Meralco’s new ‘elec-trick’ rates
Herman Tiu Laurel (June 29, 2015)
There may be many issues that are equally important but certainly none more vital to the Philippines’ economic welfare than the World’s highest power rates perpetually being imposed on its people.
The 2016 political arena may have been enlivened by VP Jejomar Binay’s much delayed offensive against the BS Aquino administration. But what could have been an atomic bomb to boost his fortunes was if he had also started lambasting the sky high electricity rates.
Last week, the Manila Electric Co. (Meralco) came up with its new “elec-trick” scheme to ostensibly hoodwink the public into paying for its double “capex” (capital expense) included in its billing to consumers.
The business newspaper, which, like Meralco, belongs to the same financial “investment” group, announced this latest “elec-trick” reverse-psychology gimmick on its Web site. On June 24, 2015 it said, “’Meralco could delay July bills’ … (specifically) the issuance of July power bills for a couple of days as it awaits regulatory approval for its proposed lower distribution tariff…”
That delay has been deliberated planned by the power company to circumvent the consumer advocates and “good” Energy Regulatory Commission (ERC) elements who have been calling on Meralco to account for past capex projects it has yet to fulfill, amounting to tens of billions of pesos.
Meralco obfuscates by propagating misleading news items, like this June 11 piece headlined in many newspapers that claims “Meralco seeks lower interim rate for distribution,” which delighted even our power consumer advocates–until one of our stalwarts, Jojo Borja, visited the ERC and looked into Meralco’s petition.
This “lower interim rate” is actually a P20-billion capex petition for 2016 (which is double of all past years since 2007 of P7 billion to P10 billion a year) without accounting for numerous unfulfilled capex projects promised in Regulatory Periods 3 and 2, the rate setting exercise.
Every four years Meralco is required to justify its rate petitions and undergo a review of what it has really spent on, supposedly conducted, and not done. Consumer advocates attending the ERC hearings now demand this before any new capex is granted.
Meralco has long been getting “provisional” (now “interim”) capex privileges despite failing to show accomplishments on the billions of pesos in supposed improvements.
In the present instance, Meralco is basing its rate petition on the PBR (Performance Based Rate) scheme, which in itself has also been put into question by consumer advocates over the past decade.
The “replacement cost” valuation of Meralco’s assets has raised the company’s asset base from P48 billion in 2006 (under the old RoRB or Return-on-Rate-Base framework) to P96 billion in 2007 by the stroke of a pen–without any additional or new assets.
That is the heart of the PBR scam under the former ERC chairman Rodolfo Albano (who shamelessly wanted his daughter-in-law to replace him), which the current and soon-to-retire chairperson Zenaida Ducut continues to the present day.
The 100-percent increase in asset valuation effectively doubled Meralco’s distribution rate base. After the PBR asset revaluation, Meralco distribution rates rose from P0.70 per kilowatt-hour (kWh) in July 2007 to P1.167/kWh by June 2008. And since Meralco annually claims new capex, its asset base has risen further; by 2011 it rose to P1.6464/kWh.
Between that period and the present with fluctuations in currency and other costs, the rate base declined slightly to the current P1.5562/kWh.
Meralco now claims it is reducing this (out of the goodness of its heart) to P1.3939/kWh but it is, as Jojo Borja explained to us, actually due to Meralco having already been awarded by the ERC billions in “under-recoveries” charged to “elec-tricked” consumers.
Consumer protection crusader Jojo Borja, along with the group United Filipino Consumers and Commuters (UFCC) led by RJ Javellana (whose group has been provided volunteer lawyers to help in filing cases versus Meralco), will be filing a new case to stop this new “elec-trick” gimmick to fast break the unprecedented P20 billion capex for 2016; and escape scrutiny and responsibility for eight years of 100-percent overpriced rate base, as well as 400-percent overpriced power transformers (which also go into Meralco’s asset base) and 900-percent overpriced electric posts.
On the ERC situation, Borja has been giving us good feedback about several new officials in the institution who would like the agency to turn a new leaf. They see the pending early-July retirement of Ducut as an opportunity to install an independent, consumer-sympathetic chairman at the helm. However, presidential adviser and oligarchic factotum Rene Almendras is attempting to insert (illegally) a fellow factotum who is “contained” in the collegial board but who would be used by his Big Business bosses once becoming chairperson.
As it is, the executive director of the ERC is already seen as a factotum of the oligarchs, a situation which the better members of the body are advising the public to neutralize with the appointment of a truly independent chairperson. My consultations with some consumer groups also raised the idea of a Consumers’ Ombudsman, who will duly act on consumer complaints against these abusive and exploitative privatized utilities.
We really have to put a stop to these greedy power oligarchs’ dirty “elec-tricks” if the nation is to survive.
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