DIE HARD III
Herman Tiu Laurel
11/8/2010
First it was the Manila Electric Co. (Meralco); now it’s the Wholesale Electricity Spot Market (Wesm) and the National Power Corp. (Napocor); another time, it will be the National Grid Corp. of the Philippines (NGCP); and then it’ll be Meralco’s turn again. The power rate gouging just goes on and on, constantly keeping our power rates the highest ever in Asia — and getting higher still!
Last week, just as torrential rains compelled authorities to release overflowing water from hydro-electric dams such as Angat, raising public expectations for a further reduction of November power rates, given this bountiful hydro power source, Meralco announces that it will raise power rates anew by 98 cents per kWh due to higher electricity prices from the Wesm. Translated, this means that virtually half of the increase (at 55 cents per kWh) from P3.68 to P4.85 per kWh will come from Meralco while the other half will be used to account for Napocor’s so-called “under-recoveries” the past months.
The Electric Power Industry Reform Act (Epira) requires Meralco to take at least 10 percent of its power supply from Wesm, which auctions power from all independent power producers (IPPs), supposedly to introduce competition (and lower prices). But these rates are actually manipulated by power distributors that also own IPPs. Napocor’s “under-recoveries,” on the other hand, accrued from government’s artificial intervention in times when it had to mitigate the Wesm’s overcharging by ordering temporary low rates.
The Wesm counts among its participants the IPPs and the buyers-distributors. A common sense view of power cost is that this should not be subject to volatility except for fuel and currency fluctuation, which we actually pay for with the corresponding price adjustments.
However, the Wesm bidding or auction also supposedly factors in demand and its fluctuations, a factor that is extremely vulnerable to manipulation. As demand is affected by conditions of supply, these conditions can be easily manipulated by such claims as the “breakdown” of some plants, “unscheduled maintenance” (as with Malampaya gas), “jellyfish invasions” (at Sual), and even supposed El Niño effects (that could easily be neutralized by foresight and preparation), among many others.
Moreover, the Wesm is managed by the Philippine Energy Management Corp. (Pemc) whose operations (including salaries, expenses, etc.) we, the consumers, pay for to the tune of P622.868 million in 2009 (which was still apparently not enough as the firm sought an additional P108 million late last year), and P800 million this year just for “trading” alone.
The Wesm is without a doubt the same system that California adopted, which gave way to the infamous Enron scandal. Back then, Enron executives manipulated power supply by asking power plants to shut down on various pretexts (such as breakdowns and maintenance), then jacked power prices sky high before leveraging their stocks in the market until the company’s collapse. As a result, the state of California found itself with $50 billion in losses. But then, the Enron executives were later sent to jail; while the Wesm executives here continue to hoodwink the nation.
The local Wesm has been scandal-ridden since its inception, with public investigation being called by Malacañang, the Senate, Congress, and the Pemc itself, as in the 2010 case wherein the Pemc asked the Energy Regulatory Commission (ERC) to intervene against the Wesm based on a letter-complaint from two power utilities for “drastic price spikes” from Jan. 26 to Feb. 25 this year.
Generation prices in the Wesm, accounting for Meralco’s total 55-centavo hike in its November rate, can go as high as P19 per kWh, which is probably close to what it is today. But Meralco itself had just raised its distribution rates in the past months.
By maintaining a tacit modus operandi with the Wesm, the Power Sector Assets and Liabilities Management Corp. (Psalm), Napocor, and the ERC to alternately petition for, approve, and implement power rate hikes, Meralco is perceived to be obfuscating the fact that its franchise area continues to have the highest power rate in Asia, by dazing and off-balancing consumers who are unable to spot a culprit — who’s none other than all of them plus the whole corrupt system, including the legislature and the judiciary, that has propped up the Epira law.
To refresh, the Belmonte Congress in April 2001, before it was set to be replaced by a newly-elected set of legislators, approved the Epira for P0.5 million (supposedly from Meralco) plus P10-million National Electrification Administration (NEA) projects per congressman. The Senate, too, allegedly concurred in exchange for favors from the energy lobby. The judiciary, for its part, has repeatedly sustained the Epira law from consumer suits; thus, ensuring its preservation. Except for Rep. Magtubo in 2001 and Reps. Toby Tiangco and Bernadette Herrera today who have spoken out against the power plunder, Congress has kept quiet the past 10 years.
