Consumer revolt overdue

DIE HARD III
Herman Tiu Laurel
10/25/2010



Last Sept. 29, Meralco announced the strong likelihood of its exceeding the company’s core net income target of P11 billion for 2010. Set on top of its reported P7-billion income for 2009, this is already well beyond a whopping 60-percent profit growth that’s sure to signal a lot more happier days for the power firm.

Meralco’s chief financial officer highlighted the company’s power sales volume growth of 11.7 percent in an attempt to justify its astronomical earnings. The official statement says that “volumes are much higher on an accumulative basis… (and that) today it’s greater than last year in terms of energy sold… (therefore, making it) the main driver.” But frankly, this is a load of BS.

First of all, virtually all sectors have been tightening up on power consumption. My own business, for instance, has had to shut down some huge kitchen exhaust fans and office air-conditioners to cut down on power bills. In my home, I have rationed everyone’s use of air-conditioning and replaced our old side-by-side no-frost ref with a smaller manual defrost one that saves on consumption by almost half. Secondly, neither industrial nor commercial, nor any household statistics, can buttress that alleged 11.7-percent jump — which, honestly, is still 50 percent short of the projected income growth.

Meralco’s claim is simply a big fat lie to cushion the impact of its obscene profit. It also adds: “Another reason that contributes to the growth is the mix of our customers. There is a difference to their rates.”

But then, after all these diversionary claims, the true reason for the shoot-up, which is hardly covered by media, finally surfaced when “the official also cited the rate increases granted by the Energy Regulatory Commission (ERC) as another reason for the growth in income.” Ahh!

Meralco’s distribution charge was hiked twice since 2009 (P0.27 and P0.269/kWh) for a cumulative increase of almost 50 percent granted by the ERC under the new Performance-Based Rate (PBR) setting mechanism.

The PBR allows Meralco to charge rates based on “projected investments and operating expenses related to the distribution of electricity,” or rates based on investments and costs it has yet to make or incur years into the future.

It’s like vegetable vendors charging the prices of next year today, by citing equipment purchases yet to be made as well as fertilizer cost hikes and typhoon damages still to come. The thing is, with such mercenary vendors, we can just give them “the finger” and proceed to the next stall that prices its goods based on today’s costs.

But with the monopoly of electricity in the Meralco franchise area, we have no choice but to buy power from that company no matter how onerous, exploitative, abusive, exorbitant and oppressive its rates are — thanks to the ERC.

Last Oct. 13, Aquino III’s Energy Secretary Jose Almendras announced that government had “solved” the Mindanao power shortage. But most do not know the big “1-2-3” behind that claim:

An El Niño weather crisis was predicted by meteorologists in 2009 for the current year, which the Power Sector Assets and Liabilities Management Corp. was well aware of. Despite this, the National Power Corp. was given the green light to sell power barges (PB) 117 and 118 at about the same time to the Aboitiz group.

It’s as if nobody thought that Mindanao was going to be effectively deprived of some 200 megawatts of power from these PBs, especially since these were instrumental in easing the power crisis during Cory and Ramos’ time when they were acquired in 1994.

So when the El Niño drought finally fell upon Mindanao in February 2010, the depletion of water in hydro plants Agus and Polangui resulted in five- to eight-hour brownouts that led to terrible losses in business and employment.

Thereafter, the National Grid Corp. of the Philippines (NGCP), which took control of the publicly-owned Transmission Corp. or TransCo after privatization, immediately entered into a so-called Ancillary Services Procurement Agreement (ASPA) with Aboitiz-owned Therma Marine Inc. (TMI), wherein the latter, with the use of PB117 and PB118, would supply “additional” power to the Mindanao grid.

The NGCP then applied for a power rate adjustment as part of the ASPA application; afterwhich, the ERC gave it a provisional authority (PA) to raise its rates. This way, TMI will get paid as the monies will have to be collected from the electric utilities and consumers’ pockets.

But that’s not all. The capital recovery fee of $30 million calculated by TMI for the two barges when these were purchased was raised to $84.7 million — or increased threefold after being transferred from the government to the private sector, for a windfall of P3 billion!

Furthermore, the new ASPA charges were set over 10 times higher than the average 2009 NGCP monthly rates. These are aside from the fact that there was no competitive bidding at all in favor of TMI and little public consultation prior to the issuance of the PA.

A coalition of Mindanao congressmen thus reported on the real cost of this claimed “solution” by Almendras: “The electricity bills in Mindanao have virtually doubled from March to April and May this year. In 2009, we paid P49.70 per kWh/month. However, last April we paid P360 per kWh/month and P606 per kWh/month in May 2010. This had caused untold sufferings and hardships to our people in Mindanao, especially the poor.”

At about the same time as that Almendras boast, consumer advocates Pete Ilagan of Nasecore, maverick power entrepreneur Jojo Borja from Mindanao, lawyer Nelson Loyola of CCI, 89-year-old Lamp leader Mang Naro Lualhati, and writer Butch Junia, who called for the abolition of the ERC recently, were all at the hearing on ERC Case No. 2010-069-RC — on the, hold your breath… “Application for Approval of the Annual Revenue Requirement and Performance Incentive Scheme for the Third Regulatory Period” — in other words, the proposed Meralco rates for years 2011-2015.

In the proposal, four million of us ordinary consumers will be slapped with an additional P2.8564/kWh while Meralco’s large customers, including mall owners such as SM, Robinsons, Ayala and Rockwell will be charged only P0.2205/kWh, or 10 times less!

With ABS-CBN and TV5 in the power oligarchs’ hands, plus the fact that Meralco stockholders are the biggest advertisers in media, the power consuming public may never get hold of these facts. It’s time all of us realize how we are being fleeced as consumers for our revolt has long been overdue!

(Tune in to Sulo ng Pilipino, Monday, Wednesday and Friday, 6 to 7 p.m. on 1098AM; watch “Power Consumers’ Revolt Long Overdue!” with Pete Ilagan, Butz Junia, and Mang Naro on Talk News TV with HTL, Tuesday, 8 to 9 p.m., with replay at 11 p.m., on Global News Network, Destiny Cable Channel 21; visit our blogs, http://newkatipunero.blogspot.com and http://hermantiulaurel.blogspot.com)