Electric eel's fishy tales gain

CONSUMERS' DEMAND!
Herman Tiu Laurel
2/13-19/2012



The top “electrocutioner” of the country sitting as chief executive officer (CEO) of the Manila Electric Co. (Meralco) announced on February 9, 2012 that “Meralco sees higher 2012 income” compared to its P 14.5-billion of 2011.

In one report, the electrifyingly good news for Meralco was attributed by the big electrophorus electricus of Meralco thus,

“The utility firm’s chief executive mainly hinged such forecast on recent increase in their sales volume, which to his assessment signals green shoots of recovery in the economy.”

We heard this old fish wives’ tales before, that Meralco’s huge profit increase in 2009 of 114% or P6 billion from its 2008’s P2.8 billion, and surged 74% in 2010 to P 12.2 billion and P 14.5 billion in 2011 or around 25% more on what Meralco itself declares as 2% growth in volume sales.

Even Meralco, however, cannot lie all the time as it admits in several news reports in a very attenuated one-sentence statement that a significant portion of the profit is from rate increases.

“Significant” would be the understatement of the century. How Meralco gets these whopping rate increases is the subject of our many columns – Meralco-llusions with ERC.

The Electrocutor also explains that they expect a rise in profit due to projected “growth drivers” such as the “commercial and highly industrialized sectors.”

But as our regular power sector analyst Butch Junia reports “… based on Meralco’s RY 2012 average monthly expected revenues filed with ERC, residential customers will contribute 63.3% of the P3.96 nillion revenues.”

The non-residentials, i.e. the industrial and commercial customers, account for a mere 35.2%.

In terms of consumption, residential customers will get or use only 37% of total energy sales of P2.495 billion kwh.

While the lion’s share of 61% will be delivered to industrial and commercial customers, it is a “clear case of their paying less for more…”

Hence, the driver of Meralco’s profits is really the residential consumers who pay as high as P4.00/kwh versus the biggest commercial/industrial consumers which can pay as low as P0.10/kwh.

Now, who’s subsidizing what and filling Meralco’s money bag? If readers remember the late comedian Pugo’s one-liner, “Das a lotta nonsense,” now referring to the evil eye of Meralco propaganda.

“Growth” as the wool to pull over the public eye and spirit in the power plunder scheme has been used time and again.

It was at its height during Fidel V. Ramos’ time when surplus IPP (Independent Power Producer) capacity was contracted on the projected economic growth of Ramos’ Philippines 2000.

The Asian Development Bank (ADB) ritually warned FVR that contracted capacity was already exceeding even the best demand projection.

However, the pen on then multi-billion contracts was mightier than the words of warning.

The past decade when the Philippine power rates were challenging Mt. Everest, there were continuing voices warning of power shortages because of “growth” like Raul Concepcion, but the growth that came literally in trickles.

Even 6% growth is a standstill rate and it is a truism that at least 7% growth is needed for tangible results.

The disastrous 3.7% growth for 2011 does not auger well for rosy projection for 2011 which even the best International Monetary Fund (IMF) view is only 4.2% while other financial agencies like J.P. Morgan see only 4%.

Where is Meralco going to get a dramatic uptick in demand with such figures?

The country’s installed and so-called dependable generating capacity is total installed, 16,359 MW; and dependable, around13,500.

Of course, the first question that should arise is why not make all that power dependable? That’s over 20% to fill any growth in demand.

And then there’s this report from Jon Poquis in August of 2010 in a daily entitled “Power demand grows slower than GDP:”

…As an economy grows, consumption of electricity also grows, and usually at a faster clip.

That used to be the case: the more goods and services were produced, more electricity was consumed.

Now, it is different. Data from the Department of Energy show that power demand is growing slower than the national output.

About a decade ago, every percentage growth in gross domestic product was accompanied by a 2.8 percent growth in power consumption.

Now, the ratio is one percentage point to 0.68 percentage point. In effect, it now takes about a fifth less power to increase GDP by a percentage point.

Mylene Capungcol, director of the energy department’s electric power industry management bureau, said the steady drop in energy elasticity could be attributed to a shift in the focus of the Philippines to a more service-oriented economy.

Because of this, a sustained growth in GDP will not lead to a rapid surge in power demand, she added. “This implies that even if the economy sustains or increases its current growth, the demand for electricity will not necessarily follow at the same pace.”

The latest data on the economy show a contracting export sector declining for 13 straight months and the last, the worst in 18 months.

And the challenges are not abating as the U.S. and European Union (EU) situation (notwithstanding the rosy mainstream U.S. jobs figures which we can show in future articles to be touch-up jobs) continues to worsen.

Likewise, the Middle East markets even for our OFWs.

With these traditional markets in turmoil, the Asian markets are also affected.

The oil situation is the most worrying as threats around the Straits of Hormuz are already raising Brent crude prices which will dampen economic activity the world over.

So, we can sum up the prospects for real growth in Philippine power demand for 2012 – another 2% at best and certainly not anywhere near enough to justify another 20% increase in profits on alleged increase of volume of sales.

And the DoE’s similar myth spinning as the Electrocutioner? Almendras is obviously sucking up to the oligarchs who want to set up new, exorbitant IPPs for the entire country.

One example is the “re-powering” of the Sucat power plant mothballed to create the shortages before and now to be revived to a private operator.

People should learn by now that the fishy electric eels are only good for Unagi at a Japanese restaurant, not for the home. It’s about time we take Meralco’s gigantus electrophopous electricus to the Gaisujin-sama (chef), and prepare smaller ones like DoE’s Almendras for sashimi.

More about Almendras, including apparent senatorial plans that as in kissing babies and yielding concessionary statement such as “President Aquino promises to look into power crisis” in next columns.

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