This sideshow starring a state pension fund and the Manila Electric Co. (Meralco) is not about lowering rates and instilling competent management. At least not if the standards imposed on Caesar’s wife were applied. Especially not if you ask the thousands of victimized public-school teachers denied rightful benefits where the inclinations of the granting institution seem to be to preserve booty in time for special political expenditures.

Other than teachers, the other sources of horrific tales of incompetence are told by disenfranchised government employees and retirees who subsist on meager annuities. The best sources, however, are those legions fallen ill, deprived of medical benefits promised by a system that seems to care more for ego and works of art than gratitude and works of compassion.

No declaration of incompetence can be more poignant than from those who’ve passed on while waiting for their pensions. Had the dead had the eloquence, their stories make better testimony than those at the energy oversight hearings hurled against a utility franchise.

From the deliberations, it is evident what the objectives of the accusations are about. Even from the anticapitalist Left, they see through the sideshows. More when we consider the underlying reasons for the increases in power rates and the solutions to reducing these.

Like the Borg Queen, when Gloria Arroyo gathered her gaggle and ordered a protracted siege supposedly to bring down power rates, little did she realize the gunpowder she set off would explode in her face. The arithmetic shows that the culprit behind high generation rates is not the Manila Electric Co. (Meralco). Their distribution rates have been frozen and their generation pass-through compelled by least-cost requisites.

It is not even the National Power Corp. (Napocor), plagued by historical inefficiencies and systemic sloppiness, nor is it the dubiously traded Wholesale Electricity Spot Market (WESM), where the most predatory have been posted.

Considering Arroyo’s call to arms, the solutions lie with her, and with her they lie. The proffered, albeit spurned, solutions indicate who is to blame. But more than that, by their continuing neglect, what controversies were created are seen as contrived. Here we go again with the lying. Someone’s slip is showing and, by any standard of decency, it is a profane and ugly sight.

Under Section 35 of the Electric Power Industry Reform Act (Epira) “the provisions of Section 79 of Commonwealth Act 137 [CA No. 137] and any law to the contrary notwithstanding, the President of the Philippines shall reduce the royalties, returns and taxes collected for the exploitation of all indigenous sources of energy, including but not limited to, natural gas and geothermal steam, so as to effect parity of tax treatment with the existing rates for imported coal, crude oil, bunker fuel and other imported fuels.”

In eight years of Epira, to the detriment of consumers, Arroyo has been flagrantly derelict as she perpetuates hefty royalties added to the government’s 55-percent slice on purchases of indigenous natural gas. Suicidal, we are the only economy that cannibalizes itself and inflicts royalties against its citizens.

After fleecing, an additional P1.50/kilowatt-hour (kWh) to P1.60/kWh, or over P30 billion in royalties leaks from tariffs into Arroyo’s tin box. Without surcharges, or effectively, a government overcharge, that energy would have been priced substantially below alternatives and would otherwise catalyze economic activity. The plowback would have been through increased income taxes or a consumer-driven economy.

In Arroyo’s self-abusive economic model, neither tax parity, much less discounts, exist against higher-cost imported fuels. Rather than spur development, Arroyo’s P30 billion in ill-applied royalties go to a cash box to be spent or squandered as her bureaucracy pleases.

Moreover, her expanded value-added tax (E-VAT) is blindly imposed on gross receipts. It unjustly collects on system losses, cross-subsidies, missionary electrification and on the local franchise tax.

This is a stupid and predatory government imposition. Worse, it is an illegal overcharge by Arroyo’s government. There are no values added on system losses and subsidies. VAT is a consumption tax. Nothing is consumed in losses, whether technical or pilfered. Subsidies are taxes, and subjecting these to VAT would be to doubly tax. Moreover, the E-VAT on a franchise tax is also a tax on a tax. Charge one or the other, but not both.

Another area is the issue of high-cost coal purchases. For those contracted via energy-conversion agreements, Napocor is the fuel purchaser. Its recent coal costs are priced north of $109/metric ton, while the same has been priced at approximately $60/metric ton for one of the independent power producers (IPPs) selling to Meralco.

One difference lies in contract tenors. The government imposed a three-year limit on Napocor. Rather than weakly compromise on short-term, high-priced agreements, the government should have negotiated longer tenors with contingent accession provisions in case of privatization, plus those for coal qualities, freight-on-board or delivered and payment terms. But it’s too late. Global coal shortages have kicked in.

On transmission-line variances where costs are substantially lower for Meralco’s IPPs than from Napocor, disparities are a function of load factors. Meralco has cost advantages from its IPPs because the Energy Regulatory Commission’s transmission formula weigh heavily against unused line capacities, thus bearing down on Napocor.

In infrastructure economics, we design for peak demand, not on averages. But demand is not always high. If Napocor is dispatched less, line costs can escalate 300 percent, or as much as P1.30/kWh higher than those sourced from Meralco IPPs. It becomes self-defeating. Should price be a function of efficiencies rather than load, that anomaly would not bloat Napocor’s tariffs.

Add the festering question of WESM’s strike-price formula that favors high-cost plants to Arroyo’s dereliction, predatory taxation, fuel management and dubious transmission mathematics, and we see her government solely culpable and complicit for high power costs. But more than that, in Arroyo’s battle of the bulge, we see a manicured hand clawing at private enterprise.

This sideshow is about greed and vengeance fought by proxy. It is neither about rates nor management efficiencies. Just greed and a vendetta.

If the news reports are accurate, President Arroyo will meet with Manuel Lopez, Manila Electric Co. (Meralco) chairman and CEO, tomorrow in Bohol amid the raging controversy over high electricity rates.

Each of us would have a unique plan that would be aligned with our own personal financial goals.

Determine the reason why you want these goals. For whom do you intend to do this goal? Doing your financial goal is a responsibility and obligation that you owe to yourself and your family.

Most promdis love their home provinces and hometowns. They keep on longing to go back to their lupang tinubuan. Memories of childhood and early youth grow more beautiful and precious with the years.

Through the Looking Glass: Sideshows and spurned solutions

This sideshow starring a state pension fund and the Manila Electric Co. (Meralco) is not about lowering rates and instilling competent management. At least not if the standards imposed on Caesar’s wife were applied.

Coast-to-Coast: Power and rice; why Bello?

That reduced power rates, stable rice prices and, yes, increased government revenues are on top of the Arroyo administration’s agenda serves to underscore the fact that it is bent on resolving the real, hard issues affecting our people, unlike some legislators and their self-styled “pro-people” cohorts who cannot seem to accept that the nation has moved on and has had enough of their contrived “search for truth” crusade centered on the NBN-ZTE inquiry.

The Entrepreneur: Beating the oil crisis

I DISCUSSED in two previous columns the opportunities arising from the food crisis, particularly in developing agriculture as an engine of economic growth. I don’t know how many people have noticed it, but there’s a pleasant change going on in the culture of doing business.

Reflections from the Mirror: ‘Pari delicto’?

Before, it was a bold, “If you like it, you buy it!” Now it’s an entirely different tune, like they won’t give up the Manila Electric Co. (Meralco) without a fight.