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SEN.
Miriam Santiago, asserting the oversight powers of the
Joint Congressional Power Commission (JCPC), instructed
Energy Regulatory Commission (ERC) officials Monday to
throw out an agreement between Manila Electric Co. (Meralco)
and National Power Corp. (Napocor) for a
cross-settlement of over P52 billion debts between the
two firms that would have been passed on to consumers.
Santiago
was surprised to learn that while Napocor and Meralco
were at odds over a number of industry-related issues,
the two joined forces in a petition before the ERC to
approve their cross-settlement deal. “Aha! This is a
surprise. It’s a puzzle that Napocor and Meralco, which
are always fighting, have closed ranks on the issue of
their debts to each other and decided to simply pass
them on to consumers,” the senator said in the
vernacular.
“We [in
the Power Commission] are empowered to give guidelines
to the ERC. Your guideline is, do not pass on the cost
[of their debts] to the consumers. They’re the ones who
owe, why should we [the public] pay?” Santiago said as
she specifically instructed ERC officer in charge
Commissioner Alejandro Barin.
“Understood,” Barin replied in promising to comply with
the marching orders of Santiago, who cochairs the JCPC.
According to Santiago, since Napcor and Meralco owe each
other, “they apparently decided they won’t run after
each other but will simply pass this on to customers. So
we instructed the ERC not to allow the petition; the
public had no role there, we were not consulted.”
Santiago
invoked the “just and reasonable principle” in issuing
the guideline to the ERC. “Under that principle, we have
ordered the ERC to dismiss the petition of Meralco
supported by [Napocor] to pass on the costs of their
mutual debts to the consumer. We do not even know the
exact amount, but definitely it will run perhaps to
billions.”
Moreover, Santiago ordered the ERC to impose a limit on
systems losses tucked in Meralco bills to its consumers.
Summing
up Monday’s marathon JCPC hearing, Santiago traced the
excessive electricity bills charged to consumers on
alleged “management abuse” in both Napocor and Meralco—which
have been busy pinning the blame on each other—as well
as the apparent laxity of the ERC’s industry watchdogs.
“These
apparent management abuses [by Napocor/NPC as power
generator and Meralco as distributor], and the lax
regulation [by the ERC] are the reasons why the
Philippines has one of the highest power rates in the
world, second only to Japan in Asia,” Santiago told
reporters.
She
pointed out, for instance, that “consumers are paying
for the high annual salaries of the Meralco chief
executive officer and seven other senior executive
officers which in 2008 will total some P97 million. The
officers and directors as a group will get some P170
million. This appears to be management abuse,” she
added.
Santiago
listed other instances of “apparent management abuses”
by the NPC, Meralco and ERC: one, Meralco is reportedly
buying electricity from NPC and WESM (Wholesale
Electricity Spot Market) during peak periods, when
prices are high, resulting in high pass-through
generation charges to its consumers (Meralco’s
explanation on this in accompanying story by Paul Isla);
two, Meralco and NPC entered into an agreement to ask
ERC to allow Meralco to pass on to its consumers its
unpaid debts to NPC.
She
likewise noted that the NPC apparently manipulates its
rates based on Time-Of-Use (TOU) which are very high,
and which are passed on to consumers. She added that the
NPC apparently gives preferential rates to economic zone
consumers, but passes on the cost of the discounts to
its other consumers.
In
addition, Santiago said NPC charges its consumers for
its revenue requirements, which seem to include its P7
billion bad debts. According to her, the NPC buys its
power from IPPs (Independent Power Producers) but at
higher rates than the avoided cost, or the marginal
cost, and then passes on the higher rates to the
consumers.
For its
part, the ERC has neglected its duty to set the new caps
on recoverable systems loss, and uses questionable
“performance-based regulation,” valuation of assets, and
benchmarking methodology, the senator added.
The
anticipated heated confrontation between Government
Service Insurance System president Winston Garcia and
Meralco officials during the hearing did not materialize
after Garcia, responding to questions from senators,
clarified that GSIS is “not interested” in taking over
Meralco’s management.
“We just
want to put more professional managers,” he said, adding
that the distribution utilities management has to change
or he would move to “break up Meralco’s franchise into
three or four parts to make it more efficient. These are
the things we are thinking about to lower power rates
but we are not keen on taking over Meralco.”
At the
same time, Sen. Santiago clarified that she found “no
basis” for the charge that Meralco has been passing on
to its consumers high system losses, because Meralco has
been absorbing P1 billion every year in system losses.
Still,
Santiago suggested that possible penalties for
management abuse can be imposed through legislative,
corporate, and criminal cases.
She
explained that Meralco operates under a franchise, which
means a right conferred by the government to engage in
specific business, including the rights necessary for
public utility companies to carry on their operations.
“The legislative remedy provided by the Constitution is
for Congress to amend or repeal the Meralco franchise,
as required by the common good,” she said.
The
corporate remedy, she added, is to penalize the
responsible Meralco managers, by voting them out in the
next stockholders’ meeting this month.
