OpinYon # 23 January 24, 2011




                                                       MEET THE COMMISSIONERS

The Energy Regulatory Commission (ERC) is “an independent, quasi-judicial regulatory body to be… composed of a Chairman and four (4) members …of recognized competence in any of the following fields: energy, law, economics, finance, commerce, or engineering, with at least three (3) years  actual and distinguished experience in their respective fields...”

This is the essence of Chapter IV, Sec. 38, on the Creation of the Energy Regulatory Commission under RA 9136, also known as the Electric Power Industry Reform Act (EPIRA), where declared State policies under Sec. 2 include the following:

·         To ensure the quality, reliability, security and affordability of the supply of electric power;

·         To ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability to achieve greater operational and economic efficiency and enhance the competitiveness of Philippine products in the global market;

·         To protect the public interest as it is affected by the rates and the services of electric utilities and other providers of electric power;

·         To establish a strong and purely independent regulatory body and system to ensure consumer protection and enhance the competitive operation of the electricity market.

Sec. 42 of EPIRA commands ERC to “handle consumer complaints and ensure the adequate promotion of consumer interests,” which is reinforced further in Sec. 43 by the mandate to “promote competition, encourage market development, ensure customer choice and penalize abuse of market power.”

The ERC is empowered to adopt a rate-setting methodology that will allow the utilities “to operate viably,” but, consistent with State policies and ERC mandates to promote consumer interest, that rate “must ensure a reasonable price of electricity.” Clearly, the reform law is not wanting in safeguards for consumers.

Knowing the mandates of power reforms and the institutions that would pursue them, we thought it was important to get to know the people who run these institutions and administer the reforms.

Aided by the magic of Google, we surveyed what was in the public domain on the ERC, starting with its official website.

The photos of the commissioners were posted in their ascendant order, but there was absolutely nothing there on where they came from, or the experience and expertise they brought to the commission. The required “three (3) years [of] actual and distinguished experience in their respective fields of expertise” were hardly discernible from their mug shots.

Unfazed, we persisted in the Google search, and turned up the following:

·         Lawyer Zenaida G. Cruz-Ducut, Chairman. Former Member of the House of Representatives for the Second District of Pampanga, serving three terms. She finished AB Pol. Sci. (1976) and LlB (1981) at Far Eastern Univ., with elementary and high school education in Pampanga. Was a Councilor, Professor, Prosecuting Fiscal, Research Attorney, Interpreter, Legal Researcher and Medical Representative. Member of the Integrated Bar of the Philippines, Movement of Advancement of Young Advocates of Pampanga and the Pampanga Human Rights Org. Married to Crisanto Ducut, a businessman, she turns 55 years old next month.

·         Lawyer Alejandro Z. Barin, Member, was Acting Chairman until Chairman Cruz-Ducut was appointed.  ZoomInfo describes him as active in corporate law practice and listed his previous positions as Corp. Sec./Consultant of General Milling Corp.; Consultant, Tao Commodity Trader; and, Vice Pres., Makati Sports Club. He is the husband of the first ERC chairman under EPIRA and current Securities & Exchange Commission Chairman Fe Barin.

·         Rauf A. Tan, Member, Business Admin. & Accounting graduate, Univ. of the Philippines, Certified Public Accountant. ZoomInfo describes Mr. Tan thus: “with more than 25 years experience in the electric power industry in the fields of finance, marketing, management, utility economics, financial systems, public relations, privatization and energy regulation. He actively contributed to the promulgation and is now [at] the forefront in the execution of the performance-based regulation (PBR) of the transmission and distribution utilities in the Philippines.”

·         Jose C. Reyes, Member, “formerly with Petron Marketing and National Power Corp.” according to ZoomInfo.

·         Lawyer Ma. Teresa R. Castañeda, Member, former ERC Executive Director.

The lack of personal information in the ERC website, on the one hand, and the deluge of irrelevant Google entries on some of the board members, on the other, made the search very frustrating.

But until we can be provided with more relevant information, this should serve as sufficient introduction to the men and women behind the many decisions and orders that are now the subject of contentious debates among industry stakeholders. At the very least, we now know who in particular is responsible for PBR, the source of the unabated increase in power rates and soaring utility profits.

By the way, if the Department of Energy (DOE) will only bother to give some time to the plight of consumers in the electricity industry, the Secretary of Energy might be of some help. Sec. 37 of EPIRA directs the department to “facilitate and encourage reforms in the structure and operations of distribution utilities for greater efficiency and lower costs.” Given the rampant increases in power rates under PBR, Secretary Rene Almendras can very well step in and lower those rates to their true levels for the benefit of consumers.

SCD POSTSCRIPT. Since our column on the Senior Citizens Discount, many have asked why I opposed it. For the record, I am not against the discount per se. In fact, I would endorse a significantly higher rate than 5% to cover even higher levels of power use by seniors. That would be small change compared to the productive years they had put in.

What I questioned was the arbitrary and underhanded action of ERC in passing the discount cost to consumers, without adequate notice and proper consultation. After being apprised of the scheme, not one of those I asked was willing to pay the subsidy.

Worst yet, ERC exempted taxes from the discount, a classic case of government having its cake and eating it too because we are paying the subsidy.

Since it is State policy to subsidize Senior Citizens’ use of power, then let the State pay for it. The subsidy, if collected from consumers, would actually amount to a new tax on them.

Finally, while we’re at it, why should the State tax our System Loss charges?

Loss na nga, and questionable as it is for being grossly overstated (sinama ang generation sa line loss), tinataga pa tayo ng VAT.

Act now. All these excesses and abuses will continue if we do not put our act together. The Freedom for Debt Coalition is hosting the First National Electricity Consumers Conference from January 25-27, 2011 at Cloud 9, Antipolo City. This is free and open to the public. This would be a good first step towards involvement. This is our chance to engage ERC chairman Cruz-Ducut who is slated to speak on “new rate methodologies and other major policy resolutions to lower electricity costs.” This would have been a good policy issue to resolve in a Congressional hearing, but barring that for now, the FDC forum shall be good as well.

On February 5, 2011, ERC will conduct public hearings on the so-called draft determination of Meralco rates for the next four years, from 2012 to 2015. Meralco’s rates for distribution alone are set to go as high as P1.90 pkwh by 2015. Attend this hearing and make your voice heard by ERC. The latest Meralco increase by 15.47 centavos pkwh, from P1.4917 pkwh to P1.6464 pkwh effective July, 2010 but the first collection to be made in the January 2011 billing cycle, was approved without any opposition or intervention from any consumer, whether as an individual or as a group. Unfortunate, but true, that increase can mean additional Meralco revenues of P46.4 Billion that we must all pay for. We should not let this happen again. Act now; join the action against rate increases, utility abuse and regulatory failures.

Email comments, concerns and suggestions to crsng_47@hotmail.com


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