OpinYon # 27, February 28, 2011




Sa ating muling pagharap sa Liga ng Mga Broadcaster ng Pilipinas, nasabi ng Pangulo ng Liga, ni Lakay Rolly Gonzalo, na baka kailangang mag-pipol power tayo kung gusto natin ng reporma sa kalakal ng kuryente. YES NA YES TAYO DYAN!

For the second consecutive week last Thursday, February 24, I was privileged to sit with the resource panel and guests at the Liga’s weekly forum. Between cosmetic surgery and resurgent customs revenues in the Port of Manila, we managed to squeeze in a few items on Meralco and power industry reforms.

Sabi nga nila, ano ang saysay ng pag-papaganda kung hindi ma-aaninagan ng ilaw na nasa presyong tama.

Close on the heels of a House of Representatives hearing that showed our electricity rates to be the highest in Asia, the cost of power, Meralco’s overcharges, un-refunded excess collections, failures of the Energy Regulatory Commission (ERC), and industry reform were topmost in everybody’s mind.

At the House hearing, it was disclosed that our rates are highest in the region at 18 US cents per kilowatt hour. The cited rate was verified independently by a member of the House, because the ERC chairman, Zenaida Ducut, could not provide any answers on comparative rates. Neither could the other resource person at the hearing, a representative of PSALM or the Power Sector Asset and Liability Management Corp.

If ERC the regulator has no clear idea on the comparative standing of our electricity rates in the region and in the rest of the world, by what standards do they measure the rate applications of Meralco and other utilities?

If PSALM the agent of power asset privatization has no clear idea on the comparative standing of our electricity rates in the region and in the rest of the world, by what standards do they measure the market value of the assets they are privatizing?

Do you still wonder why our power-related debts remain at US$16Billion, practically the same level as 10 years ago, after close to 80% of our power assets have been sold for about US$10Billion?

Do you still wonder why our rates have increased geometrically while the profits of Meralco have soared exponentially?

In fact, when we go by the findings of Ka Mentong Laurel, based on his own search in the internet, the rates are as follows, in US cents: Philippines, 28.80; Chile, 23.11; Australia, 18.55; Turkey, 18.30; Singapore, 17.34; Portugal, 12.85; Hong Kong, 11.80; Malaysia, 9.42; Iceland, 8.45; and, Spain, 5.55. These are the countries he was able to track, and he cites a Philippine rate 10 US cents higher than what Congress has.

In any case, while there might be some variances on how high the rate is, there is no dispute that the rate high. The debate is not whether high or low, but how high.

Like we always stress in any talks on power, we are not looking for free or subsidized power. We know we must pay as we go. But there should be no hidden costs and unearned revenues, and every centavo squeezed from us must be justified against the criteria for cost recovery – that every expense must be reasonable, necessary and redounding to the benefit of the customer or rate-payer; that every asset must be used or useful in providing the service, and the return on those assets is within the 12% cap for utilities and public services.

Relief from high rates is nowhere in sight. We have stormed the gates of ERC, raising protests, filing position papers, engaging the utilities and questioning ERC issuances. Still ERC spews out decisions that show no trace at all of the consumer position. Most recent is ERC’s December 15, 2010 DRAFT DETERMINATION on Meralco’s application for annual rate increases from 2012 to 2015.

I attended some of the so-called evidentiary hearings where knowledgeable consumers like Gene Lualhati, Uriel Borja, Pete Ilagan, Sieg Veloso, Lawyer Nelson Loyola, among others, challenged and questioned many of Meralco’s claims. Despite the obvious reluctance of ERC to order Meralco to produce the documents and witnesses to substantiate their claims, even denying Mr. Borja the chance to personally confront Meralco’s witness and evidence already on record, I know that the Oppositors still made very telling points.

Reading through the 89-page DRAFT DETERMINATION, however, I was sorely disappointed that there was no reference at all to the Oppositors’ arguments and objections. It was mainly the input of the foreign consultant – Sinclair, Knight & Merz, an Australian firm – that ERC relied upon.

As expected, SKM dealt mostly with "efficiency" translating into a robust and fat bottom line for Meralco. Why should we expect otherwise?

But this one takes the cake. In the Review of Operating and Maintenance Expenditures Forecast, ERC’s Regulatory Operations Service (ROS) had this disclaimer: "… ROS did not undertake an audit or attempt to verify the information on which it based its recommendations. ROS therefore cannot be held responsible for any conclusions based on misleading or inaccurate information provided (by Meralco)."

Susmaryosep naman po! What regulatory role are they discharging if they do not even "attempt to verify the information"? Ironically, or tragically, the Commission on Audit has been doing a fine job of verifying Meralco’s claims, without any help from Australian or foreign consultants whose fees are paid for by the consumers.

Tama si Lakay.

Mag pipol power na tayo sa kuryente at sa Meralco!

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


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