Manila Electric Tariff Increase Blocked by Top Philippine Court

Manila Electric Co. (MER), the largest Philippine power retailer, was prevented from raising tariffs by the nation’s top court following twin lawsuits questioning the validity of the increase.

The Supreme Court issued a 60-day restraining order and gave Manila Electric and the Energy Regulatory Commission until Jan. 8 to comment on the suits, court spokesman Theodore Te said today in a televised briefing. A hearing has been set for Jan. 21, he said.

Lawmakers led by congressman Neri Colmenares and the National Association of Electricity Consumers for Reforms filed separate suits last week, accusing the regulator of approving the increase without informing the public and failing to spot irregularities in the shutdown of some power plants on Luzon island. The justice department is looking at a possible collusion between the generation companies, Justice Secretary Leila de Lima said last week.

“It’s a welcome relief and a timely decision,” Colmenares told ABS-CBN News today. “The regulator shouldn’t have granted the approval. The circumstances surrounding the shutdown of power plants were very suspicious.”

Manila Electric shares fell 0.4 percent to 251 pesos at the close in Manila. The Philippine Stock Exchange Index advanced 0.3 percent.

State Probe

The congressman said the regulator failed to stop anti-competitive practices when it approved the tariff increase. The government is investigating the unplanned shutdown of the plants since last month that boosted prices to a record.

The regulator approved on Dec. 9 a three-phased increase in Manila Electric’s rates, starting with 2.41 pesos a kilowatt-hour this month. The total increase of 4.15 pesos a kilowatt-hour in Manila and nearby provinces is higher than the energy department’s forecast of 1.58 pesos a kilowatt-hour, Energy Undersecretary Raul Aguilos told a House of Representatives hearing on Dec. 10.

Manila Electric will return to power generation after a four-decade hiatus with plans to build plants to supply as much as 30 percent of Luzon’s demand, President Oscar Reyes said on Jan. 18.

To contact the reporters on this story: Norman P. Aquino in Manila at naquino1@bloomberg.net; Cecilia Yap in Manila at cyap19@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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