AS if to divert public attention from the crippling rice
shortage, President Arroyo last week declared that she will force Meralco to
reduce the rates it charges its customers in Metro Manila and the entire Luzon.
The purpose is noble. Consumers need a relief from high costs
of electricity.
The objective, however, is not legally possible. It is an act
of confiscation reasonably similar to what Ferdinand Marcos did to the monopoly
of electricity distribution.
There is a petition filed with the Energy Regulatory Board to
reduce the rates. The first move of the Arroyo regime was to cut by about one
half the charges Napocor makes to Meralco. Ergo, Meralco should have no reason
not to cut its rates down.
The effect of this plan is to legislate losses for both
Napocor and Meralco. The financial obligations of Napocor have been taken over
by the state to give a clean balance sheet, a fresh start.
The government also created the PSALM to sell all the power
plants of Napocor. Clearly, the intention is to pursue the government’s
privatization program.
Here comes President Arroyo practically threatening to take
over Meralco if it does not reduce its rates following the reduction she ordered
for Napocor.
Meralco is a public corporation listed in the Philippine
Stock Exchange. It has several thousand stockholders. What benefits or dividends
can they expect if the company is forced to incur heavy losses by operation of
law? This matter is the first consideration in the effort to require or force
Meralco to cut its rates.
The operative factor in the matter of power generation is the
reality that the Philippines does not produce enough of it. We import crude oil
for refinery, bunker fuel and coal, mostly from Australia, for the generating
planets.
But then the President wondered aloud why Meralco charges
Luzon and Metro Manila what she calls excessive rates when the plants in the
area uses only 1 per cent imported crude. This is false.
If it were true, the statement of the President clearly means
that Luzon and Metro Manila deliver electricity to Meralco from plants that
hardly use imported crude. If that is the case, then the electricity is
generated by hydro-power and geothermal steam.
But we do not know the costs of generating power from these
two sources. The government has not made any study or required the plants to
submit its costs and prices to the government to make an intelligent judgment on
who is abusing the consumer or the non-crude generating plants.
Without the benefit of having this information, the decision
to force Meralco to reduce the rates is in effect confiscatory, arbitrary and
has no legal leg to support it.
It is funny that the President summoned business groups, most
particularly the docile members of the Federation of Filipino-Chinese Chambers
of Commerce and Industry to rally behind her plan.
This gives her away as not having the valid legal and
economic reasons to force Meralco to cut down its rates.
The petition filed with the ERB is a legal question. The
presumption is the agency will rule on the dispute based on the weakness or
strength of the arguments of the protagonists.
A hearing room teeming with people supporting the reduction
of the rate should not affect the correct interpretation of the applicable laws
by the ERB.
The call for support is actually a protest rally against
Meralco. The crowd should be dispersed by the police because it threatens the
ERB to approve what President Arroyo wants.
The plan will definitely sink Napocor back into the quagmire
of huge debts. It will legislate losses for the state power agency and the
monopolistic distributor, Meralco.
The privatization of Meralco will never happen. Juxtaposed to
this, Meralco may well end up being owned by the state. The state is the worst
businessman in the world. That is why a privatization program is necessary to
drive government away from business and save on taxpayers’ money.
Meralco should not be sacrificed for the inefficiency and
lack of foresight of the government.
The power shortage in Luzon would not have come to pass if
the governments after Ferdinand Marcos had completed the 600MW nuclear power
plant in Bataan. That capacity may be just about enough for Metro Manila and
Luzon.
Dependence on imported crude and coal would have been
reduced. Since the main raw material for nuclear electricity is remarkably
cheaper, the Bataan Nuclear Power Plant would have assured us of adequate
electricity at cheaper costs.
The Arroyo government has been in power for seven years. It
has not invited anybody or any group to produce electricity from geothermal
steam which is abundant in the Philippines.
Costs of electricity in the Philippines are excessive by
choice. The government chose to keep power high by mere inaction. Now, with its
back against the wall and prompted by the necessity of diverting public
attention from the acute rice shortage, which, like electricity, also occurs by
choice, it is now legislating Napocor and Meralco into incurring huge losses.
The politics of making consumers happy is the top agenda of
all administrations. Little is appreciated about the fact that in the end, it is
the same consumers who pay for the political advantage of people in government.
I must repeat that consumer subsidy has never worked
anywhere. It increases unemployment and reduces production. It denies business
the profits that can create more jobs and raise productivity.
