Republic of the Philippines

ENERGY REGULATORY COMMISSION

Pasig City

IN THE MATTER OF THE

APPLICATION FOR
APPROVAL OF THE POWER
SUPPLY AGREEMENT
BETWEEN MANILA
ELECTRIC COMPANY
(MERALCO) AND SOUTH
PREMIERE POWER CORP.
(SPPC), WITH PRAYER FOR
PROVISIONAL AUTHORITY
AND/OR INTERIM RELIEF
AND MOTION FOR
CONFIDENTIAL ERC CASE NO. 2019-081 RC
TREATMENT OF
INFORMATION,

MANILA ELECTRIC
COMPANY (MERALCO) AND
SOUTH PREMIERE POWER
CORP. (SPPC),
Applicants.

DISSENTING OPINION
on the Order of Denial dated 29 September 2022
of the Joint Motion for Price Adjustment

The primordial attention given by the Commission to both the

Joint Motion for Price Adjustment by MERALCO and SPPC in ERC
Case No. 2019-081 RC and the Joint Motion for Price Adjustment by
MERALCO and SMEC in ERC Case No. 2019-083 RC is driven by a
deep and collective desire to champion the welfare of the public. On
that, the Commission is unanimous.

The dissenting minority, however, begs to differ from the

majority in the appreciation of what is before Us.
ERC CASE NO. 2019-081 RC (MERALCO AND SPPC)
Dissenting Opinion on the Order of Denial dated 29 September 2022
of the Joint Motion for Price Adjustment
Page 2

Any price adjustment which trends upward is unpopular.

Nevertheless, between denial of the price adjustment prayed for with
no anticipation as to its rate impact and the granting of such with
forecasted rate-impact scenarios, We yield to the latter.

The Energy Regulatory Commission (ERC) is created under

Republic Act No. 9136 or the Electric Power Industry Reform Act of
2001 (EPIRA), along with other agencies or entities responsible with
the electric power industry. Besides the particular provisions
applicable to ERC, all mentioned agencies and entities in the EPIRA
must be steered by the Declaration of Policy in Section 2, which states:

Section 2. Declaration of Policy. - It is hereby

declared the policy of the State:

(a) To ensure and accelerate the total

electrification of the country;

(b) To ensure the quality, reliability,

security and affordability of the supply of
electric power;

(c) To ensure transparent and reasonable

prices of electricity in a regime of free and fair
competition and full public accountability to
achieve greater operational and economic
efficiency and enhance the competitiveness of
Philippine products in the global market;

(d) To enhance the inflow of private capital and

broaden the ownership base of the power generation,
transmission and distribution sectors in order to
minimize the financial risk exposure of the national
government;

(e) To ensure fair and non-discriminatory

treatment of public and private sector entities in the
process of restructuring the electric power industry;

(f) To protect the public interest as it is

affected by the rates and services of electric
utilities and other providers of electric power;
ERC CASE NO. 2019-081 RC (MERALCO AND SPPC)
Dissenting Opinion on the Order of Denial dated 29 September 2022
of the Joint Motion for Price Adjustment
Page 3

(g) To assure socially and environmentally

compatible energy sources and infrastructure;

(h) To promote the utilization of indigenous and

new and renewable energy resources in power
generation in order to reduce dependence on imported
energy;

(i) To provide for an orderly and transparent

privatization of the assets and liabilities of the National
Power Corporation (NPC).

(j) To establish a strong and purely independent

regulatory body and system to ensure consumer
protection and enhance the competitive operation of the
electricity market; and

(k) To encourage the efficient use of energy and

other modalities of demand side management.
(Emphasis supplied)

Guided above, the Commission exercises a delicate balancing act.

