CONSUMERS DEMAND!
Herman Tiu Laurel
10/3-5/2011
My erstwhile colleague in OpinYon, Butch Junia, calls it the “Pahirap sa Bayan Rate.” But, given the fact that the Energy Regulatory Commission’s PBR or Performance Based Rate, a rate setting formula implemented in 2004, has given us the highest power rates in Asia, it’s more like a “Performance Based Rape.”
When the Supreme Court reaffirmed the now defunct 12-percent Return-on-Rate Base (RoRB) mechanism in 2003 and, along with it, disallowed the Manila Electric Co. or Meralco’s pass-on of its corporate income taxes to consumers, ordering the Commission on Audit to open the power company’s books--through which Meralco was found to have overcharged consumers in at least two test audits--the ERC, in a seeming act of defiance and showing everyone “the finger,” concocted the 15.8-percent PBR.
Drastic action needed
Fast forward to the present and everybody, including the normally quiet and conservative business and labor groups, is now openly clamoring for drastic action against the massive price gouging in the generation, transmission, and distribution of electricity.
The Philippine Chamber of Commerce of the Philippines (PCCI); the Philippine Steelmakers Association (PSA); the Philippine Exporters Confederation (PhilExport); the UP National Engineering Center; the Trade Union Congress of the Philippines (TUCP), including the Associated Labor Union (ALU); and, the Foundation for Economic Freedom (FEF), a group that ironically advocated privatization of the power industry, have all recently spoken out in a joint statement against the Philippines’ highest power cost in Asia. Specifically, they decried the absence of any “specific and strong action program or roadmap coming from the executive department” to address the current power rate crisis.
Democrito Mendoza of the TUCP, not always the most assertive labor leader, worked up the courage to “ask the Aquino administration to bring power rates down.” He was joined by the chief operating officer of PhilExport who, upon citing figures from the Department of Energy on the Philippines’ power rates at 24 US cents per kilowatt-hour compared to Thailand and Malaysia’s eight and seven US cents per kilowatt-hour, respectively, added that our power rates are “the biggest disincentive to the entry of new foreign direct investors to our shores.”
Meanwhile, Gerard R. Seno of the ALU demanded that Malacañang “make the necessary bold policy interventions, including the suspension and review of all pending power rate increase petitions in the Energy Regulatory Commission,” with TUCP’s Mendoza calling for the scrapping of the 15.8-percent PBR and the restoration of the 12-percent RoRB, stressing that high power rates eat up as much as 11 percent of workers’ income.
Concepcion’s lip service
Power company director Jojo Borja of Iligan Light, an advocate who has provided powerful, documented evidence against the ERC-Meralco tandem’s price gouging, called me about these news with enthusiasm. He, nonetheless, expressed frustration over the lip service that many so-called business leaders such as Raul Concepcion of the Oil Price Watch, a supposed consumer protection watchdog, give toward this fight.
Thus, it remains with the electricity consumers to wage the struggle against the Power Based Rate and the empowered institutions that were set up to serve and protect them but have used that power to turn against the very people who have bankrolled those institutions.
As I made sense of the torrent of news reports of complaints from the business and labor sectors last week, the day before “Pedring” hit Metro Manila, an idea occurred to me: We, the anti-PBR/ERC-Meralco campaigners, must strike while the iron is hot. We should focus the diverse sources of rage into one central target that will force a dismantling of the PBR. And that can only be achieved by putting the Chief Executive on the spot.
We should hold Noynoy Aquino entirely responsible and demand a solution from him, just as what the TUCP, PhilExport, and others have done. But the action that I believe will achieve this is a vigil, a continuous one, right at the Freedom Park across Malacañang.
Freedom Park vigil
I broached this to several of our colleagues on the morning of “Pedring” and it caught the imagination of many, including Kit Kilatis, Jojo Borja, and company. So, while the country was busy coping with the floods and winds, we braved the elements to meet at this Quezon Ave. restaurant to discuss the more devastating power abuse that’s been wreaking havoc on our national economy and lives for over a decade now.
