MANILA, Philippines - Lawmakers may turn to the courts for help to stop the impending sharp hike in electricity rates, and if necessary hold some power firms accountable for possible economic sabotage for allegedly colluding with one another to create an artificial power shortage.
Sen. Francis Escudero said only a temporary restraining order (TRO) would prevent the Manila Electric Co. (Meralco) from implementing an increase of P3.44 per kilowatt-hour in three phases beginning this month until March.
“I think that is being studied by some groups already and even on our part, we are looking into it,” Escudero said. “Taking this to court and asking for a TRO is the closest, legal and soundest option available now.”
As this developed, operators of power plants denied accusations of collusion yesterday.
The plants whose forced shutdown was being looked into were the 1,000-megawatt Sta. Rita and 500-MW San Lorenzo power plants owned by First Gen Corp. of the Lopez Group; the 1,200-MW Ilijan plant of Kepco Philippines Corp.; the 730-MW Pagbilao power plant of Team Energy Corp.; the 600-MW Masinloc power plant of AES Philippines, and the 600-MW Calaca power plant of DMCI Holdings Inc.
Opposition lawmakers said that aside from requesting for a court injunction or a TRO, they are eyeing economic sabotage case against power producers who would be proven to have manipulated prices in the spot market by creating an artificial shortage of power.
Bayan Muna Rep. Carlos Zarate, whose Resolution 588 prompted the House energy committee’s inquiry into the huge power rate increase, told reporters that his party-list group, along with some consumers’ organizations, would seek a TRO from the Supreme Court or from a regional trial court.
“Our lawyers are now studying the grounds for the petition. One ground is the possible collusion reported by the Department of Energy. The rate adjustment has to be stopped while the DOE, the House and the Senate are looking into this,” he said.
He said they might have to wait for Meralco to actually start billing their five million customers the P3.44-per-kwh increase in generation cost before filing the petition.
Meralco will collect the adjustment in three tranches: P2 this month, P1 in February and 44 centavos in March.
The distributor claims it is just passing on to customers the increased cost of producing electricity and does not make money from it. There is no increase in the distribution cost.
Including taxes and adjustments in transmission and systems loss charges, the total increase would amount to P4.15 per kwh.
Minority Leader Ronaldo Zamora said the P4.15 hike “is historically the largest increase in power rates in all the years that Meralco is enjoying its franchise.”
“As it is, right now, we are no longer just one of the most expensive power rates in the whole world. It may be that we are now the most expensive in the whole world and that is certainly what we don’t what to see,” he said.
“This not only affects our consumers, this also works very directly against more investments in the Philippines, which means it is anti-jobs, it is anti-investments, it is anti-people and anti-poor. For this reason we have taken a very strong stand,” he said.
He pointed out that if power producers had indeed resorted to collusion to force prices up, they should be punished for economic sabotage.
“This is nothing less than economic sabotage. If you do this against the people, I think a very strong case can be made against the power companies, against the maintenance companies, against everybody who is trying to make an extra buck at the expense of the people,” Zamora stressed.
Meralco officials told the energy committee on Tuesday that due to simultaneous shutdowns of the plants that supply them, the power distributor was forced to buy electricity from the open market, where prices went up from about P12 per kwh to P33.22.
ERC not blame-free
Rep. Antonio Tinio of party-list group Alliance of Concerned Teachers said the Energy Regulatory Commission (ERC) is apparently sleeping on the job, since as the power industry’s regulator, it is supposed to check possible collusion and unfair practices among producers and distributors.
He said at the very least, ERC might have abetted the possible collusion among certain producers, if it was not part of it.
Tinio also urged ERC chairman Zenaida Ducut, who is facing graft charges in connection with the misuse of certain congressmen’s Priority Development Assistance Fund (PDAF) allocations, to give up her post.
The National Bureau of Investigation has accused Ducut of acting as the agent of some of her former colleagues in the House of Representatives. She was representative of Pampanga’s second district before then President Gloria Macapagal-Arroyo appointed her to the ERC. Arroyo now represents that district.
Tinio said people cannot expect Ducut to protect their interest when it comes to power rate issues, since she herself is under a cloud of doubt.
For her part, Rep. Luz Ilagan said ERC commissioners should have looked into the details of Meralco’s planned rate increase instead of just approving the distributor’s request to stagger its collection in three phases.
“They are tasked to protect the public interest, and yet what did they do? They just accepted Meralco’s proposal at face value. There was no further inquiry on how the rate was arrived at,” she said.
For Escudero, there is clearly an abuse in the automatic increase provision granted to Meralco by the ERC.
