DOE eyes collusion in power rate hike
ENERGY OFfiCIALS AND SENATORS ARE LOOKING INTO POSSIBLE COLLUSION AMONG OPERATORS OF POWER PLANTS TO CREATE AN ARTIfiCIAL POWER SHORTAGE AND JUSTIFY A MAJOR INCREASE IN ELECTRICITY RATES.
The po er operators came under suspicion Eecause of the simultaneous shutdo n of several Ne po er plants, hich coincided ith the scheduled maintenance shutdo n of the Malampa a natural gas facilit in Pala an.
The shutdo ns ere cited as justification for the Manila (lectric o. Meralco ’s decision to raise its rates E P . per Nilo att-hour.
Meralco argued it should not Ee Elamed for charging higher rates since it is the adjustment in the cost of generating po er E producers that the compan is passing on to its five million customers.
epartment of ( nerg O( 8ndersecretar Raul guilos esterda told the House committee on energ that at least eight po er plants ent on an unscheduled shutdo n last month.
N The did it simultaneousl . It’s unEelievaEle . There is possiEle collusion, guilos said.
Sen. Sergio Osmexa III, chairman of the Senate energ committee, said an inTuir should focus on the forced shutdo n of po er facilities.
:h is it there are man plants hich Eogged do n This is so coincidental, Osmexa said.
Aguilos said power producers are supposed to schedule their shutdowns and coordinate these with the DOE so that they do not shut off their plants at the same time and create an artificial shortage of electricity.
He told the committee chaired by Oriental Mindoro Rep. Reynaldo Umali that Energy Secretary Jericho Petilla had asked producers to explain the unplanned shutdowns.
He said the plants that have suspended operations are in Sual in Pangasinan, Pagbilao in uezon, and in Batangas, Zambales, and Bataan.
“We intend to finish the investigation in two weeks,” he said, adding the Energy Regulatory Commission (ERC) would cooperate in the inquiry.
He said power plants that remained operating and whose owners may be the same as those that went on unplanned maintenance may be the “culprits” behind the huge spike in price.
Meralco officials led by chief operating officer Oscar Reyes informed the committee that the total adjustment for their five million customers in Metro Manila and neighboring provinces would be more than P4 per kwh, including taxes.
Reyes said half of Meralco’s electricity requirements come from three plants that are run by natural gas from Malampaya.
Since the Malampaya source was not available due to annual maintenance, the plants had to be powered by “more expensive liquid fuel like diesel oil” so they could continue supplying Meralco, he said.
He said they obtained 11.5 percent of their supply from the open market known as the wholesale electricity spot market (WESM).
Reyes said that due to the simultaneous shutdowns, WESM prices shot up from about P12 to P33.22 per kwh, the price at which Meralco bought from the open market last month.
He said their P33.22-per-kwh spot buying price accounts for 70 percent of the P3.44 rate increase that the ERC has approved to be passed on to customers in three tranches starting this month.
Meralco vice president Ivanna dela Peña said the P3.44 represents only the increased cost of generation.
She said taxes would go up by 17 centavos and transmission charge by four centavos.
There would also be a corresponding increase in systems loss charge (for electricity stolen or lost from transmission lines) but not in the distribution charge, she said.
Responding to a question from Rep. Elpidio Barzaga Jr. of Dasmariñas City, Cavite, Reyes said that as approved by ERC, P2 of the P3.44 generation cost adjustment would be billed this month, P1 in February, and 44 centavos in March.
Asked if the adjustments would be cumulative, the Meralco chief gave a positive answer.
He said the total adjustment would disappear from Meralco bills starting in April.
“After March, is it true that you are seeking another increase for interests on loans?” Barzaga asked. “We will have to study that,” Reyes said. Manila Rep. Amado Bagatsing and Umali suggested that P10 billion from the Malampaya fund be used to subsidize electricity users.
Barzaga and other committee members also suggested that Meralco postpone collecting the adjustment until January.
But ERC Commissioner Josefina Asirit, taking up the cudgels for Meralco, said the power distributor in fact did not have to seek ERC approval for a staggered collection since “they are allowed to automatically pass on increases in generation cost.”