The rate-making process involves the balancing of investor and
consumer interests which takes into account various factors that may
be unique or peculiar to a particular rate revision application.1 It has
been enlightened in jurisprudence that:

In the fixing of rates, the only standard which the

legislature is required to prescribe for the guidance of
the administrative authority is that the rate be
reasonable and just. It has been held that even in the
absence of an express requirement as to reasonableness,
this standard may be implied. What is a just and
reasonable rate is a question of fact calling for the
exercise of discretion, good sense, and a fair, enlightened
and independent judgment. The requirement of
reasonableness comprehends such rates which must
not be so low as to be confiscatory, or too high as
to be oppressive. In determining whether a rate is
confiscatory, it is essential also to consider the

1
Republic of the Philippines, Represented by Energy Regulatory Board vs. MERALCO, G.R. No. 141314, 9 April 2003 and
Lawyers Against Monopoly and Poverty (LAMP), et al. vs. MERALCO, G.R. No. 141369, 9 April 2003
ERC CASE NO. 2019-081 RC (MERALCO AND SPPC)
Dissenting Opinion on the Order of Denial dated 29 September 2022
of the Joint Motion for Price Adjustment
Page 4

given situation, requirements and opportunities

of the utility.2 (Emphasis ours)

On one hand, a low rate does not automatically mean that it is

reasonable and just. On the other hand, a higher rate does not
automatically mean that it is unreasonable and unjust. This is where
the technical expertise of the ERC comes in as heralds of justice. It is
well-settled that factual findings of administrative bodies on technical
matters within their area of expertise should be accorded not only
respect but even finality if they are supported by substantial evidence
even if not overwhelming or preponderant. 3 In resolving the instant
motions for price adjustment, law and contract are not the only
considerations. Factual context matters.

In light of the prayer for other reliefs just and equitable under the
premises, the situation also calls for this Commission’s valid exercise
of Police Power.

Police power is defined as "the inherent power of

the State to regulate or to restrain the use of liberty
and property for public welfare." Thus, "[u]nder the
police power of the State, 'property rights of
individuals may be subjected to restraints and
burdens in order to fulfill the objectives of the
government."' However, "[p]olice power does not
involve the taking or confiscation of property, with
the exception of a few cases where there is a necessity
to confiscate private property in order to destroy it
for the purpose of protecting peace and order and of
promoting the general welfare; for instance, the
confiscation of an illegally possessed article, such as
opium and firearms. 4

Therefore, these findings by the minority.

2
Republic of the Philippines, Represented by Energy Regulatory Board vs. MERALCO, G.R. No. 141314, 15 November
2002 and Lawyers Against Monopoly and Poverty (LAMP), et al. vs. MERALCO, G.R. No. 141314, 15 November 2002
3
Republic of the Philippines, Represented by Energy Regulatory Board vs. MERALCO, G.R. No. 141314, 15 November
2002 and Lawyers Against Monopoly and Poverty (LAMP), et al. vs. MERALCO, G.R. No. 141314, 15 November 2002
4
Equitable PCI Bank, Inc. (Now Banco De Oro Unibank, Inc.) vs. South Rich Acres, Inc., Top Service, Inc. and the City of
Las Piñas, G.R. No. 202384, 4 May 2021 and South Rich Acres, Inc. and Top Service, Inc. vs. Equitable PCI Bank, Inc.
(Now Banco De Oro Unibank, Inc.), G.R. No. 202397, 04 May 2021
ERC CASE NO. 2019-081 RC (MERALCO AND SPPC)
Dissenting Opinion on the Order of Denial dated 29 September 2022
of the Joint Motion for Price Adjustment
Page 5

Contrary to the Resolution reached by the majority, it is our view

in the dissenting minority that the Joint Motion for Price Adjustment
should be granted for the following reasons:

1) The Power Supply Agreement (PSA) entered into by

MERALCO and SPPC allows them to claim a temporary price
adjustment for a specific period based on a Change in
Circumstances (CIC);

2) Based on the matters submitted and admitted in evidence,

CIC is satisfactorily found to exist to warrant price
adjustment; and,

3) Based on the rate impact simulations presented before the

Commission and the evaluation made by the Regulatory
Operations Service (ROS), a denial of the Joint Motion for
Price Adjustment would expose the consumers to unknown
higher rates than granting the same, not only in the near term
but until 2029.