The foreign interests behind the Epira should also not escape mention. They have worked through the local oligarchs and the Asian Development Bank (ADB) as the latter attached in 2001 its approval of a $950-million loan to the passage of the said law. A weak and illegal Arroyo government, as well as Congress, was naturally unable to resist the financial and political lifeline held out by the ADB.
But just what is the interest of these groups in instituting such laws and mechanisms that complete the process of privatization?
All the IPPs and distribution companies, and now the transmission grid, the NGCP (a.k.a. National “Greed” Corp. of the Philippines), are indebted to foreign financiers and have foreign partners or principals. Listing in the stock market allows these foreign financial predators to cash-in regularly on their windfall profits.
At the same time, as the nation gets deeper into debt, these vultures will gain more access and control over our strategic energy needs — which is no different from what they have done to our food, water, and health.
There is no solution except for consumers to revolt. Monday, as this column comes out, is another day to register our protest with 10 minutes of lights out against power plunder from 7 to 7:30 p.m. Let’s do this before they ultimately control our entire lives and territory.
(Tune in to Sulo ng Pilipino, Monday, Wednesday, and Friday, 6 to 7 p.m. on 1098AM; watch Politics Today with HTL, Tuesday, 8 to 9 p.m., with replay at 11 p.m., on Global News Network, Destiny Cable Channel 21; visit our blogs, http://newkatipunero.blogspot.com and http://hermantiulaurel.blogspot.com)
Monday, November 8, 2010
Friday, November 5, 2010
Comedic tragedy
DIE HARD III
Herman Tiu Laurel
11/5/2010
Taking some time off writing about the widespread power plunder, I reviewed the other burning issues of the week. From the reactions of our Finance officials to the growing cries of exporters, OFW families, and the BPO (business process outsourcing) community for government intervention for the appreciating peso (and the depreciating dollar); to the Bureau of Internal Revenue (BIR) chief’s “not in our lifetime” comment on eradicating corruption; to the UP Law department versus the Supreme Court (SC) on judicial plagiarism, I only found comedies galore.
We received texts from our volunteer news monitor, Zaida, on an interview Wednesday afternoon by dzRH with National Economic Development Authority (Neda) Chief Cayetano Paderanga, which I translate to English: “Paderanga doesn’t even know a currency war is going on. He doesn’t even see the weakening of the peso! How did this guy get to be Neda chief? He doesn’t even discuss measures to defend the peso like ‘currency controls’ — so dumb.”
A week earlier, at a taping of my cable show with forensic financial auditor Hiro Vaswani, a colleague in the Kilusang Makabansang Ekonomiya (KME) narrated how after a seminar discussion, Paderanga admitted envy of the honest economic talk from nationalists like Hiro — to which Hiro responded with an admonition for Paderanga to simply shut up as he is well rewarded for prevaricating anyway.
Another comedic character is Bangko Sentral ng Pilipinas deputy gov. Diwa Guinigundo who, in response to clamor from excruciatingly suffering exporters, said that the BSP would continue to abide by the “free float” of the peso based on the principle that “the exchange rate reflects market fundamentals.” This, even as the most “free market” fundamentalist of fundamentalists there is, Prof. Victor Abola, already says this about the entry of the peso into the P42 to the dollar territory: “This level of the peso is destructive.”
Simply put, Paderanga and Guinigundo’s reactions are what can be labeled in colloquial Filipino as dedma or patay malisya, i.e. playing dumb. These clowns look like Stan Laurel being bonked on the head with a chamber pot by Oliver Hardy; except that they’re not funny at all since their antics cause so much damage to the nation.
The same is true for the Joan d’ Arc of taxation, BIR Chief Kim Jacinto Henares, who charged to skewer little sidewalk bananaque vendors and jeepney drivers into the tax barbeque. Imagine her stepping up a notch or two on the antics of Aquino III’s financial clowns with a headline-grabbing statement, “Not in our lifetime,” when she referred to the eradication of corruption in her agency.
