The ERC vs impeach hearings

DIE HARD III
Herman Tiu Laurel
1/20/2012



It is not just the country’s Chief Justice (CJ) on trial but the entire social and political establishment of the Philippines. Last Monday, two hearings of note were held. One involved Supreme Court (SC) CJ Renato Corona, while the other, the Energy Regulatory Commission (ERC) and the issues before it.

Amid a hodgepodge of allegations of betrayal of public trust, the Corona impeachment trial may well unearth tens of millions of pesos of anomalies in material terms. But, as the latter speaks of P30 billion to P50 billion in direct annual losses to the pockets of every Filipino for the last seven years and the years to come, it certainly constitutes more of a lasting damage to the life of the nation’s economy if it were not resolved in the people’s favor. This much has been affirmed by business, labor, energy and economic experts, as well as consultants, both foreign and local, and most especially, consumer advocates, who have long protested such grave injustice.

For the past eight years, the ERC has run afoul of several crucial decisions of the SC that sought to protect Filipino electricity consumers. In 2003, the Puno-led tribunal had already made several very important rulings: 1) a refund of the P28-billion Manila Electric Co. (Meralco) overcharging since 1994 (which has not been fully concluded today, leaving a question as to whether the power company actually took this out from consumers’ payments or its own equity); 2) an affirmation of the Electric Power Industry Reform Act (Epira)’s Return on Rate Base (RoRB) of 12 percent as a fair and just method of determining return on capital; 3) a declaration that corporate income tax payments cannot be charged to consumers as Meralco has done; and 4) an order for the Commission on Audit (CoA) to scrutinize Meralco’s books, which led to the discovery of P14 billion in overcharges for 2003 and 2007.

By exploiting a loophole in the Epira, the ERC, in complete defiance of the SC, replaced the RoRB that had been thoroughly threshed out by the high court with a so-called Performance Based Regulation (PBR) scheme that allowed rates of return to zoom up to 15 and well over 17 percent — with incentives to boot! This also gave Meralco the leeway to continue charging its income tax to customers under a new guise and the ERC further excuse to write rules that open it to charges of corruption.

The Jan. 16 ERC hearing was on two related petitions: “(a) Application for Approval of Maximum Average Price (MAP) for 2012, (b) Translation of the (said) MAP… into a Distribution Rate Structure for Meralco’s Various Customer Classes.” Yet, the ERC is hearing these without first settling prejudicial questions.

For one, Mang Naro Lualhati’s motion for reconsideration on the ERC’s approval of the capital expense claim of Meralco, upon which its (rounded off) MAP of P1.60/kWh is based — an overstated amount as shown by earlier CoA findings, which correct rate should only be P0.90/kWh — is still pending. For another, fellow advocate Jojo Borja’s petition for a temporary restraining order (TRO) on the ERC hearing, pending resolution of his protest for the regulatory agency’s disregard of his evidence of Meralco’s overprice of its own poles, transformers, and substations by over 500 percent, has yet to be acted on.

Moreover, as another warrior in our cause, Butch Junia, demanded that these prejudicial questions be settled first, drawing the ire of a very well-suited Meralco lawyer, he proceeded to question the “regulatory liaison” budget approved by the ERC for Meralco to the tune of P2.2 billion (for the regulatory period of four years) or P550 million per year.

First of all, aren’t we, taxpayers, already funding the ERC to regulate and communicate with all energy providers? Why then should Meralco have its own budget for “liaison” charged to us consumers?

And what exactly is “liaison?” The Free Online Dictionary says that liaison is “an instance or a means of communication between different groups or units; one that maintains communication; a close relationship, connection, or link; an adulterous relationship; an affair.”

Now, if theirs isn’t one that mirrors the latter definitions, do both really need P550 million a year just to communicate?

Since we are today guaranteeing Meralco a 16-percent profit margin, as opposed to the 12 percent ruled as fair by the SC of 2003; and as Mang Naro has shown that the power firm’s annual P9-billion capital expense should only be P1 billion; notwithstanding Jojo Borja’s revelation that many of the most essential equipments used in its rate base application are overpriced by as much as 500 percent, or Butch Junia’s exposé of its P550-million annual “liaison” budget (which we will raise with the courts in the near future), aren’t we ending up with a total of P50 billion in annual electricity rate overcharging, as approved by the ERC?

Third party consultants of both the ERC and Meralco themselves have stated for the record that Meralco’s assets are underutilized by as much as 50 percent. So why are yearly increases and an expansion of Meralco’s asset base still being approved while the power company’s market grows by only 2 percent?

Inasmuch as I was prevailed upon by my home network to join its Senate impeachment watch, I immediately seized the opportunity to raise the greater significance of the ERC hearing there, as I am doing in this column today.

The real handlers of BS Aquino III (the Makati Business Club, US Embassy, “evil society”) are the very same ones behind the impeachment-ouster of President Joseph Estrada more than a decade ago. Their purpose is to distract from the continuing plunder by the oligarchs and the foreign financial mafia.

The script is almost exactly the same. The Epira then was passed right before an unsuspecting public just as Estrada was made a scapegoat. Today, the power plunder rages on as some other scapegoats are paraded anew.

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