I. The Power Supply Agreement

(PSA) entered into by Meralco and
SPPC allows them to claim a
temporary price adjustment for a
specific period based on a Change
in Circumstances (CIC);

All bidders, during the Competitive Selection Process (CSP),

were given the opportunity to calibrate and submit their bids in
accordance with not only the PSA being, in certain ways, a financial
contract, particularly due to its fixed tariff scheme, but with all
provisions of the PSA taken together, including the CIC provision. We
cannot simply discount the fact that the CIC provision and all the rest
of the provisions in the PSA, a templated form5 which was one of the
documents made available to all the bidders, were just as critical to
them when they offered a guaranteed price. If the CIC provision was
excluded from the proforma PSA, certainly, other bidders would not
have participated in the first place, or the offered rates from the bidders
could have significantly differed or increased, in view of an all-risk

5
DOE DC2018-02-0003, Section 8.4
ERC CASE NO. 2019-081 RC (MERALCO AND SPPC)
Dissenting Opinion on the Order of Denial dated 29 September 2022
of the Joint Motion for Price Adjustment
Page 6

power supply assumption, to levels that would no longer be prudent

for MERALCO to pursue given its mandate to optimize its cost of power
supply.

The dissenting minority believes that the prevailing market

conditions and other pertinent external factors, which could be
reasonably contemplated at the time of the CSP by the bid participants
and upon contract execution by the Parties, should be considered as
the proper context for the offered and contracted price.

The said proforma PSA is the exact same PSA that was executed
by MERALCO and SPPC, and which was provisionally approved by the
Commission in an Order, dated 10 December 2019.

The dispositive portion of the above-said Order says, thus:

“WHEREFORE, the foregoing premises considered,

Applicants Manila Electric Company (MERALCO) and
South Premiere Power Corp. (SPPC) are hereby GRANTED
PROVISIONAL AUTHORITY to implement their Power
Supply Agreement, subject to the following conditions:

1) The applicable rate shall be at Php4.0459/kWh,

regardless of the plant capacity factor (PCF), and not
subject to any escalation with respect to Table 2 of Schedule
1 of the PSA;

2) Any extension and/or increase in contracted

capacity on the Applicants’ PSA must be subject to prior
approval by the Commission pursuant to its rules and
regulations and policies on the CSP;

3) MERALCO is hereby DIRECTED to efficiently utilize

the contracted capacity from SPPC bearing in mind its
obligation to supply at least cost;
ERC CASE NO. 2019-081 RC (MERALCO AND SPPC)
Dissenting Opinion on the Order of Denial dated 29 September 2022
of the Joint Motion for Price Adjustment
Page 7

4) The final rate that can be recovered shall be

determined by the Commission in its final resolution of the
instant Joint Application;

5) In the event that the final rate is lower than the rate
provisionally granted, the amount corresponding to the
reduction shall be refunded by SPPC to MERALCO. On the
other hand, if the final rate is higher than that provisionally
granted, the resulting additional charges shall be collected
by SPPC from MERALCO;

6) MERALCO is hereby DIRECTED to submit a written

explanation on the inconsistencies of the data provided in
its Average Daily Load Curve and Supply-Demand
Scenario; and,

7) MERALCO is hereby DIRECTED to submit a

justification and detailed explanation on its proposed
escalation rate and its proposed PCF.

SO ORDERED.” (Emphasis ours)

It is clear in the above-quoted dispositive portion that the

Commission grants authority unto the Applicants to implement the
PSA, which covers all provisions therein, subject only to the seven (7)
enumerated modifications. Noteworthy is the fact that the CIC
provision, which bears significance on the proposed rate, was not
subject to any of the modifications, neither was it placed under
discussion, in dispute, or at issue, when the same was evaluated and
deliberated on by the Commission.

The PSA warrants, in case of an event of CIC which covers

Change in Law that the Applicants may seek interim relief from the
Commission for price adjustment. This is very well sanctioned in the
PSA, and which was, again, approved by the Commission, though
provisionally. The provisional authority granted by the Commission
authorizes the implementation of the PSA until the same is revoked or
until the issuance of a final authority. Thus, not until the PSA is
revoked or a final authority is issued, the PSA and all its provisions
ERC CASE NO. 2019-081 RC (MERALCO AND SPPC)
Dissenting Opinion on the Order of Denial dated 29 September 2022
of the Joint Motion for Price Adjustment
Page 8

(including CIC) shall stand, even though the PSA has certain features
of a financial contract