One needs to ask: Didn’t her boss campaign on that great cause of eradicating corruption, and didn’t she armor up to proclaim her crusade it? Well, it shows that their pontifications are simply laughable.
Moving on to another comedy, this time in the legal circle, we are being made witness to the bitching match between UP Law and the SC over a magistrate’s alleged plagiarism. I just wonder how this is such a big issue when both parties have already figured in greater anomalies that have shaken the nation at its core, without them atoning for their sins of commission or omission.
Remember the blatantly unconstitutional “constructive resignation” of an elected President and the suspension of the brilliant lawyer Alan Paguia for raising the incontrovertible sin of the SC’s partisan political involvement in Edsa II? One can only recall how UP Law and the others sat idly by while these injustices transpired. Can they now expect us to take them seriously, given their past intransigence and the belief of many that the alleged academic theft was committed under the nose of one who is much like his peers?
If only UP Law as well as most other law schools had shown some inclination to help in the people’s struggle, such as upholding public welfare against the privatization of public utilities and resources, and against foreign usurpation of national patrimony, then maybe we can be supportive of them. Frankly, in light of RP’s gargantuan problems, this plagiarism issue is really just a molehill blocking everyone’s view of the crucial issues.
If things continue as they are, only tragedy can befall the nation from such inanities. The failure of our respective government institutions to stabilize the peso at some balanced rate, or stem the speculative dollar inflows via fiscal and financial measures, or reject the level of institutional corruption will result in the collapse of two of the biggest earners for the country, the export and call center industry.
Our domestic economy will also be dealt with a devastating blow as OFW families that are sustaining a great part of domestic consumption will spend much less amid decreasing pesos for their remitted dollars. Corruption in the revenue agencies, meanwhile, will continue to eat into the meager earnings of hardworking entrepreneurs that are keeping the rest of the economy alive. Let’s all put a stop to this comedic tragedy before it’s too late.
(Tune in to Sulo ng Pilipino, Monday, Wednesday and Friday, 6 to 7 p.m. on 1098AM; watch “Fighting Power Plunderers in the House” with Rep. Toby Tiangco, former Mayor Jun Simon, and EmPower’s Maris de la Cruz on Politics Today with HTL, Tuesday, 8 to 9 p.m., with replay at 11 p.m., on Global News Network, Destiny Cable Channel 21; visit our blogs, http://newkatipunero.blogspot.com and http://hermantiulaurel.blogspot.com)
Herman Tiu Laurel
11/5/2010
Taking some time off writing about the widespread power plunder, I reviewed the other burning issues of the week. From the reactions of our Finance officials to the growing cries of exporters, OFW families, and the BPO (business process outsourcing) community for government intervention for the appreciating peso (and the depreciating dollar); to the Bureau of Internal Revenue (BIR) chief’s “not in our lifetime” comment on eradicating corruption; to the UP Law department versus the Supreme Court (SC) on judicial plagiarism, I only found comedies galore.
We received texts from our volunteer news monitor, Zaida, on an interview Wednesday afternoon by dzRH with National Economic Development Authority (Neda) Chief Cayetano Paderanga, which I translate to English: “Paderanga doesn’t even know a currency war is going on. He doesn’t even see the weakening of the peso! How did this guy get to be Neda chief? He doesn’t even discuss measures to defend the peso like ‘currency controls’ — so dumb.”
A week earlier, at a taping of my cable show with forensic financial auditor Hiro Vaswani, a colleague in the Kilusang Makabansang Ekonomiya (KME) narrated how after a seminar discussion, Paderanga admitted envy of the honest economic talk from nationalists like Hiro — to which Hiro responded with an admonition for Paderanga to simply shut up as he is well rewarded for prevaricating anyway.
Another comedic character is Bangko Sentral ng Pilipinas deputy gov. Diwa Guinigundo who, in response to clamor from excruciatingly suffering exporters, said that the BSP would continue to abide by the “free float” of the peso based on the principle that “the exchange rate reflects market fundamentals.” This, even as the most “free market” fundamentalist of fundamentalists there is, Prof. Victor Abola, already says this about the entry of the peso into the P42 to the dollar territory: “This level of the peso is destructive.”
