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ERC orders Meralco, GNPower to stop charging Batangas firm

BusinessWorld logo BusinessWorld 1/17/2019

THE Energy Regulatory Commission (ERC) has ordered Manila Electric Co. (Meralco) and GNPower Ltd. Co. to cease and desist from “assessing, billing and collecting” from Batangas Paper Corp. (BPC) any distribution wheeling charges until their dispute is resolved.

“It is evident that an invasion of a right, which is material and substantial, is being continually inflicted upon the business interest of BPC,” the ERC said in its order dated Dec. 5, 2018 and docketed earlier this week.

It said the case “warrants for an urgent and paramount necessity” for the ERC to issue a relief to prevent serious damage against BPC, thus a halt to Meralco’s distribution wheeling charges “is therefore paramount.”

The case stemmed from a complaint filed by BPC against GNPower and Meralco for the refund of P12,171,764.50 plus legal interest, representing what it alleged as “unauthorized and illegal” assessment and collection of the distribution utility’s wheeling charges.

Meralco has the exclusive franchise to operate a distribution system in the location where BPC operates and maintains its paper factory in Sto. Tomas, Batangas.

GNPower is a retail electricity supplier (RES) that exclusively provides all of BPC’s power needs through a “master power purchase sale agreement.”

The paper company is a contestable customer as certified by the ERC and is allowed to source its electricity directly from a RES.

BPC said that beginning March 26, 2017, it had received a total of seven separate billing statements from GNPower amounting to $1,301,518.64 or P30,652,694.06 for the wheeling charges.

Based on an initial inquiry, BPC was told by GNPower that the charges were for the use of Meralco’s supposed ownership of the sub-transmission lines through which the electricity being provided by the RES passes.

However, BPC said it had discovered “much to its surprise and dismay” that Meralco is, “in truth and in fact, not the real and/or the bonafide owner” of the lines for which it was collecting the distribution utility wheeling charges.

Before filing the case, the paper company exerted effort to stop or preclude Meralco from assessing the “baseless and unwarranted” charges, as well as to convince the distribution utility to return what was collected.

“[B]ut all such effort have come to naught, hence, the filing of the instant complaint,” it said.

The ERC said there is substantial evidence for the issuance of a cease and desist order.

It noted that as a retail electricity supplier, GNPower is responsible for all contractual, service and billing matters related to its contestable customers. The obligation includes those pertaining to distribution wheeling services that will be provided by the distribution utility operating within the location of the customer.

The commission said that based on its record, BPC is directly connected to the 9.72-kilometer segment of the 38.72 kilometer sub-transmission line, which is currently owned, operated and managed by the National Grid Corporation of the Philippines.

It said almost the entire length of the sub-transmission line is located within the franchise areas of both Meralco and Batangas II Electric Cooperative, Inc.

Records also showed that Meralco has a pending application with the commission for the approval of its acquisition of the subject sub-transmission line where BPC is connected.

To date, the commission has not yet issued its resolution on the application filed by Meralco and the electric cooperative, thus both are in no position to acquire and operate the sub-transmission line, the ERC said.

The ERC said the allegations presented by Meralco “lost sight of the fact that [it] can only legally impose the [distribution utility wheeling charge]” on BPC as a contestable customer “if and only if it has assumed ownership of the sub-transmission assets.” — Victor V. Saulon

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