She said the suggestion would also just mean delaying passing on the P3.44 adjustment to customers.
ERC chairperson Zenaida Ducut, who is facing graft charges in connection with alleged misuse of pork barrel funds, was a no-show at the hearing.
Cut WESM price
At the Senate, Osmeña said his committee has started to gather reports from power plant officials and concerned sectors as part of the coming probe.
He also renewed his proposal for WESM to cut its selling price, which goes up to as much as P60 per kwh.
“We should bring that down but we should find out if there was collusion (among power plants) there is suspicion because there is too much coincidence,” Osmeña added.
Power providers get their supply from WESM during supply shortage.
Sen. Ralph Recto expressed support for a Senate inquiry, adding that Congress should also look for ways to cushion the impact of high electricity prices on ordinary Filipinos.
“These are real life, real problems high electric bills, rate increase of LRT and MRT The inquiries will be good for the people since the price hike will involve about P4 per kwh,” Recto said.
Recto also said he is for expanding the regulatory powers of the ERC. “Why is it that the Malampaya plant and other power plants had their maintenance shutdown almost at the same time, which caused the hike in the prices at WESM?”
Recto said Meralco gets about 50 percent of its energy requirement from the Malampaya plant while about 10 to 15 percent is procured from the WESM markets.
Sen. Antonio Trillanes IV, for his part, has filed Senate Resolution No. 411 calling for an investigation into the record increase in electricity cost.
Trillanes said it is the duty of the Senate to help protect public interest and safeguard the rights of consumers against unjust financial burden and abuse of the law, especially at a time when the country is still reeling from a string of natural and man-made disasters.
He said he wants the Senate committee on energy and other appropriate committees to conduct the inquiry.
Trillanes also said there is a need to review Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA) law, which was enacted in 2001 as part of reforms in the energy sector, including making electricity supply affordable and stable.
He said the impending increase in the generation cost of Meralco runs counter to the purpose of EPIRA.
He also voiced suspicion of collusion among power plant operators to manipulate power supply and prices.
Tap Malampaya funds
Senate President Franklin Drilon, for his part, said he is in favor of looking into proposals to use the Malampaya funds as subsidy to the power sector.
“We have to amend the law in order to allow the subsidy in order to prevent this hike,” Drilon said.
He said subsidizing power cost would help the public especially at a time when the country is still smarting over the devastation of Super Typhoon Yolanda.
He said it is not too late for the government to intervene to stave off further spikes in electricity costs.
But for Recto, tapping the Malampaya funds may run into legal trouble. He reminded his colleagues that the Supreme Court had ruled that the funds should be used exclusively for energy development projects.
“Right now, I read the SC decision, it would appear that you could only use Malampaya funds for resource generation and energy exploration. They might not be able to use Malampaya for this purpose, unless you amend the law,” Recto said.
Recto earlier filed a bill calling for an amendment to a Marcos-era Presidential Decree 910 on the use of Malampaya funds.
Based on PD 910, the Malampaya fund may be used for power development “and for such other purposes as may be hereafter directed by the President.”
Recto said the president should not be given the power to dictate how to use the multibillion-peso fund.
“You are collecting P26 billion a year or about P260 billion in 10 years. If they want to amend this, we can do it,” Recto said.
Protest
Meanwhile, a party-list organization yesterday started an online petition asking Filipinos to turn their lights off for 30 minutes on Friday beginning at 6 p.m. to protest the impending huge power rate hike.
The petition – filed by Kabataan party-list through online platform change.org (http://chn.ge/1djTAkv) – said the hike, considered the highest in history, “is patently unjust as (Meralco) charges exorbitant rates to consumers to pass on added costs for generating energy.”
“A single act of dissent can spark a great upheaval,” said the party-list.
The group slammed the government for its “passive approval of the power rate hike,” saying it shows officials’ insensitivity to the plight of ordinary Filipinos.
“It also comes at a time when the nation is still recovering from the onslaught of Typhoon Yolanda, with some families not even having decent meals days before Christmas,” it added.
“At a time when big business and big government connive to inflict more harm to the Filipino people, we cannot remain blinded by their flashy lies,” the group said.