerce of the Philippines (ECCP) is deeply concerned about the intervention of the Supreme Court in the Meralco rate increase," it said in a press statement.
The Chamber emphasized that the high court verdict manifests an intent to undermine the independence of the Energy Regulatory Commission (ERC), and "undermine investor confidence and threatens the economic health of the country as power generation and distribution may not be assured in future."
The ERC, by virtue of the new law, should be independent of and from any other branches of government. As a quasi-judicial agency, it is tasked to take the role of rule-making and tariff-fixing; performing a delicate balancing act among contending interests.
While it is obvious that the country is already in dire need of new base-load power plants, substations and a viable distribution network in Luzon . and other parts of the country to ensure power supply during the critical periods starting 2005, it was opined that both local and foreign investors will not come if market signals are not viable.
The ECCP has emphasized that investors will only be attracted to pour in fresh capitals if key policies would be in place.
This would include: a) the independence of the ERC is guaranteed; b) contracts governing fair rate returns are honored; and c) distribution and generation utilities are allowed to earn a reasonable investment return to improve credit standing.
"All these are jeopardized if decisions of the ERC - and the Supreme Court - are politicized, the European chamber stressed.
From ECCP's viewpoint, it noted that the ERC's decision on Meralco's rate increase must be implemented without delay "as it will benefit the economy and the users of power in the long run."
When the high court rendered its verdict on Meralco's rate adjustments, its lenders were again wary of the implications of such ruling on the financial viability of the company; considering that its cash flow is already hitting rock bottom because of another SC mandate for it to refund some P28 billion to customers.
Questions are also being raised on how the utility firm can sustain an efficient service if it would not be able to raise much-needed revenue to fund its critical projects.
Any action on Meralco's tariff sets grave concern among stakeholders in the power industry, especially among distribution utilities, because this is seen to be setting the benchmark on what future are in store for them in continuing their business operations.
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