Most Lopez-owned companies—with the exception, perhaps, of the ABS-CBN television-radio network and the tollways company in North Luzon—are dependent on the Manila Electric Co. (Meralco) for their survival, their financial sustenance and growth. By implication, if, for some reason, the Lopezes lose management control of Meralco, these companies would lose their lifelines and simply drop dead.

That is why we have absolutely no reason to doubt that for the Lopezes, being in control of Meralco “is a matter of life and death.” The grandeur and power of the Lopez financial empire depends, to a large extent, on Meralco.

These companies were described as “like so many sucklings feeding on the cash cow that Meralco has become to the Lopezes” by Winston Garcia, president-general manger of the Government Service Insurance System (GSIS).

It is this very dependence that has made Meralco charge power rates that are among the highest in the world. Thus, Garcia believes that hacking off the Lopezes’ hold on Meralco is the only possible way to bring the long-yearned-for relief demanded by its 4.4 million customers.

“Meralco’s rates are higher by at least P2 or P3 per kilowatt-hour [kWh] when compared to the rates being charged by other local power distributors. This is because Meralco has been sustaining the Lopez-owned companies through its copious cash flows. If you want to dramatically lower power rates, the only solution, really, is to free Meralco from this family’s clutches.”

Garcia has often been quoted in the media as saying that Meralco power rates have soared to unbelievable levels because of “the expensive power it buys from Lopez-owned power generating companies; its self-deals with other Lopez companies supplying it with meters, transformers, cables and the like; its bloated and overpaid bureaucracy; its noncontributory pension fund; and its numerous pass-on charges.”

The GSIS has also maintained that Meralco’s rates could be immediately lowered by P1 or P2 per kWh if its onerous contracts with the Lopez-owned First Gen Corp. and First Gas Corp. for 55 percent of its total power purchases are all thrown out.

That is why, by the way, Meralco cannot be expected to come clean and lay bare those contracts to public scrutiny. The GSIS, which owns some 37 percent of Meralco, was itself rebuffed when Garcia asked for copies of those “sweetheart” contracts.

Estrella Elamparo, the feisty legal counsel and spokesperson of the GSIS, points out that “Meralco buys only about 10 percent of its power from the Wholesale Electricity Spot Market [WESM] and about 35 percent from the National Power Corp. [Napocor]. The rest comes from the Lopez-owned power-generation companies with which Meralco has signed automatically renewable long-term contracts that are lopsidedly favorable to the generation companies but are conversely adverse to Meralco customers.”

Whenever Meralco gets a drubbing for any rate increase, which is more often than not, it always says with a straight face that it is merely charging exactly what it paid out to the generation companies, not a single centavo more. Of course!

Meralco’s duplicity came to the fore once again only recently. Elamparo asked: “Why is it that out of the recent 70-centavo-per-kWh reduction in the generation rate of Napocor, Meralco customers got only a mere 4-centavo cut?”

In contrast, she says, Meralco found an excuse to raise its generation rate by 2 centavos per kWh in August based on the small amount of electricity it buys from the WESM.

Elamparo also charges Meralco of “shortchanging” or overcharging its 4.4 million customers in its July billing cycle. Actually, the overcharging was discovered by Pete Ilagan, president of Nasecore, the electricity consumers’ watchdog group.

Based on Nasecore’s finding, which Elamparo describes as “dismaying,” it appears that Meralco not only overcharged its customers by 26 centavos per kWh in July, it also had the temerity to follow through in August with the 2-centavo increase in generation charge.

She says that “while Meralco trumpeted that it would reduce by 30 centavos its generation charge for July, it actually reduced it by a mere 4 centavos as can be seen from its billing statements for the month.

“There’s a discrepancy of 26 centavos between Meralco’s announced reduction of 30 centavos and what Meralco customers actually got, which was a cut of only 4 centavos per kWh.”

The “smoking gun,” she says, is Meralco’s own billing statements for that month.

In effect, Meralco had once again overcharged its customers by 26 centavos per kWh, or P26 for every customer using 100 kWh a month, P52 for every customer consuming 200 kWh, P78 for each one using 300 kWh and P104 for each one using 400 kWh.

In the past, the Supreme Court had caught Meralco overcharging its customers on at least two occasions. In both instances, the High Court ordered the power firm to return to its customers the illegal charges, including the P30 billion in income taxes that it had passed on to its unsuspecting customers from 1994 to 2002.

Elamparo expresses the hope that the newly installed chairperson of the Energy Regulatory Commission,
Zenaida Cruz-Ducut, would get to the bottom of how Meralco does its math in rate reductions and increases.

“There’s something terribly wrong in the way Meralco computes its charges. Why only a 4-centavo cut in the face of a 70-centavo reduction in its generation charge? Now it wants an additional 2 centavos for August on the basis of an alleged increase in WESM rates. . . .”

It’s not the first time Meralco has come under suspicion for being less than honest in its rate computations. Long before Garcia and his outspoken attorney came into the scene, Meralco’s customers have harbored this uneasy feeling that they are being had. But there was not much they could do. They were, and still are, helpless “captives” of a monopoly. Their hands are tied by their own fundamental need for electricity, in their homes and workplaces. If they refuse to pay Meralco’s outrageous rates, they get cut off.

It’s clear that the Lopezes have been violating the mandate of Meralco’s charter to procure electricity for its customers at the least cost. Unfortunately, the takeover bid by the GSIS seems to have been frustrated and put on hold by a bribery scandal at the Court of Appeals.  

Omerta_bdc@yahoo.com

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