While deemed as non-public utility operations, the Supreme Court upheld that electricity generation and supply are subject to the regulations of the Energy Regulatory Commission (ERC).
“Power generation and supply companies are not public utilities because they offer their services to limited customers and do not deal directly with the general public. However, they remain under government regulation because the EPIRA expressly provides safeguards against abuse or irregular activity, such as the requirement on these companies to secure from the ERC a certificate of compliance, among other regulations,” the SC said.
In an En Banc resolution dated August 1, 2023 and made public January 7, 2025, the SC upheld Sections 6 and 29 of the Electric Power Industry Reform Act (EPIRA), as well as sections 34 and 43, which empowers ERC to “fix and approve the universal charge imposed on electricity end-users”, and “to fix charges to allow distribution utilities to recover their losses”
This stemmed from a petition filed by Fernando Hicap, chairman of the Pambansang Lakas ng Kilusang Mamamalakaya ng Pilipinas (PAMALAYAKA), among others.
The group earlier argued that generation and power supply sectors are not public utilities, and “not subject to ERC’s regulation.” They claim that universal charge is a form of taxation and should be imposed by the Congress.
Hicap also challenged ERC’s authority to impose system loss charges on consumers as an invalid delegation of Congress power.
The SC ruled that universal charges are not tax as they are not intended to generate revenue but “to ensure the viability of the electric power industry in the exercise of the State’s police power to promote public welfare.”
Under the EPIRA law, ERC is authorized by Congress to determine and approve universal charges.
The Court also upheld ERC’s authority in imposing a system allowing distribution utilities to ensure the efficiency and quality of their services.
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