“The
criminal remedy is to file cases in court against the
responsible Meralco and NPC officers for the crime
called ‘combination in restraint of trade,’ which refers
to any conspiracy ‘for the purpose of making
transactions prejudicial to lawful commerce, or of
increasing the market prices,” she said.
At the
JCPC hearing,
Santiago, who cochairs the Power Commission with Pampanga Rep. Mikey
Arroyo, verbally ordered the NPC, Meralco and ERC to
submit written replies to her long list of technical
questions for each agency, and attach the proper
documents before she convenes the next hearing.
She said
all replies and documents will be the basis of the
report and recommendation that Powercom will submit to
both chambers of Congress. “The Powercom report will
have to analyze technical, financial and regulatory
factors that contribute to the present high power
rates. It is complex, labyrinthine, and often
subterranean,” she said.
Meanwhile, Party-list Rep. Risa Hontiveros of Akbayan is
asking Sen. Miriam Santiago and Rep. Mikey Arroyo to
inhibit themselves from the joint congressional probe,
saying the administration allies’ active participation
would only politicize the inquiry, and put a cloud over
the integrity of the probe.
Instead,
Hontiveros is calling for a citizens-led investigation
on the high cost of electricity in the country. It can
be led by eminent civil society leaders and former
government officials distinguished for their experience
and work on the power sector.
“Akbayan
has consistently called for a review of the country’s
policy on power, but the process should not be reduced
to a high-profile battle of oligarchs,” said Hontiveros
in a statement.
This
developed as Sen. Francis Escudero suggested that aside
from finding solutions to lower the power rates across
the country, both NPC and Meralco should be made to
answer the transparency and accountability issues to the
public, the main stakeholder in the raging power rate
debates.
Escudero
agreed with
Santiago
that most of the woes in the consumers’ electric bills
are direct results of the inefficiencies of the people
behind power-producing companies, and consumers “should
not be made to answer for their ineptitude through
absurd charges on our bills.”
An
opposition legislator warned the public on Monday not to
be deceived by recent Napocor claims that it is charging
a rate of P3.82 per kilowatt-hour in Luzon.
“The
President has just directed Napocor to bring down the
rate it charges Meralco at P4.11 per kilowatt-hour.
Napocor kept saying yes. That means, it’s been charging
P4.11 per kilowatt-hour or more. Now they are saying
their rate is below P3.82? There’s a problem here. Who
is lying?” asked Nationalista Party-United Opposition
Rep. Teofisto Guingona III of Bukidnon.
Guingona
said Napocor’s claim was a defensive reaction to the ad
that came out Saturday entitled, “Walang ‘Tong-Pats’ ang
Generation Charge ng Meralco”.
“The
defensive posture came from the Napocor President, Atty.
Cyril del Callar, who faces a number of administrative
and criminal complaints for overpricing Napocor’s
purchases of coal for its IPP plants and for
manipulating prices in the WESM to rise,” Guingona said.
Still on
the power issue, party-list Rep. Teodoro Casino of Bayan
Muna said Monday that GSIS head Garcia showed his true
color when he revealed a plan to “break up” the Manila
Electric Company.
“After
all is said and done, turns out Winston will just be an
agent, using GSIS, to sell Meralco. As I said last week,
it will be GMA’s (President Arroyo) cronies who will
eventually benefit from the so-called takeover. Meralco
will go from one oligarch to another, with the
government as the middleman,” said Casino.
Casiño
also suspected the involvement of a so-called
“Cebu-mafia” in the imbroglio. “But it is interesting to
note that the oligarchs identified by ex-Neda chief Neri
(Romulo) in his treatise on regulatory capture, who are
heavily involved in the power industry, come from the
South,” Casiño said.
While
denying he wanted to take over Meralco, Garcia was
quoted in reports saying that the GSIS plans not only to
buy out the Lopez family and other shareholders in
Manila Electric Co. but to break up as well the firm’s
concession to promote efficiency and transparency.
Relatedly, party-list Hontiveros of Akbayan said
oligarchic interests should be weeded out of the
Electric Power Industry Reform Act (Epira) and a
stronger regulatory mechanism must be established to
prevent sweetheart deals between companies engaged in
power distribution and those involved power generation.
“Contracts with IPPs should have been investigated long
ago, and it is in this regard that the Energy Regulatory
Commission has dismally failed,” Hontiveros said.
The GSIS
spokesperson, meanwhile, chided Meralco chairman Oscar
Lopez for challenging GSIS to buy out the Lopez family
in Meralco, then taking back the challenge the next day
because he was supposedly only being emotional on the
buyback issue. Lawyer Estrellita Elamparo said Lopez
apparently backtracked after realizing that the GSIS can
seriously take the challenge since the state-pension
institution has enough investible funds to buy Meralco’s
33-percent stake in the power distribution firm.
Elamparo said the Lopez patriarch’s outburst spoke
volumes of the family’s management style of the power
firm that has held a monopoly of power distribution in
Metro Manila the past many decades. (With F. Marasigan) |