I had already been preparing the equipment for the vigil even as I discussed it with various people. I have started auditing the tents as well as tried securing the commitment of restaurants and other establishments near the Freedom Park to allow vigil participants access to their toilets, which is a very fundamental requirement. When I broached the idea over my radio program, taxi drivers, students, and others liked it as the 24/7 vigil affords them the convenience of going at their free time.
We’ll set up a tent, with streamers and placards calling for the junking of the PBR and EPIRA (Electric Power Industry Reform Act)--the law that privatized the power sector. We’ll expose the ongoing ERC-Meralco collusion of price gouging the nation on a massive scale and demand a return to the 12-percent RoRB.
Visit at your own pace
Of course, we would need a regular sound system and a core group to maintain the vigil while others are being mobilized to visit and show their support. Regular presscons will also have to be made. We should expect thousands to visit at their own pace--each instance becoming an opportunity to educate the public further on the issues.
It is most likely that we can set it up by the first week of October; and since the Freedom Park doesn’t require a permit to stage such activities, I don’t see how the authorities would be able to obstruct us.
Let’s get together and support this vigil with firm resolve against the ERC-Meralco “Performance Based Rape” of electricity consumers!
(Tune in to Sulo ng Pilipino/Radyo OpinYon, Monday to Friday, 5 to 6 p.m. on 1098AM; Talk News TV with HTL, Saturday, 8:15 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 TV and radio archives)
Monday, October 3, 2011
Noynoy, YOU are responsible!
DIE HARD III
Herman Tiu Laurel
10/3/2011
Last week, when Malacañang was queried about the growing clamor for the country’s Chief Executive to finally act on the scourge that is the Philippines’ “highest power rates in Asia,” all the Palace mouthpiece could give was a one-liner that reeks of evasiveness and buck-passing.
Reacting to the call from the Philippine Chamber of Commerce and Industry (PCCI), its allied business organizations, and moderate labor groups, the Trade Union Congress of the Philippines (TUCP) and the Associated Labor Union (ALU), deputy presidential spokesperson Abigail Valte minced no words in saying, “Those concerns should be addressed to the ERC (Energy Regulatory Commission).”
This is the classic runaround that we, the people — from the most militant leftists and most democratic populists (like me), to the most moderate labor unions and working capitalists — have been subjected to under the decade-old Electric Power Industry Reform Act (Epira) that brought forth this massive power price gouging now besetting the land as a waking nightmare.
For one, it isn’t true that the power service sector or industry is the sole turf of the ERC. Even the very flawed Epira, which created that inutile regulatory body, is clear that the State — which is led by the head of state or Chief Executive, a.k.a. the President — is responsible.
Epira’s Declaration of Policy in Chapter 1, Section 2, subsections (d) and (h), state that the government is mandated “To protect the PUBLIC INTEREST as it is affected by the rates and services of electric utilities and other providers of electric power; (and) To establish a strong and purely INDEPENDENT regulatory body and system to ensure CONSUMER PROTECTION (emphasis supplied)…”
The President oversees all agencies of the State to ensure that they function as defined by law. And in the ERC and the power sector’s case, as provided in Section 23 of Epira on Functions of Distribution Utilities, government must ensure that “A distribution utility shall have the obligation to supply electricity in the LEAST COST MANNER (emphasis ours) to its captive market, subject to the collection of retail rate duly approved by the ERC.”
Filipino consumers, as represented by countless people’s organizations and advocacy groups (now joined by the aforementioned trade and labor organizations), are rightfully clamoring for the Chief Executive to take action on what has become an undisputed, factual, and glaring decade-long massive overpricing of electricity in this country — long the bane of our economy, industry, and social well-being.
It is a situation aggravated by the ERC’s demonstrable collusion with the biggest electricity distributor, Meralco, when on Dec. 10, 2004 it adopted the 15.8-percent Performance Based Regulation (PBR) scheme in place of the already thoroughly scrutinized 12-percent Return-on-Rate Base (RoRB) formula, in clear defiance of a 2003 Supreme Court (SC) decision under Chief Justice Reynato Puno reaffirming the RoRB; disallowing Meralco’s pass-on of its corporate income taxes to consumers; and subjecting the power distributor to an examination of its books by the Commission on Audit (CoA) — which found, in test years 2004 and 2007 alone, that the company again overcharged customers to the tune of P7 billion.
