DIE HARD III
Herman Tiu Laurel
8/20/2012
A new survey from a foreign energy consultant ranks Meralco's power rates as the World's "ninth most expensive". The Perth, Australia based International Energy Consultants (IEC) presentation at the Senate's Joint Congressional Power Commission (JCPC) also reported that the Philippines' power rates are still ranked the "highest power rate in Asia". The JCPC is tasked to oversee EPIRA (Electric Power Industry Reform Act) implementation to provide "least cost" power through "competition and efficiency", and chaired by Senator Serge Osmeña (who chastised the conservative economic think tank FEF, Foundation for Economic Freedom, as "communists" for supporting the review of EPIRA). Many Filipinos and Mindanaoans aware of or adept in the power sector issues, like labor advocate Louie Corrales or Mr. Jojo Borja of Iligan Light and Power (ILPI) or consumer advocates Butch Junia or Mang Naro Lualhati, believe Osmeña stonewalls real reforms.
The IEC named Hawaii, Italy, Malta, Japan, Cyprus, Germany, Denmark, Netherlands, Philippines and Singapore as having the highest power rates : "Meralco is comparable with Singapore, Australia, Netherlands and Denmark (the highest in the World - htl) but significantly higher than several other countries within the Asia-Pacific Region ,… In terms of commercial retail tariff, the Philippines ranked sixth among the 44 jurisdictions, with its $0.2043 per kilowatt hour (/kWh), exclusive of value added tax (VAT), 31% above the average among the 44 jurisdictions. The Philippines' $0.1728/kWh industrial retail tariff was also sixth highest and 26% above the average, while its $0.2485/kWh residential retail tariff was 17th highest and 13% above average." Note that Filipino residential consumers are subsidizing the local industrial sector paying 25% higher rates - and subsidizing private power companies who have never fully paid their privatization obligations to this day.
IEC's consultant John Morris said, "Several neighboring countries … have average tariffs that are much lower than Meralco's…due to … subsidies of up to 50% to consumers… IEC believes that providing subsidies via lower tariffs is bad economic practice and ultimately unsustainable. When subsidies are added back to retail tariffs, the true cost of electricity in these countries rises to a level that is much closer to Meralco's… " Mr. Morris' opinion attempts to justify Meralco's high rates, blame it on "subsidy" but on this he provides no basis for the claim. If the policy of subsidizing power is "bad economic practice and ultimately unsustainable" then why are all the Asian countries Morris cites as practicing this "bad subsidy" all growing far faster economically and their people live better lives than the Philippines? Likewise, government subsidy to a country's power sector in its various methods of generation is the predominant practice in the World. This is obvious when considering mega-projects like hydro-electric or nuclear energy project all over the World only governments can undertake.
IEC was also the consultant the Philippine chamber of Commerce and Industry (PCCI) quoted in its February 2011 meeting and reported in the media, the same report TUCP cited to back up its direct and written appeal to President Noynoy Aquino to act on bringing down power costs in the country which it said is causing investors to turn away and jobs lost. Many Filipino power consumer advocates have been reporting this fact even before IEC came out with its survey in October or 2010; but there is a new twist to its presentation of its survey adding its opinion on the matter of subsidies to the power sector that those who understand the power industry in the Philippines immediately recognize as blatant lies: 1) that Philippine and Meralco power rates are among the highest because of subsidy from government and 2) subsidy for electricity is bad of an economy.
Let us state it clearly and emphatically here, there is no government subsidy in the Philippines for its power sector. If any subsidy is being provided it is the power consumers providing it – advancing payments each year for four year regulatory periods to Meralco and other Distribution Utilities (DUs); WESM (Wholesale Electricity Spot Market) exorbitant premium rates for power purchases from selected IPPs (Independent Power Producers); consumers' payments to Meralco rates based on 500% to 900% overprice of transformers, sub-stations, electric poles and other assets, proven by Jojo Borja's documented testimonies; consumer payments to Meralco for the "regulatory liaison" amounting to P 2.2-B which Butch Junia exposes; the carry-on of Meralco non-power related assets such as the Rockwell real estate projects; the up to 17% Performance Based Rate (PBR) that ERC replaced the 12% RORB rate affirmed by the Supreme Court in 2003.
Filipino power consumers are also paying for the subsidies for the "Lifeline Rate" to those consuming below 99kWh/month, the "senior citizens" discount and the SPUG (Small Power Utilities Group) or the financially unviable electrification of rural communities. Government is not paying for any subsidy. Don't be fooled by the use of the term subsidy by Mr. Morris, Serge Osmeña and others like them. They make everyone assume "subsidy" is always from government and "freebee" to people. In the Philippines' privatized power, water and toll ways it is always the consumers and commuters who are paying the subsidy to privatized public enterprises – socialism and "freebees" for the capitalists from the people's capital. IEC is playing an insidious role, as foreign consultants of ERC and Meralco like Emmerton Consulting, SKM and NCL – obfuscating data and signals, mixing half truths, to cover their own asses while taking in huge consultancy fees and giving the ERC, Meralco, the privateers the smokescreen to arbitrarily "true up" or "fudge" information and manipulate the industry sector.
