Supreme Court key to averting power crisis

Apart from being  a lofty legal arena, it is an exalted judicial clearing house for socio-economic policy.

As the highest judicial authority in the land, the Supreme Court  can choose either to act as an agent of development  or a protector of the status quo.

Aside from adjudicating constitutional challenges to official conduct and personal disputes, SC decisions impact on commercial and industrial activities.

And since the prospect of most workers staying on the payroll  and sustaining families hinges on the viability of business and industry, they also inevitably affect the rest of society.

The consequences are far greater when strategic industries are at the core of such decision-making process.

Amid recurring power shorta ges in Luzon, the SC has emerged as a crucial player in the country's drive towards energy security. It has become a battleground for the settlement of vital issues, and its decisions would shape the country’s energy future.

Last month, in a decision penned by Senior Associate Justice Antonio Carpio,  the High Court  rejected power-supply agreements signed in 2016 by main power distributor Manila Electric Co.  with its subsidiaries or related power- generation companies.

Consumer groups had complained that the PSAs were overpriced and had failed to undergo a competitive selection process.

The SC decision put on hold the construction of seven coal plants with a total capacity of 3,551 megawatts, located in Subic, Bataan, La Union, Batangas, Quezon, and Iloilo.

Sen. Sherwin Gatchalian, chairman of the Senate committee on energy, said  “[t]he SC decision ordering the bidding of all power supply agreements submitted by distribution utilities (DUs) from June 30, 2015 is a win for all power consumers who are distrustful of sweetheart deals between DUs and generating companies.”

The decision is a major victory for consumer protection and a welcome surprise for environmental groups and communities that have campaigned to lessen dependence on ‘dirty’ energy. Ii also demonstrates that SC is independent, not beholden to powerful business interests.  

There are other cases before the SC that warrant special attention as they could impact energy security and consumer welfare.  

In December 2016, the Philippine Chamber of Commerce and Industry asked the High Court to declare void orders of the Department of Energy  and the Energy Regulatory Commission to implement Retail Competition and Open Access. RCOA is a mechanism that allows end-users to choose electricity suppliers.

Under RCOA, qualified end-users can choose to buy only from clean energy sources such as geothermal, hydro, wind, solar or natural gas.

In June 2017, the Philippine Movement for Climate Justice asked the SC to order the DoE and the DENR to stop issuing permits for new coal plants.

The country  is a signatory to the Paris Climate Change Agreement, but growth in the use of renewables and clean energy has been slow.  In ,fact, ,coal is projected to dominate, with its share in the power generation mix swelling  from 47 percent  in 2016, to 70 percent -80 percent  by 2030.

In February 2018, a consumer group asked the SC for a temporary restraining order against the implementation of the Renewable Energy Law (RA 9513), particularly provisions on renewable portfolio standards and the feed-in-tariff. The petitioner argued that the subsidies to be given cannot be justified and would be a heavy burden on consumers.

Malampaya gas fuels five power plants in Batangas, with a combined capacity of 3,211 MW. These plants provide 30 percent to 40 percent  of the power needs of Luzon and have contributed immensely to energy security.

The government has earned more than $10 billion from Malampaya since 2001. In 2018 alone, it made  $766 million.

By the end of  next month, state revenues from Malampaya  are expected to reach $11 billion.

In May last year, the Service Contract 38 consortium operating the Malampaya Project asked the SC to overrule ‘Notices of Charge’ issued by the Commission on Audit against DoE and the consortium, starting in 2010.

CoA said  it was wrong for DoE to include the income tax of consortium members in the government’s 60-percent  share of Malampaya revenues,  resulting in an  under-collection of the government’s share by more than $ 3 billion (for the period from 2002 to 2017).

Apart from  local proceedings, there are arbitration cases before the International Chamber of Commerce  and the International Centre for the Settlement of Investment Disputes.

In April this year, the ICC arbitration tribunal voted 3-0 to affirm the position of the SC 38 consortium that income tax forms part of the government share, and that there was no under-collection. The tribunal is composed of Yves Fortier, David Williams, and the highly respected former SCChief Justice ReynatoPuno.

In a statement, Energy Sec. Cusi welcomed the ruling thus: “This victory would go a long way in giving exploration and development activities in the country a much needed and long overdue boost as investors will now have renewed confidence in our upstream gas industry.”

As Malampaya reserves dwindle  there is an urgent need to explore and develop new sources of indigenous energy.

Ever since CoA issued the Notices of Charge in 2010, petroleum-exploration companies have steered clear  due to on contract sanctity and fiscal policy consistency.  Exploration  turned lehargic , and no major discoveries made.

Into the first three years of the Duterte administration, only one petroleum service contract has been awarded – Service Contract 76 signed in October 2018 with Ratio Petroleum Ltd. of Israel.

On Nov. 22, 2018, Cabinet Sec. Karlo Nograles(representing President Duterte) and Cusi launched the Philippine Conventional Energy Contracting Program. The PCECP seeks to attract investors to explore and develop indigenous oil and gas resources in the country.

The success of the PCECP significantly depends on whether the SC would reverse the CoA Notices of Charge.

A decision overruling the CoA would make it more likely that investors would participate and ensure thesucess of  the PCECP.  

Conversely, a decision affirming the CoA would  spell  disaster  for the PCECP, and undercut government efforts for greater energy security.

And so, as the old cliché goes, the ball is in the hands of the SC.

Behold God’s glory and seek His mercy.

Pause and pray, people.