A new Psalm-ERC-IPP con game?

DIE HARD III
Herman Tiu Laurel
11/4/2011



In 2009, amid looming water and power shortages, alarm bells rang over the threat of El Niño to Mindanao’s hydro-electric plants. At that time, state holding firm Power Sector Assets and Liabilities Management Corp. (Psalm) sold off the state’s Power Barges (PB) 117 and 118 to the Aboitiz group for $30 million.

Following Energy Regulatory Commission (ERC) rules, Aboitiz then submitted these to an “independent third party appraiser” that established their “fair market value or DEPRECIATED replacement value” (emphasis added) at an astounding $84 million--the basis for the ERC’s approved setting of the company’s rate base.

In 2010, the power crisis that was feared by most came in full swing. Virtually every quarter attributed it to El Niño. Cagayan de Oro power expert David Tauli, however, maintained that the shortfall occurred because the National Power Corp. (Napocor) issued a directive that “wasted away the energy it should have stored in Lake Lanao in order to help supply the load in the next six months when there is low inflow to the Lake.” Soon after, other news sources pointed to “overlapping maintenance” schedules as another major culprit.

At the opportune time, Aboitiz happened to be ready with the much needed supply from PB 117 and 118, which it had earlier bought from government--but now at a cost three times higher.

Many Mindanao NGOs, electricity consumer protection advocates, businessmen, as well as House representatives stood up to oppose the said transaction but to no avail. The series of decisions Psalm took, i.e. ordering Napocor to deplete the dams, which created the power crisis; the sweetheart sale of PB 117 and 118 to Aboitiz; followed by the ERC “manna” that turned a $30-million investment to an $84-million rate base in a few months, certainly spelled disaster for Mindanao business and household consumers.

The troika of Psalm, the private sector independent power producers (IPPs), and the ERC must have found the game so easy that they are apparently trying a repeat of the same 1-2-3 formula.

Last Oct. 28, a newspaper item entitled, “Red alert issued on Mindanao grid,” said that the operator of the country’s power transmission grid, the NGCP (National Grid Corp. of the Philippines), had issued warnings of “a generation deficiency caused by (the) scheduled maintenance of some power plants… and the unexpected shutdown or reduced capacity of others.”

Couldn’t Psalm, Napocor, and the ERC, being the expert bodies charged with ensuring reliable and “least cost” electricity to the entire country, have foreseen this? If every year we, the public, are subjected to such sudden shocks of electricity shortages, then obviously these agencies are being remiss in their duties. Shouldn’t they be subject to review, investigation, and complete overhaul?

Worse, such calamitous state of affairs only gives rise to suspicions of a deliberate conspiracy to create a similar situation as the 2010 power crisis in Mindanao.

Just four days before that “red alert” was issued in the papers, I recall this piece (“Psalm to push through with sale of power plants”) that said, “(Psalm) president and CEO Emmanuel R. Ledesma said in a phone interview that Psalm will push through with the planned sale of four diesel-fired power barges… 101, 102, 103, and 104… by December… concluding privatization activities for the year.”

I predict those four power barges will be sold off at the same bargain basement prices (that PB 117 and 118 were) to one or several of the usual power oligarchs who will quickly have them appraised by “independent appraisal agencies” for thrice the amount, which the ERC will then approve as the basis for setting very high rates.

The destination of these power barges will again be Mindanao as no such “red alert” exists for Luzon and other regions; so poor Mindanao will once again be subsidizing the oligarchs’ entire acquisition costs and more from consumers’ power rates.

Just as some Mindanao solons did in 2010 opposing the sale of PB 117 and 118, some of them are again standing up to oppose the sale of the four power barges today. One of them, Rep. Rufus Rodriguez, has threatened to delay, if not stop, the sale as it would “adversely affect Mindanao power consumers.” It still remains to be seen if they will be more successful this time.

The nation is in rage over the blatant abuses committed by the power oligarchs in cahoots with the Electric Power Industry Reform Act (Epira)-mandated power privatization and regulatory agencies.

In the past months, in addition to the usual anti-power plunder advocates and NGOs, known business and labor federations have also raised their voices. The latter two were even more aggressive, maybe making up for lost time, and sent their complaints directly to Malacañang.

Unfortunately, the Chief Executive never reared his head to face the issue and had only his spokesperson, that little colegiala-ish know-nothing bimbo, to refer everyone back to the embodiment of “regulatory capture,” the ERC.

Meanwhile, Napocor is set to add more charges to our already bloated bill--another P15 billion for the “missionary grid” on top of the “lifeline rate” and Maximum Average Price (MAP)-translated rates favoring large industrial/commercial users, all subsidized by us residential consumers.

But we shouldn’t fret that these government officials and agencies are taking no heed of the pleas and plaints of the people. The rage will only grow and the final outburst, only greater.

Just this past week, a large nationwide lay organization already reached out to the electricity consumer protection movement to extend its hand in solidarity. This is one clear sign that the groundswell against the electricity plunder and abuse continues to grow; which can only mean that the outcome will be a tectonic shock strong enough to change the Philippine political-economic landscape.

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