(Watch Destiny Cable GNN's HTL edition of Talk News TV, Saturdays, 8:15 to 9 p.m., with replay at 11:15 p.m. and Sunday, this week: "Politicization of the Judiciary" with Attys. Bono Adaza and Alan Paguia; visit http://newkatipunero.blogspot.com)
The IEC named Hawaii, Italy, Malta, Japan, Cyprus, Germany, Denmark, Netherlands, Philippines and Singapore as having the highest power rates : "Meralco is comparable with Singapore, Australia, Netherlands and Denmark (the highest in the World - htl) but significantly higher than several other countries within the Asia-Pacific Region ,… In terms of commercial retail tariff, the Philippines ranked sixth among the 44 jurisdictions, with its $0.2043 per kilowatt hour (/kWh), exclusive of value added tax (VAT), 31% above the average among the 44 jurisdictions. The Philippines' $0.1728/kWh industrial retail tariff was also sixth highest and 26% above the average, while its $0.2485/kWh residential retail tariff was 17th highest and 13% above average." Note that Filipino residential consumers are subsidizing the local industrial sector paying 25% higher rates - and subsidizing private power companies who have never fully paid their privatization obligations to this day.
IEC's consultant John Morris said, "Several neighboring countries … have average tariffs that are much lower than Meralco's…due to … subsidies of up to 50% to consumers… IEC believes that providing subsidies via lower tariffs is bad economic practice and ultimately unsustainable. When subsidies are added back to retail tariffs, the true cost of electricity in these countries rises to a level that is much closer to Meralco's… " Mr. Morris' opinion attempts to justify Meralco's high rates, blame it on "subsidy" but on this he provides no basis for the claim. If the policy of subsidizing power is "bad economic practice and ultimately unsustainable" then why are all the Asian countries Morris cites as practicing this "bad subsidy" all growing far faster economically and their people live better lives than the Philippines? Likewise, government subsidy to a country's power sector in its various methods of generation is the predominant practice in the World. This is obvious when considering mega-projects like hydro-electric or nuclear energy project all over the World only governments can undertake.
IEC was also the consultant the Philippine chamber of Commerce and Industry (PCCI) quoted in its February 2011 meeting and reported in the media, the same report TUCP cited to back up its direct and written appeal to President Noynoy Aquino to act on bringing down power costs in the country which it said is causing investors to turn away and jobs lost. Many Filipino power consumer advocates have been reporting this fact even before IEC came out with its survey in October or 2010; but there is a new twist to its presentation of its survey adding its opinion on the matter of subsidies to the power sector that those who understand the power industry in the Philippines immediately recognize as blatant lies: 1) that Philippine and Meralco power rates are among the highest because of subsidy from government and 2) subsidy for electricity is bad of an economy.
Let us state it clearly and emphatically here, there is no government subsidy in the Philippines for its power sector. If any subsidy is being provided it is the power consumers providing it – advancing payments each year for four year regulatory periods to Meralco and other Distribution Utilities (DUs); WESM (Wholesale Electricity Spot Market) exorbitant premium rates for power purchases from selected IPPs (Independent Power Producers); consumers' payments to Meralco rates based on 500% to 900% overprice of transformers, sub-stations, electric poles and other assets, proven by Jojo Borja's documented testimonies; consumer payments to Meralco for the "regulatory liaison" amounting to P 2.2-B which Butch Junia exposes; the carry-on of Meralco non-power related assets such as the Rockwell real estate projects; the up to 17% Performance Based Rate (PBR) that ERC replaced the 12% RORB rate affirmed by the Supreme Court in 2003.
Filipino power consumers are also paying for the subsidies for the "Lifeline Rate" to those consuming below 99kWh/month, the "senior citizens" discount and the SPUG (Small Power Utilities Group) or the financially unviable electrification of rural communities. Government is not paying for any subsidy. Don't be fooled by the use of the term subsidy by Mr. Morris, Serge Osmeña and others like them. They make everyone assume "subsidy" is always from government and "freebee" to people. In the Philippines' privatized power, water and toll ways it is always the consumers and commuters who are paying the subsidy to privatized public enterprises – socialism and "freebees" for the capitalists from the people's capital. IEC is playing an insidious role, as foreign consultants of ERC and Meralco like Emmerton Consulting, SKM and NCL – obfuscating data and signals, mixing half truths, to cover their own asses while taking in huge consultancy fees and giving the ERC, Meralco, the privateers the smokescreen to arbitrarily "true up" or "fudge" information and manipulate the industry sector.
(Watch Destiny Cable GNN's HTL edition of Talk News TV, Saturdays, 8:15 to 9 p.m., with replay at 11:15 p.m. and Sunday, this week: "Politicization of the Judiciary" with Attys. Bono Adaza and Alan Paguia; visit http://newkatipunero.blogspot.com)
