Joker warns vs Napocor rate cut

MANILA, Philippines – Sen. Joker Arroyo warned the government yesterday against cutting the rates charged by the National Power Corp. (Napocor) to the Manila Electric Co. (Meralco), saying it might again leave the state-owned power firm in deep financial trouble.

President Arroyo earlier ordered Napocor to cut by half its charges to Meralco, apparently to pressure the latter into lowering electricity rates.

She also directed the Department of Trade and Industry to file four petitions with the Energy Regulatory Commission (ERC), all aimed at pulling down Meralco rates.

The four petitions are as follows: to enjoin Meralco from buying electricity from the Wholesale Electricity Spot Market during peak hours; ensure preferential treatment for households and power-intensive industries in the distribution of TransCo (National Transmission Corp.) charges; to prohibit Meralco from charging its system loss as a separate item; and to require Meralco to charge the same rates as the Visayan Electric Co. (VECO), Cebu Electric Co. (CEBECO) or Davao Light.

Senator Arroyo said he finds the President’s order to Napocor disturbing. “This was done in 2003 and was corrected in 2005 because Napocor lost big time and the public in the end had to shoulder the cost,” he said over dwIZ.

He said there could be other ways to make Meralco lower its rates. “I think this can be done through dialogues,” he said.

He also expressed support for amendments to the Electric Power Industry Reform Act as proposed by Sen. Juan Ponce Enrile. The EPIRA has not been successful in lowering power rates.

Enrile seeks to bring down the cost of electricity by removing certain charges that the EPIRA allows to be passed on to consumers.

Under Senate Bill 2121, Enrile said the law failed to check market abuse or to make the review process for power contracts transparent.

He said consumers should only be required to pay for actual consumption, while industry players should shoulder the risk costs in every business venture.

Two of the extraneous charges Enrile wants power-generating companies to assume and not pass on to end users are: the cost of unused power, brought about by “stranded debts and contract costs” (debts and other liabilities) of Napocor and the “stranded contract costs” (fixed contract price regardless of actual consumption) of distribution utilities through the so-called universal charge; and the cost of royalty on energy from indigenous or renewable sources also through the universal charge.

To further lower the cost of electricity, Enrile also wants franchise taxes imposed by local government units to “be limited only to the distribution and wheeling charges earned by the distribution utilities, and not on... gross receipts.”

The bill also provides for public hearings – not public consultations where resource persons and witnesses are not bound by oath and have limited accountability – on applications for rate increases.

To ensure real competition, Enrile also proposes lower requirements for the privatization of generation assets from 70 percent to 50 percent as well as lower requirements for transfer of management and control of total energy output of power plants under contract with Napocor to independent power producers, also from 70 percent to 50 percent.

Enrile said his was the only negative vote for EPIRA when it was passed into law in 2001. He said that while he believed in restructuring the industry, encouraging competition, privatization, and effective regulation, he said he did not think the EPIRA would be able to accomplish these.

“It was my firm belief that the EPIRA’s promised benefit of ensuring the quality and reliability of the supply of electricity that would translate to lower consumption costs could not be achieved, thus making this promise illusory,” he said. 

Meanwhile, Malacañang said it is confident of a favorable decision of the ERC on its petitions to compel Meralco to lower electricity rates.

Presidential spokesman Ignacio Bunye said the government wants Meralco rates to be as low as the rates charged by distribution firms outside Metro Manila.

“Other power distributors in the Visayas and Mindanao have demonstrated that they can charge rates that are lower than Meralco’s,” Bunye said in Filipino.

Bunye said the President’s actions concerning power were all in the interest of consumers who are complaining about the high rates of Meralco.

He also allayed fears of bigger financial trouble for Napocor as a result of Mrs. Arroyo’s order.

“As to the possible effect on the financial standing of Napocor, that remains to be seen,” Bunye said. - With Marvin Sy