Simply put, Paderanga and Guinigundo’s reactions are what can be labeled in colloquial Filipino as dedma or patay malisya, i.e. playing dumb. These clowns look like Stan Laurel being bonked on the head with a chamber pot by Oliver Hardy; except that they’re not funny at all since their antics cause so much damage to the nation.
The same is true for the Joan d’ Arc of taxation, BIR Chief Kim Jacinto Henares, who charged to skewer little sidewalk bananaque vendors and jeepney drivers into the tax barbeque. Imagine her stepping up a notch or two on the antics of Aquino III’s financial clowns with a headline-grabbing statement, “Not in our lifetime,” when she referred to the eradication of corruption in her agency.
One needs to ask: Didn’t her boss campaign on that great cause of eradicating corruption, and didn’t she armor up to proclaim her crusade it? Well, it shows that their pontifications are simply laughable.
Moving on to another comedy, this time in the legal circle, we are being made witness to the bitching match between UP Law and the SC over a magistrate’s alleged plagiarism. I just wonder how this is such a big issue when both parties have already figured in greater anomalies that have shaken the nation at its core, without them atoning for their sins of commission or omission.
Remember the blatantly unconstitutional “constructive resignation” of an elected President and the suspension of the brilliant lawyer Alan Paguia for raising the incontrovertible sin of the SC’s partisan political involvement in Edsa II? One can only recall how UP Law and the others sat idly by while these injustices transpired. Can they now expect us to take them seriously, given their past intransigence and the belief of many that the alleged academic theft was committed under the nose of one who is much like his peers?
If only UP Law as well as most other law schools had shown some inclination to help in the people’s struggle, such as upholding public welfare against the privatization of public utilities and resources, and against foreign usurpation of national patrimony, then maybe we can be supportive of them. Frankly, in light of RP’s gargantuan problems, this plagiarism issue is really just a molehill blocking everyone’s view of the crucial issues.
If things continue as they are, only tragedy can befall the nation from such inanities. The failure of our respective government institutions to stabilize the peso at some balanced rate, or stem the speculative dollar inflows via fiscal and financial measures, or reject the level of institutional corruption will result in the collapse of two of the biggest earners for the country, the export and call center industry.
Our domestic economy will also be dealt with a devastating blow as OFW families that are sustaining a great part of domestic consumption will spend much less amid decreasing pesos for their remitted dollars. Corruption in the revenue agencies, meanwhile, will continue to eat into the meager earnings of hardworking entrepreneurs that are keeping the rest of the economy alive. Let’s all put a stop to this comedic tragedy before it’s too late.
(Tune in to Sulo ng Pilipino, Monday, Wednesday and Friday, 6 to 7 p.m. on 1098AM; watch “Fighting Power Plunderers in the House” with Rep. Toby Tiangco, former Mayor Jun Simon, and EmPower’s Maris de la Cruz on Politics Today with HTL, Tuesday, 8 to 9 p.m., with replay at 11 p.m., on Global News Network, Destiny Cable Channel 21; visit our blogs, http://newkatipunero.blogspot.com and http://hermantiulaurel.blogspot.com)
Monday, November 1, 2010
Power pirates feeling the heat
DIE HARD III
Herman Tiu Laurel
11/01/2010
The power pirates from government and the private sector are beginning to feel the heat from the people’s rage over their electricity price-gouging. They know that they have already reached the limit of the people’s tolerance of their abuse. The recent notice from the Power Sector Assets and Liabilities Management Corp. (Psalm) of its dropping the P471-billion “universal charge” (UC), consisting of debts and contract cost recoveries of the National Power Corp. (Napocor), is the first sure sign of this.
These so-called “debts” are actually profits that the independent power producers (IPP) raked in from the onerous purchased power agreements (PPA), along with the currency and fuel supply guarantees given out to them by Cory, FVR and Gloria, as well as from the fire sale of low cost Napocor generation assets, such as the privatized hydro and geothermal plants — which could have serviced all the debts and then some if government had retained them.