The defiant implementation of the onerous PBR did not only prove that the ERC saw itself as a power above all; it also resulted in up to 80 percent annual increases in Meralco’s profits from 2008 to 2010, on nothing more than what the power company admits to be a paltry 3-percent increase in its customer base.
Clearly, those profit jumps — P2.7 billion in 2008; P6 billion in 2009; and P12 billion in 2010 — couldn’t have been on account of Meralco’s 11-percent increase in sales volume.
According our colleague Romeo Junia, when “PBR was instituted, Meralco’s per kWh distribution rates have gone up — from P0.9657 in 2003 under rate unbundling, to P1.2227 in May 2009, to P1.4917 in May 2010, to P1.6464 this year (P1.5828 in 2011 to be able to claim a “decrease” when it should only be P0.90), and to P1.9036 by 2015. That rate was P0.7957 per kWh in 2003 under the Return on Rate Base…”
That’s why the rate increase from the RoRB’s 12 percent to the PBR’s 15.8 percent was already a violation of the “least cost” provision of the Epira, not to mention Meralco’s franchise under RA 9209 (Section 4) which holds, “The grantee shall supply electricity to its captive market in the least cost manner… (It) shall charge reasonable, just, and competitive power rates for its services to all types of consumers within its franchised area in order that business and industries shall be able to compete.”
The ERC defends its re-formulation of the pricing mechanism by insisting that it has to follow the Epira provision that provides for “just and reasonable profit” for the service providers. But even 6 percent in profit is already “just and reasonable” according to Iligan Light power company director Jojo Borja who says, “Our family has been in the power business for 80 years; we were happy with 6-percent profit and it was an honorable business. With Epira, what we used to earn in one year we earn now in two months, and for Meralco it’s even shorter.”
TUCP Party-list Rep. Democrito Mendoza should thus tell his House leader to shut up about his push for Charter change (Cha-cha) to “entice foreign capital” because, as Mendoza said so himself, our power rates are by far “the biggest disincentive to the entry of new foreign direct investors to our shores.”
Good thing Mendoza already addressed this demand to Aquino III directly instead of the ERC.
But, as the issues in the power sector already go beyond just price gouging, involving economic sovereignty, sabotage, and plunder, Malacañang should never be allowed to shirk from its primordial duty to protect the consumer and, more importantly, the nation and its economy. So to Noynoy, we say: It’s your responsibility. Take heed or else…
(Tune in to Sulo ng Pilipino/Radyo OpinYon, Monday to Friday, 5 to 6 p.m. on 1098AM; Talk News TV with HTL, Saturday, 8:15 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 TV and radio archives)
Herman Tiu Laurel
10/3/2011
Last week, when Malacañang was queried about the growing clamor for the country’s Chief Executive to finally act on the scourge that is the Philippines’ “highest power rates in Asia,” all the Palace mouthpiece could give was a one-liner that reeks of evasiveness and buck-passing.
Reacting to the call from the Philippine Chamber of Commerce and Industry (PCCI), its allied business organizations, and moderate labor groups, the Trade Union Congress of the Philippines (TUCP) and the Associated Labor Union (ALU), deputy presidential spokesperson Abigail Valte minced no words in saying, “Those concerns should be addressed to the ERC (Energy Regulatory Commission).”
This is the classic runaround that we, the people — from the most militant leftists and most democratic populists (like me), to the most moderate labor unions and working capitalists — have been subjected to under the decade-old Electric Power Industry Reform Act (Epira) that brought forth this massive power price gouging now besetting the land as a waking nightmare.
For one, it isn’t true that the power service sector or industry is the sole turf of the ERC. Even the very flawed Epira, which created that inutile regulatory body, is clear that the State — which is led by the head of state or Chief Executive, a.k.a. the President — is responsible.
