Meralco: Not the problem but the solution

Meralco is currently embroiled in a controversy over the proposed increase in power generation charges, although sources say the rates are expected to normalize by February. Not many Filipinos, however, are aware that at the end of the day, it’s really all about the law of supply and demand. Maintenance work has forced the shutdown of the Malampaya natural gas field as well as the Sta. Rita and San Lorenzo power facilities which provide about 40 percent of the power needs of Luzon, and where Meralco also sources its power requirements. As a result of the shutdown, Meralco has to buy from the Wholesale Electricity Spot Market (WESM) – a creation of the Electric Power Industry Reform Act or EPIRA Law that is supposed to lower electricity costs – where the rates are ironically much higher.

Meralco chair Manny Pangilinan welcomes the congressional inquiry into the firm’s proposed rate hike because it will give the public an opportunity to better understand the situation. After all, the company aims to be part of the solution – not add to the problem – that a looming energy crisis not only in Luzon, but also in the entire Philippines could bring. 

As explained by power industry observers, Meralco itself will not be increasing its distribution charges. However, since the distribution company has no recourse but to buy power from the WESM where the rates are a lot higher, it has to reflect the higher costs of electricity in the billing charges. If not, the alternative would be to have rotating power interruptions, our source elaborated. This is also one of the reasons why Meralco has decided to take the bull by the horns, so to speak, by going into the power generation business itself so that it is not overly dependent on sellers for its energy requirements.

The company has partnered with the Aboitiz Group for a planned 600-megawatt coal-fired power plant located in Subic, and this has been endorsed by the Energy department because it is critical in averting an impending power shortage in Luzon by 2015 (or even earlier). But this has been derailed by a court ruling invalidating the Environmental Compliance Certificate (ECC) previously granted to the first 300-mw project component – for which the group has filed a motion for reconsideration.

Ever since the group of Manny Pangilinan became the majority shareholder of Meralco, the country’s biggest electricity distribution company, many consumers have noticed the marked improvement in services through a more reliable and stable electricity supply, with upgrades also made on the facilities. In fact, the utility company is embarking on a “smart grid roadmap” via prepaid metering service where advanced digital technology will enable consumers to track their electricity consumption and thereby use energy more efficiently to manage their bills. 

I’m told that Meralco is increasing its capital expenditure by more than 40 percent next year to further improve its distribution capability and to push through with plans to go into power generation precisely to meet increasing energy requirements due to an expanding customer base. Currently, the company serves 22 cities and 89 municipalities covering the whole of Metro Manila and environs, with the number of residential consumers having increased by an average of 3.3 percent in the last five years.

Mar amplifies his sentiments

Interior Secretary Mar Roxas, who is still in the Visayas, texted me clarifying an item in our Babe’s Eye View column last Sunday (“Ping Lacson: Make or break”) where we quoted some sources who said “the President feels indebted to Mar,” a close friend of PNoy, for giving way during the presidential elections in 2010. 

“PNoy doesn’t owe me anything. On the contrary, I am so grateful to him for giving me a chance to continue being useful and of service, thus giving my life more meaning and purpose,” the DILG chief texted.

Aquino allies and some Liberal Party members are insisting that President Noy should endorse somebody who will continue the “straight path” legacy of this administration.

Manila Polo Club in financial straits?

Some members of the Manila Polo Club are wondering about an alleged P50 million loan supposedly incurred by the club’s previous administration, saying that the by-laws specify that any loan undertaken must first be approved by the majority of members during a general assembly meeting. Apparently, the club is in dire financial straits so the management is trying to look for ways to defray the costs by increasing membership dues and imposing “transfer fees” to members who wish to transfer ownership of their shares.

There is also an alleged tax deficiency amounting to P100 million according to an assessment by the Bureau of Internal Revenue, some members claim, adding that they are not happy that share prices are going down by as much as 15 percent. However, many are hoping that this “slump” will just be temporary. In fact, there are some members who are looking at buying additional shares when club share prices start to dip.

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