II. Based on the matters submitted

and admitted in evidence, CIC is
satisfactorily found to exist to
warrant price adjustment

CIC is defined under Article 1.1 of the PSA as follows:

“Change in Circumstance means:

(a) any Law coming into effect after the signing of this
Agreement, including the adoption or enactment, or
any change or repeal with respect to the imposition
of taxes, duties, levies, fees, charges and similar
impositions, and the right to remit or convert
currencies, but in all cases excluding any Legal
Requirement or the application or interpretation
thereof in existence at such date but which by its
explicit terms became effective only after the date of
this Agreement; or

(b) the amendment, modification, repeal or withdrawal

of any Law (including any official interpretation
thereof which the Parties have relied upon in
entering into this Agreement) in force at the date
hereof; or

(c) the application, enforcement, interpretation or

implementation of any Law by a Governmental
Instrumentality at any time after the date of this
Agreement

which causes or may cause serious damage to, or

materially and adversely affects the financial condition of
any of the Parties.
ERC CASE NO. 2019-081 RC (MERALCO AND SPPC)
Dissenting Opinion on the Order of Denial dated 29 September 2022
of the Joint Motion for Price Adjustment
Page 9

Xxx” (Underscoring ours)

Laws, as contemplated in the above-cited definition, is defined in

the PSA as:

“Laws means any decree, resolution, law, statute,

act, ordinance, rule, rulings, direction, order, treaty, code
or regulation (including any of the foregoing relating to
health or safety matters or any Environmental Law) or
any interpretation of the foregoing, as enacted, issued or
promulgated by any Governmental Instrumentality,
including amendments, modifications, exclusions,
replacements, or re-enactments thereof.” (underscoring
ours)

Governmental Instrumentality, as contemplated therein, is

defined in the PSA as:

“Governmental Instrumentality means the

Government or any ministry, department, agency,
bureau, commission, judicial, quasi-judicial or
administrative body, or political subdivision thereof, the
central bank, and any state-owned company, in each case
within the Philippines.” (Underscoring ours)

The appreciation for SPPC’s contract should be more

straightforward. The basis for the claim of CIC is Change in Law in the
form of a change in policy direction by a government instrumentality.

The Notice of Natural Gas Restriction as issued by National

Power Corporation (NPC), a state-owned company therefore a
governmental instrumentality, unmistakably qualifies to be a CIC as
defined and contemplated by the Applicants in the PSA.

The Notice of Natural Gas Restriction to the majority of the

Commission, remains to be such, a mere notification— but insofar as
the PSA is concerned, the same clearly is a law. A law, which as
contemplated in the PSA, certainly leaves SPPC no other option but to
conform.
ERC CASE NO. 2019-081 RC (MERALCO AND SPPC)
Dissenting Opinion on the Order of Denial dated 29 September 2022
of the Joint Motion for Price Adjustment
Page 10

This was clarified and emphasized during the clarificatory

hearing on 30 August 2022, excerpts6 of which are as follows:

COMMISSIONER LUMBATAN:

x x x The Chair pointed out very interesting point as

far as the basis or as far as the CIC being claimed by
SPPC, as CIC, referring to the notice of gas
restriction. This is the view of the Commission that
a notice of gas restriction cannot be taken as a
directive because there is no positive act being
required by the notice of restriction. And I’m trying
to confirm now if this was your answer earlier.
While this may not be a directive, the notice
nevertheless, was taken as a directive because San
Miguel is left with no choice but to do or not to do a
particular act. Is that correct?

MR. CAUSON (Witness-SPPC and SMEC):

We confirm that, Your Honor, in the sense that

such notices resulted in the restriction of the
fuel for the Ilijan Power Plant, which in turn
constrained its capacity, which in turned
constrained us to source the deficient power
supply or contract capacity from WESM,
which unfortunately, had become more
volatile as the result of such gas restriction.
At least from a correlation standpoint, Your Honor.”
(underscoring and emphasis ours)

It is breaching to be so limiting in interpreting the Applicants’ own PSA

to the extent of substituting our own limited interpretation to that of
the real intention of the parties. It can even be noted that in Section 1.2
of the PSA, under which the parties lay down the rules on
interpretation of their PSA, it says not to limit the generality of
any preceding words or to be construed as being limited to
the same class as the preceding words where a wider
construction is possible. Clearly, the Commission cannot impose
upon the parties to be so restrictive when they themselves intend to be
generally inclusive in interpreting their agreement.

