DOJ, DOE probe ‘collusion’

MANILA, Philippines - Two government agencies are now looking into allegations of collusion among power plant operators that implemented simultaneous shutdowns, triggering a hefty increase in electricity rates.

The Department of Justice (DOJ) has started its probe while a tripartite team under the Department of Energy (DOE) is investigating the possible collusion among power producers that supposedly forced distributors to increase their rates.

Justice Secretary Leila de Lima yesterday said she had directed the DOJ’s office for competition (OFC) to conduct the probe on alleged collusion involving the simultaneous shutdown of power plants, which supposedly forced the Manila Electric Co. (Meralco) to hike electricity rates by more than P4 per kilowatt-hour.

Energy Secretary Carlos Jericho Petilla also said a tripartite team is now investigating the alleged collusion.

Under Executive Order 45, the DOJ was also designated as the “competition authority.”

The DOJ-OFC is tasked to investigate all cases involving violations of competition laws and prosecute violators to prevent, restrain and punish monopolization, cartels and combinations in restraint of trade.

De Lima said she was also advised about the intended filing today by certain groups of a formal complaint demanding that the OFC investigate the matter.

“As soon as I receive such complaint, I will refer the same to OFC for immediate fact-finding investigation,” she said.

De Lima said a fact-finding panel would be created for this purpose.

Militant party-list group Bayan Muna, along with some consumer groups, is set to go to court this week to stop Meralco’s P4.15-per-kwh rate increase.

A spokesman for the group said they would try to file the petition for a temporary restraining order (TRO) today or tomorrow.

Bayan Muna Rep. Carlos Zarate said one of the grounds for the petition would be the alleged collusion among certain power producers, which contributed largely to the unprecedented increase in the cost of electricity.

He said Meralco should be stopped from collecting the increase while concerned government agencies, the Senate, and the House of Representatives are looking into the alleged collusion.

Congress has joined the DOE in conducting separate probes on the power rate adjustment approved by the Energy Regulatory Commission (ERC).

Meralco justified the increase, citing the generation cost for its steep adjustment in electricity rates of P4.15 per kwh.

President Aquino, however, said he doubted the validity of this justification.

Aquino had ordered the DOE to investigate the issue, saying a possible anomaly or oversight could inflict “injury to the economy.”

Press Secretary Herminio Coloma said the allegations of collusion between independent power producers and distributors are “serious.”

However, Coloma said there must be clear and convincing evidence of such, in order for the government to protect the end consumers.

“These allegations are serious, and we need concrete evidence because those who have joined the industry have put their huge investments at stake in rendering service (by way of utilities) to the public,” Coloma said.

“And the government is also serious in giving protection to our consumers. We will not allow them to take advantage of the situation,” he said.

Lawmakers earlier said the deliberate disruption of power plant operations is tantamount to economic sabotage.

But in case the DOE sees something wrong with the ERC’s action or inaction on the rate hike, Aquino said they would have to turn to Congress for help in addressing the matter. 

De Lima, on the other hand, said she would order the OFC to immediately complete the probe and submit its report and recommendation by next month.

Once possible violations of relevant laws are found, the DOJ will then conduct preliminary investigation on criminal charges against responsible corporate officers and government officials, she warned.

Petilla, meanwhile, said the tripartite probe would focus on alleged collusion among power plant operators that implemented the so-called emergency shutdowns.

He said the shutdowns could have triggered the artificial shortage in power supply to drive prices up at the Wholesale Electricity Spot Market (WESM), the country’s trading floor for electricity.

“Investigation is still ongoing but I cannot give details yet considering it’s a tripartite investigation involving the Philippine Electricity Market Corp. (PEMC) and ERC and not just the DOE,” Petilla said yesterday.

He said the tripartite team is expected to complete its investigation by Dec. 30.

“Dec. 30 is the date of fact-finding results. No penalty because we really have no conclusion yet at this point,” Petilla said.

Coloma said the Electric Power Industry Reform Act (EPIRA) does not give distributors like Meralco blanket authority to raise power rates with impunity.

“We will not allow any unjustified and unreasonable increases, or make them (distributors) take advantage of the situation. That is government’s way of protecting the interests of the consuming public,” he said.

Bearing the brunt

In the meantime, consumers are bearing the brunt of higher electricity rates for December.

One consumer residing in Taguig City with a monthly consumption of 156 kilowatt-hours found her December electricity bill at P2,000 or higher by P800 from a November billing of P1,200 of slightly lower consumption.

Another consumer residing in Pasig with a consumption of more than 300 kwh found her bill higher by P2,000 or P7,000 from roughly P5,000 last month.

A Quezon City resident with a consumption of about 241 kwh, meanwhile, found her bill at P2,800 from only about P1,900 last month or an increase roughly P900.

Not all of Meralco’s more than five million consumers have received their electricity statements for December but Meralco had already warned of record high rates given the one-month shutdown of the Malampaya gas field in Palawan.

The shutdown prompted affected power plant operators to use the more expensive diesel in running their plants.

The three plants sourcing power from Malampaya are the 1,200-megawatt Ilijan combined cycle natural gas plant owned by Kepco Philippines Corp. and the 1,000-MW Sta. Rita and 500-MW San Lorenzo natural gas facilities owned by First Gen Corp. of the Lopez group.

Malampaya supplies electricity to three natural gas power plants in Luzon, accounting for 2,700 MW. In all, these power plants provide 40 percent of the electricity needs of Luzon.

As cleared by the ERC, Meralco has said that electricity rates will increase by at least P481 in December, based on the staggered computation of the power distributor.

The total increase in electricity rates for a 200 kilowatt-hour household, which is the typical residential user, is P2.41 per kwh, according to Larry Fernandez, head of utility economics at Meralco.

The increase could be higher for residential users with consumption bigger than 200 kwh.

Fernandez said the P2.41 per kwh is composed of the P2 generation charge, the P0.05 transmission charge, taxes of P0.17 and other charges of P0.20, Fernandez also said.

The P2 per kwh generation charge in December is based on the staggered billing scheme approved by the ERC last Monday to implement the P3.44 per kwh increase in Meralco’s generation charge for December.

The ERC has said Meralco may collect the P3.44 per kwh generation charge in three installments: P2 per in December, P1 in February and P0.44 per kwh in March.

Meralco officials said that aside from the Malampaya maintenance shutdown, the situation was also aggravated by emergency outages of several plants, which led to tighter supply and higher prices at the WESM.

In a presentation in Congress last week, Meralco said the increase from the use of liquid fuel translates to just over P1.04 per kwh versus the P2.38 per kwh increase coming from WESM.

“Thus, If Meralco chose not to dispatch First Gas power plants using liquid fuel, consumers will end up paying more,” a source from the Lopez Group said.

The same source said First Gen’s procurement of liquid fuel goes through a competitive bidding. – With Delon Porcalla, Jess Diaz, Christina Mendez