MPIC, ERC, et al.: Economic sabotage

CONSUMERS DEMAND!
Herman Tiu Laurel
8/22-24/2011



High winds and turbulent tides are lashing our Philippine economy.

As the main engine of the world economy buckles, with the US financial system reeling from its asymmetrically exploding fiscal crisis, Europe staggers amidst socio-economic upheaval while the Japanese nation’s risen sun dims in the dark cloud of its tectonic and nuclear disaster.

Inevitably, local business news reported that “Exports (are) down 10.2 percent in June,” from $4.557 to $4.092 billion year-on-year, or a loss of almost P25.2 billion.

Sustaining Losses
On top of that, the Philippine economy in general -- including our exporters, as well as our largest dollar-earning sectors, the OFWs and BPOs -- is sustaining many losses from the appreciation of our currency.

Every peso appreciation to the dollar costs OFWs a least a billion and BPOs probably close to that amount.

From the way the global situation looks, it will be even worse in the next two months.

But while all these setbacks are hitting the Philippine economy, Filipino entrepreneurs, workers, and consumers like tons of bricks in every waking hour, guess what, the newspapers have reported that a Big Business conglomerate such as Metro Pacific Investments Corp. (MPIC) expects core profits to grow nearly 25 percent, with 31 percent coming from its Manila Electric Co. (Meralco) operations which have been reaping up to 87 percent in profit growth each year, from 2008 to 2010.

Why, MPIC CEO Manuel V. Pangilinan even expects its power unit’s profits to grow “modestly” to P14 billion in 2011, which it seems ready to exceed by the time the year ends, judging from it profits midway.

How did the power company achieve such a feat and continue this bountiful harvest for MPIC?

New Pac-Man
Newspaper reports state that in the first half of 2011, “Meralco’s core net income increased 35 percent to P7.82 billion on higher distribution tariffs despite the slightly lower volume of electricity sold because of the cooler weather and lower industrial consumption of power as a result of the disruption caused by the March earthquake in Japan.”

So, Meralco sold less electricity but got higher profits.

Now isn’t that one business everyone should envy?

The other major component of MPIC’s profit this year -- which was a surprise even to me despite my constant monitoring of the utilities sector -- is from water.

With the control of Maynilad Water Service Inc. (MWSI) by MPIC, better known as the “Manny Pangilinan Infection of Companies,” a new Pac-Man has indeed arrived! MWSI contributed 41 percent of MPIC’s profits -- again on higher rates plus tax holidays.

The next major unit contributing P720 million or 21 percent of MPIC’s profits is its infrastructure arm, Metro Pacific Tollways Corp. (MPTC).

Its higher rates are, of course, the culprit again.

eVAT for Motorists
Note that this does not yet include the 12 percent eVAT soon to be slapped on hapless motorists due to the Supreme Court (SC)’s recent decision sustaining the Bureau of Internal Revenue (BIR)’s imposition of said tax.

Overall, though, of all the utility services under the MPIC empire, it’s still power that draws the greatest attention due to its far-reaching effects on the most number of people and enterprises.

Meralco’s “highest power cost in Asia,” as stated in a February study by the Philippine Exporters’ Confederation (PEC) and Employers Confederation of the Philippines (ECOP) entitled, “The Impact of High Energy Costs on Exports,” which quotes an October 2010 study by independent think tank, International Energy Consultants, was described as such: “with average retail rate of electricity of 18.1 US cents per kilowatt/hour… the Philippines… has eased out Japan at the top… at 17.9 US cents per kilowatt/hour.”

The report further stated: “The high cost of electricity in the Philippines was traced by the group to the fact that all costs --from producing power to distribution and taxes-- are passed on to consumers.

Besides, the Philippines is the only country in the region that has privatized its electric power sector and has no state subsidy on rates.

Power Rates Mount
The (2010) study likewise noted that domestic natural gas coming from the Malampaya gas deposits in offshore Palawan that fuels three of the biggest power plants in Luzon (has) been priced so high. It has been suggested that the Philippine government renegotiate the Malampaya contract to bring down the cost of natural gas.”