6
TSN (Clarificatory Hearing), 30 August 2022, pp.168-169. Resource Person/Witness for Applicant SPPC and SMEC Mr.
Paul Bernard Causon
ERC CASE NO. 2019-081 RC (MERALCO AND SPPC)
Dissenting Opinion on the Order of Denial dated 29 September 2022
of the Joint Motion for Price Adjustment
Page 11

The Commission has allowed parol evidence to ascertain the true

intent and agreement of the Applicants in the PSA. During the
Clarificatory Hearing conducted on 30 August 2022, the Commission
required the witnesses to take an oath before proceeding with the
presentation and thereafter it actively propounded questions as to
matters of their agreement and the true intentions thereof, and which
testimonies were offered, submitted, and received in evidence. And it
was established in the sworn testimony that pursuant to the real
intention and contemplation of the parties, the Notice of Natural Gas
Restriction is interpreted to be one as law, being an order, directive,
or regulation as issued by NPC, a governmental instrumentality.

Moreover, We cannot disregard the fact that the Natural Gas

Restriction has significantly restricted the generation capacity of the
subject Ilijan Plant. It was manifested, and a well-known fact as well,
that the Ilijan Plant has no other viable fuel option other than
Malampaya Gas, particularly during the aforesaid claim period. As
has presented, there is a correlation between Ilijan deration and
WESM prices. This means that when NPC unilaterally reduced the gas
allocation to Ilijan, it reduced its capacity and thus injected volatility
in the WESM market. SPPC, including its affiliates, have no spare
uncontracted capacity and thus was constrained to buy the deficient
capacity from WESM, which is already undergoing massive volatility.
With the Restriction that was apparently effective on the very same day
that it was received, and with an indefinite duration as to when the
same will be lifted, leaves SPPC with no other recourse but to seek for
price adjustment as WESM prices, as an established fact, have spiked
to levels much higher than the gas price under Ilijan Gas Supply
Agreement for Malampaya Gas which was existing at the time of the
CSP and contract execution for this contract capacity.

These circumstances, which started from the Natural Gas

Restriction resulting to WESM purchase rate that is more than double
than SPPC’s fuel cost and more than the entire contract price for such
contract capacity, are definitely causing serious damage to SPPC, as
presented and clarified, during the clarificatory hearing on 30 August
2022, excerpt7 of which is as follows:

“MR. CAUSON (Witness-SPPC and SMEC): In

the case of SPPC, xxx, March 2021, we’ve received
unilateral notices of gas restrictions that limit our, I

7
TSN (Clarificatory Hearing), 30 August 2022, pp.67-72. Resource Person/Witness for Applicant SPPC and SMEC Mr.
Paul Bernard Causon
ERC CASE NO. 2019-081 RC (MERALCO AND SPPC)
Dissenting Opinion on the Order of Denial dated 29 September 2022
of the Joint Motion for Price Adjustment
Page 12

mean, that limits the ability of the Ilijan Power Plant

to supply the contract capacity. Xxx, these notices
provide no outlook with respect to the duration
and the extent of the deration of the gas supply to
the Ilijan Power Plant. And as I mentioned earlier, that
puts the Ilijan Power Plant in a very tough situation
because it has, it cannot really use commercial LNG at that
point in time, particularly with respect to the claim period,
from January to May 2022. And it would have been unwise
as well to use diesel fuel to supply the contract capacity. So,
next slide. So, that means our only recourse is really to
source the deficiency in terms of our capacity from
the Ilijan Power Plant or the nominated power
plant to supply MERALCO’s requirements under
the PSA from WESM.

