DIE HARD III
Herman Tiu Laurel
10/19/2012
It took every Meralco watcher a day or two before the "bill deposit" the power distribution utility company wanted to raise, could be figured out. The "bill deposit" was Greek to most people and nobody recalled it existed until it was raised two weeks ago because Meralco wanted to raise it. The "bill deposit" is a "security deposit" listed among "customer protection" in a "Magna Carta for Residential Electricity Consumers, one-month estimated consumption of the Manila Electric Co. (Meralco) customer held by the company and forfeited in case of non-payment of bills. On its face the deposit seems simple and fair, but the devil for Meralco and the saving grace for consumers are in the details. We're glad Meralco opened this Pandora's box and a chest full of rectifications consumers must demand.
Power crusader Butch Junia set us a comprehensive paper on the Magna Carta based on , Section 31 of ... 9136 (Epira), adopted by the ERC on June 9, 2004: the "bill deposit" is defined as "the deposit required from customers by distribution utilities (DU) of new and/or additional service equivalent to the estimated billing for one month to guarantee the payment of the bills." Among the basic rights of consumers there are: "quality, reliable, affordable, safe and regular supply of power"; and a most notable provisions is Article 7 of chapter II, Consumer Rights which says, "A customer who has paid his electricity bill on or before its due date for three (3) consecutive years may, however, demand full refund of the deposit even prior to the termination of his service. An application for this purpose shall be filed with the concerned distribution utility which must refund the deposit within one month from receipt of such application."
Butch Junia cites a most vital provision: "Distribution utilities (DU) shall pay interest on bill deposits equivalent to the interest incorporated in the calculation of their Weighted Average Capital Cost (WACC), otherwise the deposit shall earn an interest per annum in accordance with the prevailing interest for savings deposit as approved by the Bangko Sentral ng Pilipinas (BSP). The interest shall be credited yearly to the bills of the registered customer." To sum up these three provisions mentioned here: 1) electricity customers have a right to "affordable" electricity; 2) a customer who pays his bill on time unerringly for three (3) years can demand a refund of the "bill deposit"; 3) the DUs should pay interest on the "bill deposit" equivalent to the DUs' interest on its WACC as approved by ERC in the current "regulatory period" of 14.75 percent or the prevailing savings deposit rates.
The amount of "bill deposits" Meralco accumulated based on its 2011 sales of P 256 billion is about P 25.6 billion. Junia's writes: "Meralco's 1st VP Ivanna de la Peña … confirmed that 90,000 of their customers were sent the notice of increase for the month of October, … other batches for every month will be receiving the same kind of notice. These were the disconnected customers or those who received three disconnection notices within the year, ... about 1.2 million customers in one year, or roughly 20 percent of its five (5) million customer base. By a straightforward analysis … of the P26.4 billion cash pile, about P5.2 billion would be adequate to answer for the problem accounts and the rest, the P21.12 billion should already be returned to the customers … The provision for bad debts (incorporated in our bills — htl) is almost P700 million; the Working Capital is P1.156 billion (consumers also provide — htl) … are substantial buffers … Why then, should the rest of Meralco's captive customers — 75 percent of its customer base — be penalized."
Now, the great swindle coverts the "bill deposit" to a "bilk deposit": "ERC has given Meralco a WACC of 14.75 percent, resulting in Meralco's return on capital of P19.77 billion for RY 2013. In arriving at the WACC, Meralco's cost of debt was benchmarked to a low of 10.8 percent, ... and high of 13.7percent. That is the cost of Meralco's borrowings and … recovered from us (consumers)… but in November, 2010, ERC un-coupled the interest from WACC and pegged it to the Land Bank rate at the start of the year which is 0.5 percent in 2011, 0.75 percent in 2010." So now, all the 5-million Meralco customers are losing at least 14 percent in interest earning from the "bill deposit" which Meralco is now keeping as part of its profits. This amendment happened in 2010 under the watch of ERC chairman Zenaida Ducut, with commissioners Rauf Tan, Alejandro Barin, Ma. Teresa Castañeda and Jose Reyes.
The millions of electricity consumers all over the country are victimized by ERC's gross failure to disseminate information needed by consumers; and manipulations of the Magna Carta and the Epira by elements in the ERC and Meralco. It is clear consumers are being bilked of billions more in this "bill deposit" hike. We will bring these to the Ombudsman, but the ultimate protection of consumers is awareness, vigilance and militancy. It's time all consumers act as one.
(Watch Destiny Cable GNN's HTL edition channel 8, Saturdays, 8:15 to 9 p.m., replay 11:15 p.m. and Sunday, and on www.gnntv-asia.com: this week "Meralco's 'Bilk' Deposit'"; tune to 1098AM radio Tuesday to Friday 5 to 6 p.m. http://newkatipunan.blogspot.com)
