Meralco: We may go bankrupt if we absorb all systems losses

MANILA, Philippines – The Manila Electric Co. (Meralco) said yesterday it would go bankrupt if the government requires them to absorb all systems losses.

In an interview at the sidelines of yesterday’s energy forum hosted by the Philippine Chamber of Commerce and Industry (PCCI), Meralco president Jesus Francisco said they are doing their best to bring down the systems losses.

For this year, he said, they expect systems losses to be nine percent, the first time Meralco’s systems losses will fall below the 9.5 percent government-imposed cap.

Francisco said this will enable the Lopez-led power distributor to save P953 million, which they can pass on to consumers.

He said the savings could translate to a reduction of P0.30 per kWh.

Based on the data for the first five months of the year, Francisco said they are on track to meet their target.

For the first half of the year, systems losses are usually high, but these go down towards the last six months of the year, he explained.

He said at present, the average systems loss is on the high side, but measures are in place to pull it down.

In 1996, the government imposed a 9.5 percent cap on systems losses. In 2004, Meralco had P2 billion in losses on their bottom line because of systems losses that they had to absorb. Last year, Meralco absorbed P260 million.

Francisco said this year, the utility firm will not absorb anymore the systems losses should it meet its target.

Christian Monsod, Meralco director, said it is not possible for the company to absorb the entire P16-billion systems losses because the profit of the firm is only P3.6 billion.

Monsod explained that charging systems losses is part of the framework, “and not a single utility distributor in the world absorbs everything.”

He also questioned the position of the Department of Trade and Industry (DTI), which said that only Meralco should absorb systems losses and that the other distribution firms in the country are exempted.

“Why are they (DTI) targeting Meralco? They did not include the other firms because they know all firms will fail,” Monsod said.

He noted that if the Energy Regulatory Commission (ERC) grants the petition of DTI, they might as well liquidate Meralco because the move will wipe out their capital.

Meralco critic Manila Rep. Amado Bagatsing called the Lopez-controlled firm “the largest user of jumpers in the Philippines” for “passing on to its four million customers its more than half-billion-peso power consumption every year.”

“Meralco takes the profit, but passes on to us its losses. To say that that’s unfair is an understatement. They want the fruits, but not the risks,” Bagatsing said.

The administration congressman lamented that the power distribution firm is always “quick” to cutt off power of its poor constituents, even if they “were just late in payments for a few days.”

“Meralco’s free use of electricity is doubly ironic. It does not pay a single centavo for the electricity used by its offices. So, can anyone blame the people for saying that Meralco is the most guilty when it comes to stealing electricity?”

“Insult is added to injury as Meralco collects bill deposits equivalent to two months of electric consumption, but does not apply the deposit to unpaid bills of its customers,” he said.

“That’s why they’re called bill deposits so they may be used in cases wherein consumers are hard-pressed to pay their bills. The deposit is for two months, so at the very least one month should be usable by consumers before Meralco moves to disconnect service,” Bagatsing pointed out.

He said the reference to “jumpers” was made because of Meralco passes on to consumers the cost of the electricity Meralco itself uses, amounting to about half a billion pesos each year. Meralco customers in 2007 paid for its P530-million worth of power consumption.

Bagatsing said he cannot blame his constituents for being disappointed with the Lopezes, “more so with their posturing about their allegedly being a family which honors social and corporate responsibility.”

The Manila congressman has filed a bill in the House seeking to repeal Republic Act 7832 (Anti-Electricity Pilferage Law) that authorized power distributors like Meralco to collect systems loss charge for stolen electricity and electricity lost due to its inefficiency in distributing power.

Bagatsing argued that systems loss is “part and parcel of the risk of doing business in the power distribution sector and that Meralco and the other firms should shoulder it.”

A labor group critical of Meralco earlier described as “pathetic” its decision to make use of its retirees to defend and justify the pension funds it has been giving, which is being shouldered by Meralco customers.

National Labor Union president Dave Diwa said the country’s largest power distribution firm is now “pushing hapless senior citizens to do the fighting for them” after they “hid behind the skirt” of popular actress Judy Ann Santos, who received flak from the public due to TV ads she did on behalf of Meralco.

Meralco, Diwa said, should “stop hiding behind the retirees,” noting that “the lines that Meralco obviously fed its retirees were fallacious since the retirees claimed their pension benefits to be the fruits of their labor.”

He said Meralco retirees can only be entitled to such a claim if they “had contributed to their pension fund through the years.”

“But that they haven’t – not even a single centavo, unlike private and state workers who are entitled to SSS and GSIS pensions, respectively.”

“What’s wrong with Meralco is that its customers are the ones shouldering the pension premiums of current Meralco customers and the pension proceeds of Meralco retirees,” Diwa explained.

He also noted the tendency of the Lopezes to resort to “below-the-belt attacks” on the GSIS, especially its general manager and president Winston Garcia, who was responsible for the series of exposes against Meralco.

“Meralco has cheated in paying its taxes to the BIR, passing P30 billion of its income tax from 1994 to 2002 to us consumers. Second, Meralco has been padding our electric bills with systems loss charges, its own consumption amounting to half a billion pesos a year, its P8-billion annual remuneration package, and its P2.8-billion pension cost,” Diwa said.

He added that Meralco has yet to refund P14 billion of the P30 billion which the Supreme Court ordered to be returned to customers in 2004, and the P21.4 billion more of customers’ meter and bill deposits.   — With Delon Porcalla