Xxx, after March 2021, when the NPC started

informing us of gas restrictions, that’s when we saw the
capacity of the Ilijan plant go down to an average
of 40% from March to May 2022 and basically, 50%
for 2021. The result, with respect to WESM prices,
can be seen at the bottom part of the chart where
you see a very strong correlation between gas
restrictions and WESM prices. So, as you can see,
the more the gas is, everytime there’s a gas
restriction from Malampaya, you’ve seen WESM
prices become more volatile. More of an upward
volatility risk rather than a downside one. And
that’s a double edged sword as far as we are concerned
because we lose capacity but at the same time when we turn
to the spot market to source the deficiency in terms of
capacity, we’ve seen a very volatile WESM market with
very high prices. And the impact to us is that the fuel cost
that we expected from Malampaya gas, which by the way
also escalated due to higher US CPI and higher prices
during the first half of 2022. So, before, it was only around
2.6, 2.8 but in the first half of 2022 we’ve seen the
Malampaya gas price go up to 3.22 to 3.6, almost Php3.60
per kilowatt hour. So, that was our fuel expectation [sic] but
what we’ve seen, what we’ve incurred as a result of
our deficiency in capacity and also based on the
circumstances I described earlier is that we were
forced to buy from WESM at prices ranging from
Php7.00 per kilowatt hour to more than Php9.00
per kilowatt hour. Particularly, for the offtake
volume that we couldn’t generate from the Ilijan
ERC CASE NO. 2019-081 RC (MERALCO AND SPPC)
Dissenting Opinion on the Order of Denial dated 29 September 2022
of the Joint Motion for Price Adjustment
Page 13

Power Plant. And that takes us to a fuel cost

recovery, generation cost recovery of Php1.392
Billion for the period January to May 2022, for the
first half of 2022. In view of such circumstances,
we incurred, SPPC incurred negative gross
margins of Php880,000,000 and incurred a net
loss of Php2.45 Billion for the first half of 2022. Xxx”
(Emphasis and underscoring ours)

Finally, to argue that SPPC must have foreseen such Natural Gas
Restriction forthcoming is of no relevance. Such an interpretation is
far-fetched. The Notice of Natural Gas Restriction is, in fact, in itself a
CIC. The PSA does not, at all, require that such issuances be unforeseen
or unforeseeable to qualify as CIC.

III. Based on the rate impact

simulations presented before the
Commission and the evaluation
made by ROS, a denial of the Joint
Motion for Price Adjustment would
expose the consumers to unknown
and even higher rates than granting
the same

The rate impact simulations presented and submitted in

evidence by MERALCO clearly are indicative that the denial of the CIC
claims would even expose the consuming public to unknown and even
higher rates than granting the same, both in the short-term and in the
long-term (until 2029). And We, in the Commission, should not allow
such eventuality.

The dissenting minority recognizes that all these data and

information made available to the Commission are all indicative based
on the view of industry experts, less than conclusive but definitely
better than taking it on chances.

MERALCO conducted an expert validation using its views on key

assumptions as they impact spot market as well as bilateral price
simulations. And only then that it joined SPPC in the request for price
adjustment after it has clearly validated that (1) the grant of CIC claim
ERC CASE NO. 2019-081 RC (MERALCO AND SPPC)
Dissenting Opinion on the Order of Denial dated 29 September 2022
of the Joint Motion for Price Adjustment
Page 14

and (2) the consequential preservation of the PSA, will result in the
least cost option to its customers, while ensuring adequacy of supply.

Before the Commission, MERALCO presented three (3)

scenarios,8 to wit:

1) The Commission approves the price adjustment with six-

months recovery period and before the PSAs are terminated;

2) The PSA is terminated, and MERALCO secures (i) Emergency

PSAs (EPSAs) through DOE Exemption from CSP covering a
one-year term; and (ii) Replacement PSAs through CSP
covering the term until 2029; and,

3) The PSA is terminated, and MERALCO sources power from

WESM.

