Solon hits Meralco 'sweetheart deals'; firm says agreements in 'good faith'


Posted at May 25 2018 09:28 PM

MANILA - Bayan Muna party-list Rep.Carlos Zarate has warned of hikes in electricity rates due to the Manila Electric Company's (Meralco) power supply deals that allegedly bypassed competitive bidding.

"On top of TRAIN-induced price spikes, a hefty P1.55 per kilowatt-hour (kwh) increase in electricity rates will greet customers of Meralco under power supply agreements (PSAs) that Meralco earlier awarded without bidding to its own sister companies, subsidiaries and affiliates," Zarate said in a statement Wednesday.

The lawmaker was referring to the Tax Reform for Acceleration and Inclusion (TRAIN) law, which critics cite for quickening inflation. 

Meralco spokesperson Joe Zaldarriaga, in response, said the deals were "negotiated in utmost good faith and the resulting rates...filed before the ERC (Energy Regulatory Commission) are very competitive and favorable to consumers."

"These PSAs were legally filed in accordance with the rules and regulations of the ERC with the objective of ensuring adequate and reliable power supply at ‘least cost’ to Meralco’s more than 6 million customers," Zaldarriaga told ABS-CBN News.

"Each of the PSAs had undergone a very rigorous, lengthy and at times, contentious negotiation process with the generation companies which actually took many months and years before these agreements were signed and filed with the ERC."

The lawmaker said Meralco assumed the price of coal back when the peso-dollar exchange rate was P46 to $1 in the PSAs it submitted to two committees of the House of Representatives, which investigated the firm's power deals.

Zarate called Meralco's PSAs with its affiliates "sweetheart deals" that are supposedly disadvantageous to power consumers.

"Due to the high price of coal and the peso's weakening, average generation charge under the seven PSAs will cost us Meralco consumers P5.22 per kwh. This is P1.55 per kwh more than what Meralco wanted us to believe in the PSA applications and in its earlier House presentation," Zarate said.

"Based on these applications, the cost of generating electricity in the contracts would supposedly average P3.67 per kwh only. But Meralco used deceptive assumptions to arrive at the supposed P3.67 average rate in the PSAs."

Zarate said he used the prevailing price of coal and the peso-dollar exchange rate as of March 2018 to calculate the P5.22 per kwh average rate.

"The P1.55 will cost millions of Meralco customers P54.54 billion in additional charges per annum. For the 20- to 21-year duration of the long-term power supply contracts, Meralco customers will shoulder P930 billion in additional power rate expenses," he said.