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December 16, 2020
ENERGY REGULATORY COMMISSION
Pacific Center Building
Hon. Agnes VST Devanadera
Chairperson and CEO
Ms. Catherine P. Maceda
Atty . Alexis M. Lumbatan
Atty. Floresinda G. Baldo-Digal
Mr. Marko Romeo L. Fuentes
Re: Resolution No. 06 Series of 2020, May 26, 2020
We write to the Commission ( ERC ) in connection with the issuance of ERC Resolution No. 6, Series of 2020, dated May 26, 2020 , “A Resolution Approving the Adjustment to the Feed-In-Tariff (FIT)” (the “Questioned ERC-Resolution”), which among other things, approved , adopted and adjusted the Feed in Tariff ( FIT ) for the years, 2016 to 2020, without compliance to the ERC FIT Rule Making procedure as well as the ERC Rules of Practice and Procedure or ERC RPP , and thus the lack of due process to the detriment and prejudice of electricity consumers . The issuance of the Questioned Resolution is a decision of the ERC in excess of jurisdiction as well as abuse of discretion equivalent to lack of jurisdiction, and thus the Questioned Resolution is null and void.
We also observed that only two (2 ) members of the ERC who signed the Questioned Resolution are incumbents and Commissioner Maceda did not take part while Commissioners Asirit and Cervantes , soon both left in July 10, 2020 and are replaced by two (2 ) new Members. Thus, the implementation of the Questioned Resolution that increased hefty FIT tariff retroactive to five (5) years are left at the hands of the minority in ERC. This fact raises additional issues of impropriety , delicadeza and absence of quorum that could be the reasonable grounds for Commissioners Maceda, Digal and Fuentes to cause the ERC to withdraw and recall the Questioned Resolution.
The portion of the Questioned Resolution is quoted as follows:
As a keen advocate of consumer rights, I respectfully submits that there is an undeniable need to nullify the said ERC-Resolution to allow the proper observance of due process and set the proper forum, wherein all interested parties can engage in a hearing.
At the onset, we respectfully highlight that the imposition of the abovementioned adjusted FIT rates does not comply with the requirements provided for under paragraphs 7 and 8 of ERC Resolution No. 16, Series of 2010, “Resolution Adopting the Feed-In Tariff Rules” (the “FIT-Rules”) in relation to Rule 21 on Rule Making of the ERC RPP in Resolution No. 38, Series of 2006.
As the regulating body for the electric and power industry, you are well aware that Section 2.5 of the FIT-Rules contemplates that electricity consumers who are supplied with electricity through the distribution or transmission network will share in the cost of the FITs in part through the FIT-Tariff Allowance (the “FIT-All”) and applied to all billed kWh. This FIT-All shall be set by the ERC on an annual basis upon proper petition.
Emphasis is made on the fact that the Energy Regulatory Commission (“ERC”) is mandated to impose, set, or adjust the FIT on an annual basis. This directive was in fact, echoed by the ERC itself in the Questioned ERC-Resolution, predicated on the imperative need to allow pass-through of local inflation and foreign exchange rate variations.
In issuing the Questioned ERC-Resolution, this Honorable Commission highlighted two (2) mistakes, its failure to adjust the FIT annually, and to conduct the appropriate proceedings for their approval. The failure of the ERC to conduct the appropriate proceedings for the FIT approval is made even more apparent by the fact that no mention of a case for rate adjustment was cited in the Questioned ERC-Resolution.
In fact, an examination of the Questioned ERC-Resolution will easily reveal the adjustments to the FIT rates were only made by the ERC after considering the propositions of Wind Energy Association of the Philippines (“WEDAP”) and the Developers Renewable Energy for Advancement, Inc. (“DREAM”) on 19 July 2019, and the presentation of the Market Operations Service Renewable Energy Division (“MOS-RED”) on 01 October 2019.
To be candid, the procedure for rate adjustment should have been followed in this case. Section 43(u) of Republic Act 9136, otherwise known as the EPIRA, contemplates that the ERC shall have original and exclusive jurisdiction over all cases contesting rates, fees, fines and penalties imposed by the ERC in the exercise of the powers, functions, responsibilities granted under the EPIRA, and over all cases involving disputes between and among participants or players in the energy sector. All notices of hearings to be conducted by the ERC for the purpose of fixing rates or fess shall be published at least twice for two successive weeks in two (2) newspapers of nationwide circulation.
The case for rate adjustment should have been preceded by filing and publication of the application itself and of the notice of hearing. These requirements are indispensable bearing mind that these are essential elements of procedural and substantive due process. These are the initial safeguards put up by the framers of the law to ensure that all interested parties are given the opportunity to be heard. This is critical given that the Questioned ERC-Resolution would naturally result to an increased burden to consumers through the adjustments of the FIT-All. Clearly, the increase in the FIT rate brought about by the adjustments in local inflation and foreign exchange fall squarely under a category of a rate case, which should have been subjected to proper notice and hearing. What is worse, the Questioned ERC-Resolution retroactively applied adjustments to the Fit rates in complete disregard of its own rules.
Just to highlight the additional burden that will again be shouldered by the hapless consumers, it can be seen the already high FIT Rate for SOLAR 1 at P9.68/KWH set in 2014 is further adjusted to a staggering P11.2758/KWH for year 2020. The same is true for WIND which from the original FIT rate at P8.53/KWH, it now stands at whopping P9.8976/KWH for year 2020. Easily, these are almost two pesos and more than a peso adjustment for the SOALR and WIND, FIT rate, respectively that will have to be unfairly borne by the consumers.
What makes matters worse, is that we have seen these surreptitious adjustments in the most horrible timing, which is in the middle of a Pandemic that is being faced by our Nation. At the very least, in the spirit of the Bayanihan Law, with due respect, the ERC should have at least exercised compassion, if not consideration in this case knowing full well that the imposition of the rate adjustments will result to an additional burden on the consumers, who are already embattled with the current economic effects of the pandemic. In giving due course of the motions filed by WEDAP and DREAM, it appeared that the ERC was favoring these two entities over other market participants and the consumers.
Moreover , with one Member of the ERC who did not take part in the Resolution and two(2) Members who knew that they are soon leaving the ERC on completion of their term of office on July 10 , 2020, are reasonable grounds for the ERC to withdraw and recall the Questioned Resolution .
In view of the foregoing premises, we respectfully implore the ERC to withdraw the issuance of ERC Resolution No. 6, Series of 2020, and defer the implementation of the adjusted rates at least until the proper proceedings have been pursued so that the other comments and ideas of the consumers and other stakeholders can be considered and not only the propositions advanced by WEDAP and DREAM.
Given the undeniable merit of our position on the matter, we trust that our request be granted. We reserved to consider other legal remedies on the matter to protect the consumers on a void resolution that adjusted higher FIT rates retroactive to five (5) years.
Very truly yours,
Atty. Victorio Mario A. Dimagiba, AB, LLB, LLM
 The determination and imposition of the approved FIT rates to the eligible RE Developers shall commence upon the effectivity of the FIT-All after due proceedings (ERC in ERC Case No. 2011-006RM).
 “WHEREAS, Section 2.1. Thereof stated that the ERC shall adjust the FIT annually for the entire period of its applicability to allow pass-through of local inflation and foreign exchange (FOREX).