A summary of the impact simulations based on the above

scenarios is extracted and reproduced hereunder:

Scenario Impact to Estimated

MERALCO Incremental Cost to
Customers MERALCO
Customers
Scenario 1: CIC Claims PhP 1.57/kWh higher PhP 5.2 Billion
approved with 6-month vs. the original rate
recovery (without the CIC Claim)
Scenario 2-A: PSAs Rates of EPSA/s will be: PhP 12.6 Billion
terminated PhP 1.92/kWh higher
Secure 1-Year term vs. rates of the SMC
EPSA/s PSAs even if the CIC
Claims are approved
Scenario 2-B: PSAs Estimated Rates of new PhP 25.8 Billion
terminated PSA/s will be:
Replacement PSA/s PhP 0.56/kWh higher
through CSP, covering the vs. estimated 2023-
remaining Term up to 2029 rates of the SMC
2029 PSAs with current (and
possible) CIC Claims
Scenario 3: EPSA/s are PhP 2.87/kWh higher PhP 1.6 Billion for
not vs. the rates of the SMC one month
approved/implemented

8
Exhibit PP-JMPA
ERC CASE NO. 2019-081 RC (MERALCO AND SPPC)
Dissenting Opinion on the Order of Denial dated 29 September 2022
of the Joint Motion for Price Adjustment
Page 15

by October 4, 2022, PSAs even if the CIC

MERALCO to source from Claims are approved.
the WESM

We have to take note that the WESM prices are at the moment
high and emergency power is definitely not a cheaper option as shown
in the presentation of the Applicants. What remains to be clear in the
simulations made by MERALCO is that the granting of the price
adjustment is actually the cheapest option available.

The Commission, being an administrative and quasi-judicial

body, observes a quantum of evidence required to establish a fact
before the Commission. In the Revised Rules of Practice and
Procedure of the Commission, the technicalities of law and procedure
and the rules obtaining in the courts of law shall not be strictly applied
to proceedings before the Commission. However, irrelevant,
immaterial, or unduly repetitious evidence shall be excluded. That
being said, this must be carried on subject to the requirements of
due process.9 In the observance of that due process, the quantum of
evidence which must be met before the Commission is substantial
evidence, which is that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion. 10
Hence, we give considerable evidentiary value to the uncontroverted
simulations made and presented by the applicants.

In the final deliberations by the Commission of the instant

motions on 29 September 2022, the Regulatory Operations Service
(ROS) was required to present its own impact simulations for the
purpose of guiding this Commission in determining which available
option best serves and protects the consumers and the ROS in its
response, through Engr. Alvin Jones Ortega (Chief of the
Tariffs and Rates Division), confirms that granting the
price adjustment remains to be the cheapest option. ROS
further confirms that aside from the data that it was able to gather and
validate, the Commission, as of today, remains to have no other data
or information that contradicts and disproves the simulations
presented and submitted by MERALCO. Thus, We have no reason not
to accept the simulations made by MERALCO as reasonably true and
valid as the same are independently corroborated by ROS. The copious,
9
Its full text is found in Section 1 of Rule 19 of the Revised Rules of Practice and Procedure of the ERC, to wit:

Section 1. Rules of Evidence Not to be Strictly Applied. - Subject to the requirements of due process, the technicalities of
law and procedure and the rules obtaining in the courts of law shall not be strictly applied to proceedings before the
Commission. However, irrelevant, immaterial, or unduly repetitious evidence shall be excluded.
10
Reno Foods, Inc. v. National Labor Relations Commissions, G.R. No. 116462, 18 October 1995
ERC CASE NO. 2019-081 RC (MERALCO AND SPPC)
Dissenting Opinion on the Order of Denial dated 29 September 2022
of the Joint Motion for Price Adjustment
Page 16

clear, and convincing evidence presented by the Applicants are

undeniably vital insofar as the resolution of the instant matter is
concerned.

With all the possible consequences discussed, it behooves the

Commission to exercise our equity jurisdiction. The dissenting
minority finds it just and necessary under the circumstances to grant
the joint motion to cushion the impact of high cost of fuels and so as
not to disrupt the basic and essential services being rendered by both
MERALCO and SPPC to the consuming public. And in so doing, We
can not only serve substantial justice, but as well safeguard strong
public interest.

In view of the foregoing, the undersigned Commissioners

register their DISSENT and vote to GRANT the Joint Motion for
Price Adjustment filed by movants MERALCO and SPPC.

Pasig City, 29 September 2022.

ALEXIS M. LUMBATAN MARKO ROMEO L. FUENTES

Commissioner Commissioner

OCAML / gmsmh / jggw | OCMRLF / rij / cca