By Rey E. Requejo

The Court of Appeals has upheld the decision of the Energy Regulatory Commission ordering the electric cooperatives nationwide to refund their consumers in the amount of P812.81 million in over-recoveries of systems loss.

In a 30-page decision, the court?s special 17th Division through Associate Justice Estela Perlas-Bernabe denied the consolidated appeal filed by 91 electric cooperatives seeking to nullify the orders of the energy commission.

The agency charged the cooperatives for over-recoveries in the implementation of the purchased power adjustment as mandated by Republic Act 7832, also known as the Anti-Pilferage of Electricity and Theft of Electric Transmission Lines/Materials Act of 1994.

The refund order came as the appellate court upheld the constitutionality of RA 7832, which the electric cooperatives sought to be declared as illegal. That law, which set caps on the recoverable rate of system losses, was approved on Dec. 8, 1994 and took effect on Jan. 15, 1995. The corresponding implementing rules and regulations was signed on July 7, 1995.

?Petitioners cannot evade the application of the law after it has become effective,? the court stressed.

The electric co-ops asserted that the system loss caps prescribed under Section 10 of RA 7832 are ?arbitrary and violative of the non-impairment clause, thus, invalid and unconstitutional.?

Under Section 10 of RA 7832, the maximum rate of system loss that the cooperative can pass on to its customers shall be: 22 percent at the end of the first year following the effectivity of RA 7832; 20 percent  at the end of the second year following the effectivity of the said law; 18 percent  at the end of the third year; 16 percent at the end at the fourth year; and 14 percent at the end of the fifth year. 

They also assailed the implementation of the system loss caps even after the effectivity of Republic Act 9136, otherwise known as the Electric Power Industry Reform Act of 2001. 

The appellate court agreed with the position of the Office of the Solicitor General that the Epira allows caps mandated in RA 7832 to stay in fore until replaced by caps which shall be determined by the ERC based on several technical considerations.

The CA said the claim of the electric cooperatives that their business will be adversely affected by the implementation of the said law is not a valid excuse for them not to comply with the law. 

?The law may be harsh, but it is the law. For recovering system loss more than that allowed by law, petitioners must refund such over-recoveries to their consumers,? the appellate court stressed.