Consumer group

The LNG facility in Batangas that the joint venture will operate will handle imported LNG, which is a more expensive fuel for power generation.

“Once the merger and acquisition of the LNG [power plants] are completed, this will result in the hiking of electricity rates that will severely affect electricity consumers,” the P4P convener said.

Arances also said LNG is prone to price increases, as it is vulnerable to global market forces, citing the experience in the United States.

“Based on our data, imported LNG will be costlier because there are pass-on charges, including freight costs at dollar rates in world markets. It’s more expensive than coal, so power rates will go up,” he said.

The group also expressed concern over the timing of the joint venture agreement, which came as Meralco awarded 2.4 gigawatts worth of new power supply agreements to two plants owned by its partners in the LNG venture.

Meralco will acquire a 40 percent stake in the Ilijan LNG Power Plant and Excellent Energy Resources LNG Power Plant through the deal, which would effectively make the distribution utility the owner of the power plants.

“In January, Meralco gave away 80 percent of its new power requirements to these two SMC gas plants based on terms that give consumers the short end of the stick,” Arances said.

“Now, we learn that Meralco, all this time, was intending to buy those plants, and would be directly benefiting from expensive costs of fuel passed on to consumers.

This is clearly robbery in broad daylight,” he added.

SMC, Aboitiz and Meralco are also seeking to acquire the adjacent liquefied natural gas import and regasification terminal owned by the Atlantic Gulf & Pacific Company with Linseed Field Power Corp.

According to Arances, these are violative of the intentions of the Electric Power Industry Reform Act to prohibit cross-ownership between generation and distribution sectors and secure competition to ensure least-cost electricity for consumers while guarding against power sector abuses.