A ‘high-voltage’ issue

The formal intervention of the Office of the Solicitor General was recently sought by a consumer-watchdog group in connection with the Meralco petition that has remained unresolved before the Energy Regulatory Commission (ERC) since 2003.

The Meralco petition recently drew public attention amid insider speculation that ERC Chairman Rodolfo Albano Jr. could “midwife” its approval before his scheduled retirement in July.

Actually, the Meralco petition is not for a rate increase. It is simply asking the ERC to approve a settlement agreement with the National Power Corp. (Napocor). In that agreement, signed in 2003, Meralco agreed to pay Napocor a total of P20.05 billion as penalty for unilaterally revoking a 10-year power-supply agreement three years before it was due to expire in 2004.

The catch was—and this was why both parties had to get the express approval of the ERC—Meralco would be allowed to charge the P20.05 billion to its customers. To recover that amount alone, the Meralco must impose an increase of up to 36 centavos per kilowatt-hour and collect for 80 months. If the amount it pays to Napocor is only P20.05 billion

Why Napocor agreed to this arrangement in the first place is hard to understand. It’s plain as day. Such a scheme is unfair and unjust to Meralco customers who had absolutely nothing to do with the Meralco management’s contract violation. Yet, here it is, wanting you and me to foot the bill.

But why call in the Solicitor General?

Pete Ilagan, president of the National Association of Electricity Consumers for Reforms (Nasecore), explains that there are two important considerations in this “high-voltage” issue. First is the very real possibility that the ERC might just find a justification, however weak or lame, for approving such a scheme. Otherwise, why did the regulatory body not reject the settlement agreement outright? From the very start, it seemed that mischief was afoot. The record shows the ERC under Albano has tended to bend the Meralco way.

And second is the underlying issue of protecting the government’s financial interests in this case. Napocor, as everybody knows, is mired in debt. It most certainly can use a hefty financial boost by way of a penalty payment from Meralco.

In his letter to Solicitor General Agnes VST Devanadera dated April 17, Ilagan stressed that what must be collected from Meralco is not merely P20.05 billion, but P52 billion “representing principal, interest and surcharges on its failure to purchase contracted power.”

Think of what Napocor could do with P52 billion, Ilagan says.

The Nasecore under Ilagan has so far been doing a great job of championing and defending electricity consumers’ rights and interest, most especially in the Meralco franchise area. Now it has urged Napocor—through Cyril del Callar, incumbent president—to protect its own interest by renouncing the settlement agreement agreed to by his predecessor, Rogelio Murga.

For the guidance of Meralco’s customers who, by now, must be shell-shocked from a barrage of all sorts of increases in the prices of oil, food and power—we are reproducing Pete Ilagan’s April 17, letter to SolGen Devanadera:

“This pertains to the petition for the approval of the Settlement Agreement between Meralco and Napocor filed with the Energy Regulatory Commission on 15 April 2004 which, to this date, has remained unresolved. Nasecore is an intervenor in this particular ERC case and has been at the forefront of the strong opposition to the approval of the agreement since it was signed in 2003. Attached are our letters to the Napocor board of directors dated 11 August 2003 and 18 November 2005. [Petition with the settlement agreement, 10-year supply contract, opposition and letters attached].

“In our 18 November 2005 letter, Nasecore specifically urged the Napocor board to withdraw from the said joint petition and pursue vigorously the collection of its receivables from Meralco the amount of P52 billion representing principal, interest and surcharges on its failure to purchase contracted power with Napocor based on their 10-year contract for the supply of electricity. Nasecore believes this is the most prudent course of action for Napocor.”

At this point, let me just add parenthetically that the P52 billion Ilagan suggests is collectible from Meralco would probably be disputable. But Meralco has not paid Napocor a single peso since the controversial settlement agreement was drawn up in July 2003. It stands to reason that Napocor should demand that the cost of money and other surcharges—whatever amount that might come to—be added to the principal penalty. Ilagan’s letter continues:

“We filed our Opposition to the Joint Application and Issuance of Provisional Authority on 12 May 2004. On 22 December 2005, Nasecore filed an urgent motion for the immediate dismissal of the application and a very urgent motion for the dismissal of the application on 16 January 2006. Unfortunately, both were simply ignored by the Honorable Commission [opposition and motions attached].

“After almost four years since the filing of this petition, Nasecore reiterates its position that the said settlement agreement is prejudicial to the interests both of the government and the customers of Meralco, thus making it unacceptable.

“In this regard, may we respectfully request your good office to review the Settlement Agreement and, thereafter, intervene in the above-mentioned ERC case in behalf of the government and the electricity consumers of Meralco, as the said agreement does not serve, and is in fact contrary, to the best interests of the government and electricity consumers.

“We trust that your Office will share Nasecore’s position and remain steadfast to its mandate of public service, and thus grant our request. . . .”

It’s comforting to know that a consumer group like Nasecore is doggedly trying to thwart Meralco’s despicable bid to punish its customers yet again with another rate increase. But the power of consumer groups to alter the outcome of such cases is quite limited, being largely persuasive. They can only cajole, plead or threaten the authorities. Ultimately, the protection of consumers’ interest would depend on the government agencies charged by law to provide such protection. 

Let’s hope the ERC and the Office of the Solicitor General will find the wisdom and conviction to do what they are supposed to do—which is to serve and protect the public interest.  

Omerta_bdc@yahoo.com

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