Of course, we want to bring fair electricity prices to our people that are comparable to other Asian countries, where rates are only one-fourth of what Meralco charges and half of what people in our other provinces pay for. But the universal charge, if imposed, will not only add over one peso more to our already highest power rates in Asia; it will nudge us even closer to the very top worldwide.
The Freedom from Debt Coalition (FDC) has long called for Psalm to drop its bid before the Energy Regulatory Commission (ERC) of laying that P471-billion UC on our backs. It even called on government to conduct a fresh round of review (and renegotiation) of IPP contracts in order for it to rescind the onerous ones. But even as we’re all for FDC’s plea, calling for another review is really redundant and inane.
As the FDC itself is reminded, another government review some years ago already found 35 IPP contracts to be severely disadvantageous to government, which hasn’t been acted upon up to now. The issue therefore isn’t whether these should be reviewed again; but whether Aquino III will act on the conclusions of that first review by renegotiating those PPAs, and sue for damages or compensation for losses incurred by government and power consumers over the decades, including opportunity and interest costs.
The amounts which these IPPs have plundered are so staggering that an honest-to-goodness assessment would compel them to surrender their contracts and return to the state those generating assets, which they got for a song, just to save their necks. But this will require an absolutely heroic political will that is simply not forthcoming from the present dispensation.
All of us should realize that the only source of political will is the same sector that these pirates have apparently been holding by the nose — the people.
Only the power pirates’ fear of a seismic backlash from the people has made them desist (so far) from pushing through with the UC; and only that kind of a backlash to the prevailing set-up of privatized power generation, transmission, and distribution can end the continuing exponential growth of Psalm and the public’s debt.
The idea of floating a “bond” by Psalm, for instance, which is really just issuing new debt papers and creating more utang as government proposed, should be rejected vehemently as it will only worsen the debt problem even more.
The FDC, meanwhile, continues to urge government to “enforce provisions in the IPP contracts” that call for the IPPs to maintain an operational level of readiness at all times in order to prevent unplanned outages that give way to more rate increases at the Wholesale Electricity Spot Market while IPPs that break down still get paid for power that they don’t produce.
One can indeed see the convoluted system, and it’s one that can’t be corrected unless the basic privatized set-up is overturned, i.e. brought back to the system before privatization.
Unfortunately, the present government cannot be expected to even imagine this as it hasn’t shown a heart for real radical change. How can it be in favor of the people when it cannot even temper rate increases in other public services, such as mass transport and toll ways?
Our only recourse then is to go back to the people and help galvanize their raging sentiments into national action.
Last Saturday morning, the anti-ERC, anti-Meralco action alliance held its first consultation. Despite only a day’s notice, a dozen attended; Pete Ilagan of Nasecore and former Mayor Jun Simon said they will attend the next meet. Of significance is the attendance of Kilusang Makabansang Ekonomiya (KME) with Jimmie Regalario and businessman Ricky Angeles. It is a group that represents at least four progressive bishops who I am told also believe in the socialization of the energy sector.
We will be inviting FDC and EmPower for the next meet, as well as others interested to help. (We’ll announce the next venue in our Friday column.)
REMEMBER: Tonight, Monday, Nov. 1, is the start of our “10 Minutes vs Power Pirates” lights out protest that will be held every Monday henceforth, from 7 to 7:10 p.m.
(Tune in to Sulo ng Pilipino, Monday, Wednesday, and Friday, 6 to 7 p.m. on 1098AM; watch “ERC-Meralco Victims: Gising Na!” with FDC, Jimmie Regalario, and Atty. Alan Paguia on Politics Today with HTL, Tuesday, 8 to 9 p.m., with replay at 11 p.m., on Global News Network, Destiny Cable Channel 21; visit our blogs, http://newkatipunero.blogspot.com and http://hermantiulaurel.blogspot.com)
Herman Tiu Laurel
11/01/2010
The power pirates from government and the private sector are beginning to feel the heat from the people’s rage over their electricity price-gouging. They know that they have already reached the limit of the people’s tolerance of their abuse. The recent notice from the Power Sector Assets and Liabilities Management Corp. (Psalm) of its dropping the P471-billion “universal charge” (UC), consisting of debts and contract cost recoveries of the National Power Corp. (Napocor), is the first sure sign of this.
