BY JP LOPEZ

WINSTON GARCIA, president and general manager of the Government Service Insurance System, yesterday sought an expanded probe into "sweetheart deals" between Manila Electric Co (Meralco) and its sister companies, this time into alleged discounts to the latter.

Garcia said the probe should look into the tax payments made by Meralco over electricity it itself used and electricity it sold to sister companies, among them the broadcast giant ABS-CBN and telecom provider Bayantel.

"Preferential treatment and discounts that may have been given to sister companies of Meralco, if true, would translate to lost income for the company and Meralco investors outside of the Lopez group," Garcia said.

"With GSIS members and pensioners having a 33 percent stake in Meralco, I want to make sure that GSIS is not shortchanged by sweetheart deals among Meralco and its sister companies," he added.

Earlier, Garcia said Meralco favored Lopez-owned generating plants, resulting in higher power rates.

He said Meralco should be investigated in the light of admissions by its officials that the power utility firm has been passing on to consumers the cost of 72 million kilowatts (kWh) a year it used for its operations.

Meralco officials said the 72 million kWh of power is included in the "systems loss" charge imposed on consumers.

Systems loss is that portion of electricity which is pilfered or is lost during transmission.

In Monday’s joint congressional Power Commission (Powercom) hearing, Ireno Acuna, Meralco senior executive vice president, admitted to Sen. Juan Ponce Enrile that the power distributing firm has been passing on to consumers the cost of its electricity usage in its offices and facilities.

"The only question now is how much is Meralco saddling consumers with electricity it itself uses. GSIS wants its Meralco investments to grow, but not at the expense of the public," Garcia said.

"I’d like to reiterate that the GSIS is willing to go to court to have the records of Meralco opened and to have those responsible for its mismanagement punished," he said.

But Sen. Joker Arroyo questioned the motive of Garcia.

Arroyo said the GSIS, despite the denial issued by Garcia, is clearly out to take over Meralco and this would become clear when the power distribution firm holds its yearly stockholders’ meeting on May 27.

"I think the GSIS really wants to get hold of Meralco because how can they effect the change? Despite what Garcia said that they don’t really want to control it, what’s the fight all about? So the fight to have more shares and to have more voting rights, the net effect of that eventually is to have control. I’m not saying that it’s not good or it is bad but ultimately, that’s the objective," he said.

"All these talks about power rates would be useless until we know the results on May 27. After May 27 we can talk about power because then we’ll know who would be running Meralco," Arroyo said.

"If they (Garcia) gain control, it’s their responsibility to bring down power rates. If they cannot do that, what’s their use? Why should we allow them to sit there?" he said.

A WORD OF CAUTION

Arroyo and Senators Francis Escudero and Mar Roxas cautioned those toying with the idea of breaking up Meralco into several franchise companies.

"You can only revoke a franchise if there’s a violation of the terms of the franchise," said Arroyo, who sponsored the last renewal of Meralco’s 25-year franchise.

"If there’s no violation of terms of franchise, it’s a little difficult," he added.

Roxas said: "I don’t think it’s a good idea. It will break up the coordination on the existing line or system. We should maintain having Meralco covering one franchise area and merely work on improving its service and cost efficiency."

Escudero said that in the case of Metropolitan Waterworks Sewerage System, the government had to re-acquire one of the two concessionaires as it initially proved to be ineffective in delivering services.

Sen. Miriam Defensor-Santiago, energy committee chair and co-chair in Powercom, said they have tapped the services of some technical experts from the University of the Philippines to determine which among Meralco, National Power Corp. (Napcor) and independent power producers (IPPs) charge high power rates or whether they engage in price manipulation.

"We want to find out how much these IPPs really charge Meralco. We want to ascertain if there was price manipulation through acquisition of supply during peak and off-peak hours," she said.

‘NOT VAT-ABLE’

At the hearing of the House committee on energy chaired by Pampanga Rep. Mikey Arroyo, congressmen said imposing expanded value added tax on "systems loss" and on power sourced from renewable energy adds to Meralco’s already soaring electricity rates.

Rep. Luis Villafuerte (Camarines Sur) said systems loss is not a "VAT-able" item.

Villafuerte said charging a 12 percent tax on systems loss is a double whammy for consumers.

"Bakit? Nagbebenta ba ang Meralco ng pilferage?" he said.

"There’s confusion in the public. They think that all these items in their bill should be charged 12 percent EVAT. That’s a misleading assumption," he said.

Rep. Pedro Romualdo (Lakas, Camiguin), chair of the committee on good government, said Meralco should also shed light on reports that it is charging EVAT even for electricity from plants using renewable energy.

PART OF SERVICE FEE

James Roldan, BIR assistant commissioner for legal service, said while Villafuerte was correct in saying that the systems loss is not a commodity to be taxed, "it is part of the service fee of Meralco."

"There is actually a sale of service of Meralco," he said. "It is still part of their distribution charge."

Rep. Ernesto Pablo (APEC party list) said the systems loss passed on to consumers is not 83 centavos per kilowatt hour but P1.01.

Pablo, who represents electric cooperatives, said he is for the suspension of VAT on power.

Romualdo said VAT could have bloated a portion of the amount Meralco is charging its consumers by 23 to 39 percent.

‘QUESTIONABLE SYSTEM’

"Meralco owes an explanation to consumers. They have to explain this questionable system at the height of high costs of basic commodities and petroleum products," he said.

He said Meralco should declare in its billing the large portion of power supply representing VAT-free renewable energy that it buys from the Napocor and other IPPs.

Of the power being distributed by Meralco, an average 25 percent is sourced from power plants using renewable energy.

Romualdo said billing documents of Napocor to Meralco showed that from Feb. 1 to July 10, 2006, the time Napocor started charging 12 percent EVAT, from 24.03 percent to 39.09 percent of supply was sourced from plants run on renewable energy.

CLASS SUIT

Chief presidential legal counsel Sergio Antonio Apostol said the public may consider filing a class suit against Meralco.

He recalled that the Supreme Court in 2003 ordered Meralco to refund P30 billion to its customers, representing income tax charges it had incorporated in its basic rates since 1994.

Caloocan Bishop Deogracias Iñiguez said he supports the transfer of ownership of Meralco from the private to the public sector.