ERC and PCSO crimes

DIE HARD III
Herman Tiu Laurel
7/8/2011



Last June 5, after 18 long months, the Energy Regulatory Commission (ERC) finally responded to a petition from Mang Genaro “Naro” Lualhati — one of those who won for us the P30-billion refund in 2003 of the Manila Electric Co. (Meralco)’s 1993 overcharging — urging the body to respond to some Commission on Audit (CoA) findings that Meralco once again overcharged us by P7 billion in 2004 and 2007. Based on this, Lualhati asked for a different audit of the intervening years, the result of which formed the basis of his other P39-billion refund petition for all the other overcharging.

The ERC’s dilly-dallying was a blatant delaying tactic to prevent consumer advocates from bringing the issue to the courts pending the approval of the Performance Based Regulation (PBR) scheme for Meralco from 2011 to 2014, which consumers contend is illegal.

With the PBR recently approved and very dishonestly announced as a “lowering” of rates when it actually more than doubled the erstwhile legitimate ones, the ERC finally releases its decision on Lualhati’s petition — but with arguments full of deception, chicanery and sophistry.

The June 5 ERC decision claims that “the CoA erred… (by) applying disallowances under Meralco’s Performance Based Regulation application to the firm’s return on rate base (RoRB) petition to determine the fairness of rates; calculating Meralco revenues using historical asset costs and a 12-percent RoRB; and calculating Meralco disallowances and revenues without regard to ‘incrementals’ such as higher pension costs and kWh sales increases.”

It further describes the “use of historical asset costs (under) the 12 percent RoRB… as ‘contrary to existing law and jurisprudence’ that allow the use of appraised values and a weighted average cost of capital (WACC), which in this case was set by the ERC at 15.5 percent.” That WACC and 15.5-percent PBR are the ERC’s concoction and are in no way a law or having the force of law. Has the ERC now supplanted the Congress of the Philippines in making its own laws for the energy sector?

Butch Junia, our forensic analyst on the power sector, traces the root of the CoA audit to the “Rate Unbundling” case (which caused the first spike in power rates) in 2003, leading to the call for the ERC to enlist CoA for a regulatory audit. He says: “That was the audit that noted P7 billion over charges (which the National Association of Electricity Consumers for Reforms or Nasecore placed at P15 billion; and which Mang Naro pegged at P31 billion); but that CoA audit, after 19 months, is overturned/ignored/debunked by ERC. All the points raised in the ERC order are contrary to the refund order of the SC (Supreme Court) in November 2002, reiterated in the denial of Meralco’s Motion for Reconsideration in April 2003.”

That refund order by the SC, Junia notes, is where: “1) the Net Average Investment method is applied; 2) the 12-percent RoRB is upheld, not WACC; 3) income tax is not chargeable to us (consumers); 4) Retroactivity of rates is expressly upheld; and 5) PBR is indirectly assailed, particularly rate unbundling.”

The PBR, Junia contends, “stands tenuously on a general prevision in the Epira (Electric Power Industry Reform Act) that allows the ERC to adopt an alternative rate setting methodology, but (with) guiding criteria; like a just rate for customers. This time (though) ERC has crossed the limit.”

The “Heads Up” movement by farmers groups will spread to other issues and advocacies since it is actually a protest against the entire corrupt system that rules over this land, such as in the Philippine Charity Sweepstakes Office (PCSO) under all the administrations since Marcos, save for President Estrada’s (which the likes of Linggoy Alcuaz, who was part of the Arroyo PCSO Board, can attest was clean even as they tried to dig up dirt in the Estrada PCSO Board and found none).

I have had a long record of exposing PCSO anomalies since my October 2001 Tribune column. Readers may recall that I was one of the few who reported on the P80,000-media payola through radio spots to favored anchors and commentators. Several months back, I wrote a piece on some honest radio anchors who have since given up soliciting sponsorships from PCSO as the PR managers there demand as much as 70 percent of the billings. I also made an exposé on the reported Juico-Ayala deal to takeover the P4.5-billion Quezon Institute property along E. Rodriguez Ave., as well as the nepotism rampant in that present Board, not to mention the cornering of the agency’s PR fund by a “Doctor” who apparently now is being touted as a front for another Juico.

That is why I have persisted in broadcasting practically with no ads from any vested interest or group, sustained only through private efforts — to continue exposing the lies of mainstream media and educating the public with utmost credibility.

(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, on “Heads Up for Coconut Farmers”; visit http://newkatipunero.blogspot.com and http://hermantiulaurel.blogspot.com for our articles plus TV and radio archives)