Asian Energy Advisors

Apparently Meralco and PEPOA have withdrawn their suit filed at the Pasig Regional Trial Court which had already issued a TRO against PEZA implementing it’s “open access” program for private ecozones.

From last year:

Meralco, in a disclosure to the Philippine Stock Exchange, said the case it filed together with the Private Electric Power Operators Association (PEPOA) “is intended to clarify which of the two government agencies, the Energy Regulatory Commission [ERC] or PEZA, has the authority to regulate distribution utilities and determine electric power rates within economic zones.” Source

Also from last year:

MERALCO, together with the Private Electric Power Operators Association (PEPOA), filed for the injunction claiming that only the Energy Regulatory Commission (ERC) and not the PEZA, has the authority to regulate distribution utilities and determine electric power rates within the ecozones.

Pending the resolution of the matter, the court issued the injunction to maintain a status quo between the parties.

Under the PEZA guidelines, power distributors operating in the ecozones are required to register with the agency to avail of the P1-per-kilowatthour cut in rates.

PEZA said MERALCO and PEPOA would no longer be allowed to operate inside the ecozones if they failed to comply with the provisions of the guidelines in question.

The distributors have contested this, saying it would violate the franchise granted to them by Congress and will result in huge profit losses because their power supply contracts with customers would be breached. Source

It’s also useful to review what Nani Roxas, now at AIM, had to say about this a little over three months ago in the last half of this pdf of his presentation, starting at page 18:

With the withdrawal of the Meralco/PEPOA suit, the legal questions are still unresolved. But it looks like we will - in the absence of any other legal challenge - end with dual jurisdictions for some distribution utilities, including Meralco.

Multiple jurisdictional control of utilities is not at all uncommon in the U.S. Most have at least two regulators - with the state commission having jurisdiction over retail sales and FERC over wholesale sales. Some utilities operate in multiple states and are subject to multiple state commissions.

This adds an additional step in the cost of service filings - before you even begin, you have to conduct a “separation study” to allocate assets and operating expenses and loads among the multiple jurisdictions. Then you can get into the normal issues of rate cases specific to the jurisdiction.

In order to prevent Meralco’s cross-subsidizing of operations (profits and losses) between the two jurisdictions (PEZA and ERC) therefore, careful scrutiny will need to be given by intervenors to the separation study.