Epira’s Declaration of Policy in Chapter 1, Section 2, subsections (d) and (h), state that the government is mandated “To protect the PUBLIC INTEREST as it is affected by the rates and services of electric utilities and other providers of electric power; (and) To establish a strong and purely INDEPENDENT regulatory body and system to ensure CONSUMER PROTECTION (emphasis supplied)…”
The President oversees all agencies of the State to ensure that they function as defined by law. And in the ERC and the power sector’s case, as provided in Section 23 of Epira on Functions of Distribution Utilities, government must ensure that “A distribution utility shall have the obligation to supply electricity in the LEAST COST MANNER (emphasis ours) to its captive market, subject to the collection of retail rate duly approved by the ERC.”
Filipino consumers, as represented by countless people’s organizations and advocacy groups (now joined by the aforementioned trade and labor organizations), are rightfully clamoring for the Chief Executive to take action on what has become an undisputed, factual, and glaring decade-long massive overpricing of electricity in this country — long the bane of our economy, industry, and social well-being.
It is a situation aggravated by the ERC’s demonstrable collusion with the biggest electricity distributor, Meralco, when on Dec. 10, 2004 it adopted the 15.8-percent Performance Based Regulation (PBR) scheme in place of the already thoroughly scrutinized 12-percent Return-on-Rate Base (RoRB) formula, in clear defiance of a 2003 Supreme Court (SC) decision under Chief Justice Reynato Puno reaffirming the RoRB; disallowing Meralco’s pass-on of its corporate income taxes to consumers; and subjecting the power distributor to an examination of its books by the Commission on Audit (CoA) — which found, in test years 2004 and 2007 alone, that the company again overcharged customers to the tune of P7 billion.
The defiant implementation of the onerous PBR did not only prove that the ERC saw itself as a power above all; it also resulted in up to 80 percent annual increases in Meralco’s profits from 2008 to 2010, on nothing more than what the power company admits to be a paltry 3-percent increase in its customer base.
Clearly, those profit jumps — P2.7 billion in 2008; P6 billion in 2009; and P12 billion in 2010 — couldn’t have been on account of Meralco’s 11-percent increase in sales volume.
According our colleague Romeo Junia, when “PBR was instituted, Meralco’s per kWh distribution rates have gone up — from P0.9657 in 2003 under rate unbundling, to P1.2227 in May 2009, to P1.4917 in May 2010, to P1.6464 this year (P1.5828 in 2011 to be able to claim a “decrease” when it should only be P0.90), and to P1.9036 by 2015. That rate was P0.7957 per kWh in 2003 under the Return on Rate Base…”
That’s why the rate increase from the RoRB’s 12 percent to the PBR’s 15.8 percent was already a violation of the “least cost” provision of the Epira, not to mention Meralco’s franchise under RA 9209 (Section 4) which holds, “The grantee shall supply electricity to its captive market in the least cost manner… (It) shall charge reasonable, just, and competitive power rates for its services to all types of consumers within its franchised area in order that business and industries shall be able to compete.”
The ERC defends its re-formulation of the pricing mechanism by insisting that it has to follow the Epira provision that provides for “just and reasonable profit” for the service providers. But even 6 percent in profit is already “just and reasonable” according to Iligan Light power company director Jojo Borja who says, “Our family has been in the power business for 80 years; we were happy with 6-percent profit and it was an honorable business. With Epira, what we used to earn in one year we earn now in two months, and for Meralco it’s even shorter.”
TUCP Party-list Rep. Democrito Mendoza should thus tell his House leader to shut up about his push for Charter change (Cha-cha) to “entice foreign capital” because, as Mendoza said so himself, our power rates are by far “the biggest disincentive to the entry of new foreign direct investors to our shores.”
Good thing Mendoza already addressed this demand to Aquino III directly instead of the ERC.
But, as the issues in the power sector already go beyond just price gouging, involving economic sovereignty, sabotage, and plunder, Malacañang should never be allowed to shirk from its primordial duty to protect the consumer and, more importantly, the nation and its economy. So to Noynoy, we say: It’s your responsibility. Take heed or else…
(Tune in to Sulo ng Pilipino/Radyo OpinYon, Monday to Friday, 5 to 6 p.m. on 1098AM; Talk News TV with HTL, Saturday, 8:15 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 TV and radio archives)
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