PBR: an 'anti-people' power scheme

DIE HARD III
Herman Tiu Laurel
6/3/2011



Our latest episode on the Electric Power Industry Reform Act (Epira) on my Destiny Cable Global News Network show entitled, “The curse of Epira,” had as guests, power consumer advocate Butch Junia and Freedom from Debt Coalition (FDC) former vice-chair Wilson Fortaleza, who jointly declared the “jury in,” finding the 10-year old power law a supreme failure for being grossly inimical to the people and the nation’s economic welfare. Fortaleza put it thus: Epira gave “first world power rates for our third world country.”

Instead of lowering electricity prices, Epira catapulted them to become Asia’s highest; it failed to add additional power production capacity to obviate shortage fears; and it “sold off” 70 percent of government’s generation assets to private companies without reducing the $18-billion National Power Corp. (Napocor) debt that privatization was supposed to pay off.

These Napocor debts, now under the ambit of the Power Sector Assets and Liabilities Management (Psalm) Corp., still stand at $18 billion today. Psalm’s recent claim that it will pay off $1.5 billion, which doesn’t meaningfully reduce the debt at all, only proves that Epira is one monumental scam!

Notwithstanding this Epira curse, the Lower House is now even into amending said law to extend some of its unjust provisions. As we wrote recently, the “lifeline” rate subsidy that would have expired this June--a subsidy supposedly to help poor power users using less than 100 kWh per month but taken from paying power customers--has been intended by the chair of the House Energy Committee, Rep. Dina Abad, and seconded by Ben Evardone and Rufus Rodriguez, to be extended for another 10 years.

Meanwhile, the Senate Energy Committee wants to reclassify the lifeline rate beneficiaries to even lower the 99 kWh-threshold as its chairman, Lopez-related Sen. Serge Osmeña, said if the set-up is unchanged, “We’ll be driving out investors… It doesn’t make sense that half of all residential customers are being subsidized.”

On one hand, congressmen want to milk the paying consumers to pay for their charity while senators want to lower the cut-off to charge more of the poor for the benefit of “investors.” They’re all obviously missing the point.

Why subsidize the poor from paying customers’ pockets? Why not from the profits of Manila Electric Co. (Meralco) and private power generators that have been raking it in all this time?

Early this week, newspapers reported Meralco CEO Manuel Pangilinan’s media briefing where he reported his company’s first-half results for earnings: “In terms of the financial position of the company, it is definitely ahead of last year. So, we also expect the full-year performance for this year to be ahead of 2010.”

Get this: Meralco earned a whopping P12 billion in 2010 only on a 3-percent volume growth over 2009’s P6.5 billion and 2008’s P2.8 billion, almost all on the basis of the Energy Regulatory Commission (ERC)-approved rate increases under the PBR (Performance Based Rate) scheme of 15.8 percent and its four-year PROSPECTIVE capital expenditure base, which are over the old RORB (Return-on-Rate-Base) of 12 percent on ACTUAL capital expenditure.

As a result, Meralco has (since 2008) increased yearly profits by an average of 100 percent even as the market has not grown over 3 percent per year. The country’s electricity consumers are at a threshold if the PBR isn’t scrapped. The next 10 years will be an era of unprecedented PBR electricity price gouging on top of the past decade of predatory pricing form Epira.

The windfall, nay windstorm, profit of Meralco under Pangilinan’s corporate condominium (in which San Miguel Corp. is one of the largest stockholders) has taken out so much cash from the people’s pockets that he can’t stop spending. He’s now into buying, as newspapers have reported (which Pangilinan is not denying), the NBA franchise of the Sacramento Kings for $200 million.

Awash with cash from the exploitation and abuse of the present Meralco franchise area, Pangilinan is all set to expand his company’s feeding ground, saying, “We are looking at those adjacent to the existing franchise area of Meralco,” taking in Batangas, Quezon, Pampanga, and Tarlac to sow as much price terror as what’s being done in Metro Manila and adjacent cities.

All these are on top of the two other electrifying developments I have written about recently. First is the Renewable Energy Act that will start enforcing “renewable energy” FITs (fit-in tariffs) to attract “investors” into the renewable energy field, including wind, tidal, solar, and mini-hydro (BUT excluding geothermal), wherein such FITs are priced at P19 per kWh or three times higher than the regular generation cost we have today. This is, of course, courtesy of local and international media as well as environmental NGOs that badgered and lobbied Congress, which we will end up paying for.

Then there’s the off-grid SPUG (Small Power Utilities Group) of Napocor that is seeking to add P0.25 per kWh to our bills for its members’ missionary power service losses on top of the regular P0.045 per kWh. These additional charges are dizzying and should send us into a fit of rage now lest they smuggle all these through.

But among all these power issues, the foremost danger to Filipinos today is undoubtedly the PBR, which Junia derisively calls the “Pahirap sa Bayan Rate.” This needs to be appealed to the Supreme Court soon as it is simply an ERC-approved measure that violates the spirit of several earlier high court rulings.

One obstacle is the huge filing fee that would run into millions if consumers were to bring this to the courts, a judicial anomaly that has hounded public interest advocates ever since the Hilario Davide era. We are glad, however, that lawyer Homobono Adaza has agreed to take up the issue and find ways to challenge the powers-that-be despite the obstacles. We will soon be issuing a call for support from the public to help Bono win this crusade for all of us.

(Tune in to Radyo OpinYon, Monday to Friday, 5 to 6 p.m., and Sulo ng Pilipino, Monday, Wednesday, and Friday, 6 to 7 p.m. on 1098AM; Talk News TV with HTL, Tuesday, 8 to 9 p.m., with replay at 11 p.m., on GNN, Destiny Cable Channel 8, with “Tingting Cojuangco on the ARMM Elections”; visit http://newkatipunero.blogspot.com and http://hermantiulaurel.blogspot.com for our articles plus TV and radio archives)