Supreme Court denies PSALM petition against ERC and PEMC

The Philippine Electricity Market Corporation (PEMC) has gone through legal and political issues over the years regarding its status as the former autonomous group market operator (AGMO) and current governance body of the Wholesale Electricity Spot Market (WESM).

The Supreme Court (SC) has finally put all this to rest after it decided on a case filed in 2008 by the Power Sector Assets and Liabilities Management (PSALM) corporation against the Energy Regulatory Commission (ERC) and PEMC for the legality of the latter’s function of meting out penalties on market stakeholders and participants.

According to the SC decision promulgated on 17 April 2023: “The Power to investigate violations of the Rules is concurrently exercised by ERC and PEMC. While the EPIRA states that the act of investigating and sanctioning breaches of the Rules is a key function of the ERC, it does not mandate the ERC to perform this responsibility by itself hence, this function can validly be exercised concurrently by PEMC.”

It has been almost 14 years since the Court of Appeals denied PSALM’s petition for prohibition after PEMC formally started an investigation on the possible breaches of the WESM rules by 6 of its powerplants in 2008. PSALM elevated the case to the Supreme Court based on their interpretation that PEMC cannot encroach, usurp, intrude or assume the original and exclusive role of the ERC to act against any player or energy sector participant.

The SC ruling also affirmed PEMC’s role as the governance body of WESM and its function as a private, self-governing entity. It also provides the basis to exercise authority over the System Operator, Market Operator, and Market Participants relative to the implementation and enforcement of WESM Rules and Manuals.

This also validated the procedures and delineation of authority exercised by the ERC and PEMC on the conduct of investigations, as well as the imposition of penalties and clarified jurisdiction and forum shopping issues.

There has not been any clear indication that PSALM will file a motion for reconsideration at this time.