These so-called “debts” are actually profits that the independent power producers (IPP) raked in from the onerous purchased power agreements (PPA), along with the currency and fuel supply guarantees given out to them by Cory, FVR and Gloria, as well as from the fire sale of low cost Napocor generation assets, such as the privatized hydro and geothermal plants — which could have serviced all the debts and then some if government had retained them.
Of course, we want to bring fair electricity prices to our people that are comparable to other Asian countries, where rates are only one-fourth of what Meralco charges and half of what people in our other provinces pay for. But the universal charge, if imposed, will not only add over one peso more to our already highest power rates in Asia; it will nudge us even closer to the very top worldwide.
The Freedom from Debt Coalition (FDC) has long called for Psalm to drop its bid before the Energy Regulatory Commission (ERC) of laying that P471-billion UC on our backs. It even called on government to conduct a fresh round of review (and renegotiation) of IPP contracts in order for it to rescind the onerous ones. But even as we’re all for FDC’s plea, calling for another review is really redundant and inane.
As the FDC itself is reminded, another government review some years ago already found 35 IPP contracts to be severely disadvantageous to government, which hasn’t been acted upon up to now. The issue therefore isn’t whether these should be reviewed again; but whether Aquino III will act on the conclusions of that first review by renegotiating those PPAs, and sue for damages or compensation for losses incurred by government and power consumers over the decades, including opportunity and interest costs.
The amounts which these IPPs have plundered are so staggering that an honest-to-goodness assessment would compel them to surrender their contracts and return to the state those generating assets, which they got for a song, just to save their necks. But this will require an absolutely heroic political will that is simply not forthcoming from the present dispensation.
All of us should realize that the only source of political will is the same sector that these pirates have apparently been holding by the nose — the people.
Only the power pirates’ fear of a seismic backlash from the people has made them desist (so far) from pushing through with the UC; and only that kind of a backlash to the prevailing set-up of privatized power generation, transmission, and distribution can end the continuing exponential growth of Psalm and the public’s debt.
The idea of floating a “bond” by Psalm, for instance, which is really just issuing new debt papers and creating more utang as government proposed, should be rejected vehemently as it will only worsen the debt problem even more.
The FDC, meanwhile, continues to urge government to “enforce provisions in the IPP contracts” that call for the IPPs to maintain an operational level of readiness at all times in order to prevent unplanned outages that give way to more rate increases at the Wholesale Electricity Spot Market while IPPs that break down still get paid for power that they don’t produce.
One can indeed see the convoluted system, and it’s one that can’t be corrected unless the basic privatized set-up is overturned, i.e. brought back to the system before privatization.
Unfortunately, the present government cannot be expected to even imagine this as it hasn’t shown a heart for real radical change. How can it be in favor of the people when it cannot even temper rate increases in other public services, such as mass transport and toll ways?
Our only recourse then is to go back to the people and help galvanize their raging sentiments into national action.
Last Saturday morning, the anti-ERC, anti-Meralco action alliance held its first consultation. Despite only a day’s notice, a dozen attended; Pete Ilagan of Nasecore and former Mayor Jun Simon said they will attend the next meet. Of significance is the attendance of Kilusang Makabansang Ekonomiya (KME) with Jimmie Regalario and businessman Ricky Angeles. It is a group that represents at least four progressive bishops who I am told also believe in the socialization of the energy sector.
We will be inviting FDC and EmPower for the next meet, as well as others interested to help. (We’ll announce the next venue in our Friday column.)
REMEMBER: Tonight, Monday, Nov. 1, is the start of our “10 Minutes vs Power Pirates” lights out protest that will be held every Monday henceforth, from 7 to 7:10 p.m.
(Tune in to Sulo ng Pilipino, Monday, Wednesday, and Friday, 6 to 7 p.m. on 1098AM; watch “ERC-Meralco Victims: Gising Na!” with FDC, Jimmie Regalario, and Atty. Alan Paguia on Politics Today with HTL, Tuesday, 8 to 9 p.m., with replay at 11 p.m., on Global News Network, Destiny Cable Channel 21; visit our blogs, http://newkatipunero.blogspot.com and http://hermantiulaurel.blogspot.com)
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