Meanwhile, other power rate hikes have been mounting this past month: First, the Supreme Court sided with both the Energy Regulatory Commission (ERC) and Meralco on a 2009 P0.29/kWh rate hike petition on purely technical procedural grounds, making everyone wonder whether P-Noy’s first appointee there, Justice Lourdes Sereno, appreciates the substantive issue of Salus populi est suprema lex (the welfare of the people is the supreme law) as the ponente in the case.

Sereno even faulted consumers, saying, “they should be more vigilant in protecting their rights,” but does not consider that Meralco has hundreds of millions to pay for lawyers (with literally two dozens appearing on its behalf), not to mention P480 million for “regulatory liaison,” P72 million for foreign consultants, ad nausea, all charged to its customers. Consumer advocates, on the other hand, have to pay for their own fares; solicit volunteer legal representation; and plod through deliberately obfuscated ERC rules and rulings.

So how in heaven’s name can Sereno still claim that consumers have been remiss?

Bleeding Heart
Second, within the same month, Congress has extended the lifeline rate to consumers using 99 kWh/month or less of electricity but takes this doleout from paying consumers who use up to 100 kWh/month upwards, most of whom are equally poor; this, despite the fact that a bleeding heart such as House Energy Committee chair Rep. Dina Abad does not even shell out a cent from her P380-million pork barrel.

Then, we have the Energy Regulatory Commission (ERC)’s approval of a P4.5-billion National Power Corp. (Napocor) petition for increase of P0.07/kWh starting August to cover for “losses” from its 2003 to 2009 missionary electrification operations.

But that’s not all: In the same month again, Meralco announces an 8.5 centavos per kWh generation rate hike from the WESM (Wholesale Electricity Spot Market)’s share of power, which went up due to Malampaya Gas’ price hike (increasing WESM rates from P1.29/kWh to a gobsmacking P9.70/kWh, when the average regular generation rate is around P5.00/kWh).

Proponents of the wretched 10-year-old EPIRA (Electric Power Industry Reform Act) claim that WESM will bring down rates by competition; but it’s plain to see that it has more than doubled charges in the long run.

Indeed, we have so many fronts to watch out for in the power sector.

Murderous Exactions
In Mindanao alone, we have the Aboitizes and Alcantaras who are waiting to pounce on the privatization of the Agus-Pulangi hydroelectric complexes that supply the cheapest power in the country.

Even though they have so far been frustrated, the Alcantara group, through Joseph C. Nocos, Sarangani Energy Corp. vice-president for business development, part of the Alsons Consolidated Resources Corp., has proposed that authorities “privatize the future output of the power plants much like an independent power producer administrator contract but have the government keep control over the power plants.” Sneaky, sneaky...

Last, as if you are not yet dizzied by all the convoluted crap, the headline of one Aug. 1 report even has this proposal from another EPIRA body, the Philippine Electricity Market Corp. (PEMC): “Higher fee sought for power mart… to increase by 17 percent fees in the Wholesale Electricity Spot Market (WESM) it operates… (for a) rate of P0.0168/kWh for 2011…”

With all these murderous exactions on privatized power and public services, can anyone expect our people and economy to survive?

Hope for Justice
We thus ask of the last bastion of the people’s hope for justice, the Supreme Court, which defended public welfare through its 2003 decisions against the ERC and Meralco: Has it now been captured too?

We persist in our fight because we know the Filipino consumer can only take so much.

Hopefully, the next power and public utility hikes will serve as the final spark to light the prairie fire.

(Tune in to Radyo OpinYon, Monday to Friday, 5 to 6 p.m., andSulo ng Pilipino, Monday, Wednesday, and Friday, 6 to 7 p.m. on 1098AM; Talk News TV with HTL, Saturday, 8 to 9 p.m., with replay at 11 p.m., on GNN, Destiny Cable Channel 8; visit http://newkatipunero.blogspot.com for our articles plus select radio and GNN shows)