The problem of Meralco

In not so many words, this lack of public knowledge encapsulates the current controversies engulfing Lopez-owned Meralco that now finds itself under fire from all sides with accusations being levied on everything from the alleged charging of consumers for "ghost deliveries" of power bought from its affiliates to having the validity of the government takeover during martial law now being raked up in public again.

Most Filipinos are too young to know, for example, that the Meralco they know today is not the same Meralco that was taken over by the government during the martial law regime. At that time the Lopezes sold Meralco to the government, adamantly insisting almost ever since that it was under duress, it was an ailing company.

The pre-martial law Meralco not only distributed electricity to end-users, it was also a power generator in its own right and, consequently, maintained its own transmission network. Just a short while before it was taken over by the government, Meralco was said to be in a ton of debt owing to the ravaging effects of two super typhoons, "Dading" and "Yoling" that ravaged the country and ran right across its service area. To rebuild its infrastructure, Meralco had to borrow money.

While under government-operation, Meralco was obliged to sell its power generating assets still in operation to the National Power Corp., which was given the sole privilege of generating the power generating requirements of the country under its charter then. With the sale of power generation assets came the transfer of loans incurred by Meralco for the generation and transmission side of its business, which has since then become part of the public debt.

What was left then was a distribution business. One that proved to be very profitable owing to an industry practice termed as "asset-based management." Under this practice before the power industry was reformed, a power generating company like Meralco was entitled to a fixed return on its so-called "rate base," the total compilation of its assets whether it was directly related to the power industry or not.

The Lopezes then cannot avoid the impression of some that even if the sale of Meralco was made under duress, the Marcoses still did them a big favor. The martial law government forcibly took over an ailing company and then endowed it with privileges that made it into a very profitable distribution utility that they got back for free when the Aquino administration came into power.

To dispel this notion completely would require Meralco to present it balance sheet at the time of the takeover and at the time it was given back to the Lopezes, if the records still exist after more than two decades. Of no help at all to Meralco is the explanation of Senator Joker Arroyo, then Aquino’s executive secretary, that the government gave Meralco back to the Lopezes for free since it was forcibly taken over in the first place.

If that were the case, why are we still litigating the fate of more than 400 Marcos crony firms with the Sandiganbayan? Why did the Aquino administration simply not decide which among all the crony firms were ill-gotten or not and then do the right thing? It could have, since it started out as a "revolutionary government."

Meralco’s business is definitely a complex endeavor and one that affects more than a quarter of all Filipinos who happen to live in its service area. It is not easy to understand the inner workings of Meralco but it needs to understand that it must actively involve its customers since hey are legitimate stake holders of the enterprise. There is more to just being a publicly-listed company than meeting up with stock analysts and investors. That is why they have their problems right now.