No need for actual evidence to prove collusion between Meralco, generation firms

CHIEF JUSTICE SERENO SAYS

MANILA, Philippines—There is no need for actual evidence to show that there is collusion between the Manila Electric Company (Meralco) and the generation companies that could have led to the spike in electricity rate.

Chief Justice Maria Lourdes Sereno, during Tuesday’s oral argument said while there is no concrete evidence that Meralco talked to other power players except Thermo Mobile Inc. (TMO) “we only need to predict the behaviour of the players in the market.”

Sereno said “is it possible that what is happening now is gaming at the WESM (wholesale electricity spot market?”
In gaming, the parties adopt strategic behaviour to maximize their profits at a particular point in time which is illegal, Sereno said.

Senior Associate Justice Antonio Carpio, meanwhile, took note of the activities of Meralco at the WESM where it instructed TMO to sell at P62 per kilowatt hour at WESM even if the bilateral contract between the two is for only P8.65 per kwh.

“In following Meralco (Manila Electric Company) instructions, TMO was merely fulfilling its contractual obligations believing in good faith that Meralco was acting as a prudent distribution utility operation without any motive other than to ensure supply to its customers and without any intention of causing a spike in the WESM spot market prices,” TMO said in its comment.

Carpio said the transaction was repeated for 25 times.

“What is the effect if Meralco keeps on selling at P62 without buying? It increases the market price even if Meralco will not be the seller and buyer at the same time it has the tendency to bring up the price,” Carpio said.

Sereno, meanwhile said when the spot market is being gamed by players “not only by the way that their contracts have been structured but also by the way their contracts have been observed in the breach as well as by the absence of arms-length relationship within the WESM itself, that, I think is a very clear indication that there is a failure of market regulation.”

Justices have questioned petitioners why they went straight to the Supreme Court instead of the Energy Regulatory Commission. –Tetch Torres-Tupas, INQUIRER.net

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