ERC officials grilled on alleged 'Meralco midnight deals'

RG Cruz, ABS-CBN News

Posted at Mar 13 2017 04:10 PM | Updated as of Mar 13 2017 06:33 PM

MANILA - Executives of the Energy Regulatory Commission (ERC) were grilled by lawmakers on Monday on the delayed implementation of a rule that mandates a competitive selection process of distribution utilities entering into power supply agreements supplying electricity to consumers.

The joint inquiry of the House Committees on Good Government and Public Accountability and Energy were acting on House Resolution 566, which sought an investigation on the alleged midnight deals of Meralco-affiliated generation companies and the ERC.

In the resolution, Bayan Muna cited that on November 6, 2015, the Department of Energy (DOE) and the ERC mandated that distribution utilities should conduct a competitive selection process in entering into power supply agreements, with the intent to open power supply agreements to competitive bidding and stop the charging of self-negotiated generation rates. 

However, the ERC extended by five months the implementation of said DOE circular, thus allowing 3,551 megawatts of negotiated power supply agreements with periods of 20 years to evade the competitive bidding policy. 

Bayan Muna claimed this suspicious ERC act effectively denied the consumers the benefit of competition, and subjected them once again to the presumably overpriced negotiated prices between Meralco and its affiliated generation companies.

Bayan Muna Rep. Carlos Isagani Zarate said the seven contracts entered by Meralco and its affiliated generation companies are clearly "midnight contracts" as these were signed only four days before the new generous deadline set by the ERC, which was originally November 6, 2015 but was mysteriously moved to April 30, 2016, when their corresponding applications for contract approval were filed. 

Zarate claimed that the resulting damage to the consumers arising from the alleged midnight 20-year contracts would easily translate to P12.44 billion a year.

During the hearing, Zarate got members of the ERC to reveal how they went about the extension of the deadline.

Upon Zarate's questioning, ERC chair Jose Vicente Salazar and commissioner Alfredo Non revealed they objected to the extension. 

Commissioner Gloria Victoria Yap-Taruc also said she did not propose the extension, but said that it was decided amid many objections and concerns from stakeholders. 

Yap-Taruc argued that had they proceeded with the deadline, opponents could have gotten a restraining order against the competitive selection process.

Commissioner Josefina Patricia Asirit confirmed that the extension was her idea. 

"We received several requests for clarification if they can file if they negotiated before this date. There were several individual eccentricities that were highlighted, that's where the discussions of the commission were centered upon," she said.

"It was not meant to favor or tailor fit any particular utility or generation company," she added.

Zarate maintained that the move foreclosed any form of competition.

"For the next 20 years, tinali na niyo sa power supply agreements. In the next 20 years, nakatali na, sinara na ng Meralco ang industriya. Wala na silang bibilhin sa labas...nakakabahala," he said.

Salazar had been concerned that the exceptions should be made on a case-to-case basis or else they might open the floodgates to companies who will find different ways to circumvent the rule like changing the date.

Yap-Taruc also clarified that November 6 was not the deadline, but the effectivity of the competitive selection process without the detailed guidelines.

She added that there is no impact on power rates yet since they have to go through regulatory hearings.