Junk EPIRA to stop power lies

INFOWARS
Herman Tiu Laurel
5/5/2008



One objective of the hidden forces behind Edsa II was the passage of the electricity sector privatization law. Four months after President Estrada was ousted, the Electric Power Industry Reform Act (EPIRA) was certified as urgent and passed by a lame duck Congress. They had no decency to wait for the new elected Congress. Gloria later upped the ante with that TV ad of a couple elating over a new electric fan to cool them due to the cheaper electricity they enjoyed because of the Epira. A year later, the country was shocked by a doubling of electricity bills, only to learn that Gloria had actually ordered Napocor (NPC) to halve the actual costs to hype up EPIRA's so-called, "benefits." Gloria's instruction bloated the debt of the already indebted NPC, which could not be sustained without raising electricity rates dramatically a year later.

It was only then that Filipino consumers learned the truth about the PPA (Purchased Power Adjustment) and the IPP's (Independent Power Producers), and what great con game electricity privatization and deregulation was. The promise of lower rates through competition and transparency was all false hope, given to hoodwink people into giving up public control of the power industry. Epira created layers upon layers of legal obfuscations, including the Wholesale Electricty Spot Market (WESM), a fully-deregulated structure that negated any regulatory power of the Energy Regulatory Commission (ERC).

In 2006, Gloria vaingloriously inaugurated the WESM operation and promised lower rates for the nth time, and again instructed NPC to bid low in WESM at P2.72/kWh to impress the pubic; but by WESM's third month, it became P4.853/kWh and eventually reached almost P 11/kwh by the end of 2006. A furor ensued as Wesm accused NPC of price manipulation in a market mechanism that was guaranteed to stamp out manipulation. An investigation of alleged NPC price manipulation in the WESM was conducted through 2007 but the NPC was cleared. Meantime, WESM directors (who are also power industry executives already receiving huge pays from their mother companies) applied with ERC for P500-million operating expenses and got them approved, which means WESM directors will get pays charged to electricity bills.

And as WESM rates fluctuated monthly and were difficult to follow, a year later, another inordinate increase sprung from Meralco. Last April 23, 2008 newspapers headlined, "Meralco hikes rates." A day later, the Inquirer, succumbing to Meralco's PR blitz, headlined it and spun it as "Coal lack hikes Meralco bill." It had nothing to do with coal but with transfer pricing by the Lopezes buying at peak rates through WESM from their own IPP's. Meralco's captive columnists, particularly one in the Inquirer, started spewing out disinformation that the increase was due to the high NPC-WESM rate, allegedly higher than Meralco's rate. One radio anchor on DZXL picked up on the disinformation and spread the distortion.

Nasecore's Pete Ilagan informed us that the NPC rate electric cooperatives were getting was P4.11/kwh, which Meralco should have gotten. Meralco's claim was that NPC charged it P7.27/kwh through WESM. On April 25, however, Wesm replied that Meralco's rate was high because it chose to buy at peak hours. Why would Meralco deliberately buy at peak hours if it were not to benefit the Lopez IPP's, namely, Sta. Rita, San Lorenzo, Duracom and Quezon Power, and put down NPC?

My April 25 column summarized it: "The Great Con in the Philippines this week is: Meralco's rate increase attributed to the 'coal lack' or rising fuel prices. The real cause is the Wholesale Electricity Spot Market (WESM) in the electricity sector privatization…. The truth is Meralco bought the highest cost power from their own Lopez-owned IPPs … Wesm is the idea in California that Enron used to fleece $50-billion from California power consumers." California started electricity deregulation in 1996. Deregulation required a sell off of generating assets of publicly-owned companies like San Diego Gas and Electric or Pacific Gas and Electric to private companies like Enron which traded in the spot market. Its spot market started in 1998 with the same promise as ours. But instead of bringing down power costs, rates significantly rose.

By June of 2000, California started experiencing power blackouts--the first signs of manipulations to push prices even higher (as we experienced a few weeks ago simultaneous with the coal shortage scare). San Diego Gas and Electric filed cases of market manipulation against Enron et al but it soon went bankrupt while Enron raked it in until its $50-billion collapse and investigation for market manipulation and accounting fraud. Enron's collapse dragged down another U.S. energy company – Mirant which by 2003 filed for a $5-billion bankruptcy; but had a ready fall back in the Philippine electricity market.

As it joined Gloria Arroyo's corporate conspirators cum Board of Economic Advisers, this company backed Arroyo's coup and acquired the richest IPP's, which netted it windfall profits primarily because its IPP's were collecting PPA's without producing any electricity - thanks to the sovereign guarantees. Mirant has since unloaded its Philippine assets after siphoning away what we estimate to be $10-billion. In like manner other foreign firms in the power sector are tied in with their local conduits like the Lopezes, Aboitizes, Alcantaras et al. Ostensibly, their strategy of fleecing the country involved removing Estrada, who opposed "sovereign guarantees," and installing Gloria, who approved the EPIRA posthaste.

The hardships stemming from the power price manipulations cannot be separated from the lies of Edsa II, Gloria Arroyo, the oligarchs and the wayward media. The current "spat" between Gloria and Meralco is a moro-moro to cover up the distortion and predatory exploitation of privatized electricity that converted power into a commodity for profit instead of an engine for public service and national development. From the public utility that the Constitution defined it to be, electricity or power has now been converted into a private utility for private profit in the EPIRA. Hence, this regime of high power rates and power rate manipulation; which will only get worse until the onerous EPIRA is junked and the power industry is restored to public ownership and control. Until that revolution comes, we are forced to continue bearing the unbearable.

(Tune in to Kape't Kamulatan, Kabansa on 1098AM, Monday to Friday, 8:30 a.m. to 9 a.m., and Suló ng Pilipino every Monday, Wednesday, Friday, 6 p.m. to 7 p.m.)