“Meralco cannot justify its increase with the generation cost rationale. If they are too quick to impose a price hike, they must also be this quick or quicker to refund the consumers and give us our rebates in the shortest period of time. It should be quid pro quo,” he said.
“The ERC has been using a cost-based formula in fixing rates when it should use a market-based formula,” Escudero said.
In the cost-based system, the senator explained that the only basis they have in pricing is the cost presented by the distribution facility applying for an increase.
“It does not factor in the general market, like that much-awaited rebate. ERC does not even factor in the multiplier effect it will have on the market,” Escudero said.
“We still have one week to conduct sessions and hearing. We just passed the national budget and that’s already eighty percent off our load for this session. I believe we still have time. I hope this increase will be short-lived and hopefully will be stopped via the intervention of courts,” Escudero said.
Senate committee on energy chairman Sen. Sergio Osmeña III said his panel would try to find out if some groups had unduly profited from manipulation of prices, particularly in the Wholesale Electricity Spot Market (WESM). Osmeña’s committee is set to begin its probe on Wednesday next week.
“I understand the average rate that Meralco purchased from the WESM was P35. That is huge. Meralco buys its power at about P4.70 to P8.50. Their peak is P8.50 while P4.50 is the base price,” he said. “Who made a killing?”
“In any normal situation you’ll have a law… but if there will be collusion, that’s against the law also. So even in business you cannot collude, you cannot fix prices, you cannot decide among yourselves (who) will have a shutdown,” he said.
Sen. Vicente Sotto III voiced his support for a deeper probe on the issue even as he scored the ERC for taking an “acquiescent” stance on the rate increase.
“When there is smoke there is fire. An investigation will clear up issues,” he said.
A source from First Gen, meanwhile, said the outages of Sta. Rita, San Lorenzo and Ilijan plants were expected because they were powered by the Malampaya gas facility.
The San Lorenzo plant’s shutdown happened way back in May because of an accident, the First Gen source also said.
“We shut down our plants for no other reason than to conduct maintenance and repair work. This is to ensure that in the long run, our plants can operate reliably, efficiently and contribute in ensuring the country’s energy security,” Team Energy head of external affairs Greggy Romualdez told The STAR.
Malacañang said the government’s drive against unscrupulous and illegal business practices would spare no one.
“Nobody is above the law, everybody is treated equally under our laws,” Press Secretary Herminio Coloma Jr. said.
“The DOE is working with the ERC to address this concern,” he said, referring to suspicion that at least eight independent power producers had intentionally suspended operations in a bid to create an artificial power shortage.
“Under the EPIRA law, both DOE (department of Energy) and ERC are mandated to ascertain that power rate adjustments are not driven by anti-competitive or market abuse practices,” Coloma explained.
He said the government is ready to impose sanctions against groups found to have profited from irregular business schemes.
Coloma also said Malacañang is supporting the “Friday the 13th blackout” protest to be launched by consumer groups.
“It is part of democracy for people to show their sentiments, in the same way that we shared our view with regard to the action. That is also our view on the projected mass action,” Coloma said.
“The government’s foremost concern is to ease the people’s burden on the imposition of power rate adjustments brought about by the Malampaya shutdown,” he told Palace reporters in a news briefing.
“Other options for easing the consumers’ burden are being studied, including tighter monitoring of the schedule of shutdowns of power generators,” Coloma added.
“In this regard, the DOE has instructed the ERC to look into the outages in several power plants that occurred while the Malampaya repairs were taking place,” he said.
One of the groups protesting the impending rate hike, the Freedom from Debt Coalition, said the ERC must rescind its approval of Meralco’s rate adjustment.
“Otherwise, they should all resign because it shows that they could not protect the rights of the consumers,” said FDC president Ricardo Reyes in an interview with The STAR.
Reyes urged consumers to show their objection to the hike by joining initiatives, such as FDC’s campaign to encourage netizens to post images of their electricity bills stamped with the word “Ganid” (greedy) on their social media accounts.
Reyes slammed Meralco for announcing the power rate hike just weeks after Super Typhoon Yolanda ravaged the Visayas.
“At a time when the entire nation is in solidarity… Meralco is thinking about its profits,” Reyes said.
Meanwhile, Meralco said the total increase in electricity rates for a typical 200 kwh household is P2.41 per kwh. The increase will definitely be higher for residential users with consumption bigger than 200 kwh, said Larry Fernandez, head of utility economics at Meralco.
Fernandez said the P2.41 per kwh comprises P2 per kwh generation charge, P0.05 transmission charge, P0.17 taxes and P0.20 for other charges. - Iris Gonzales, Janvic Mateo, Delon Porcalla