Loren says Meralco rate
hike barred by SC ruling

SEN. Loren Legarda yesterday asked the Energy Regulatory Commission to review its decision in allowing Manila Electric Co. (Meralco) to increase its rates by P0.14 per kilowatt hour (kWh) effective next month.

She said Meralco cannot be allowed to raise its power rates anew without first justifying its provisional rate increase of 12 centavos per kWh in 2003 as ordered by the Supreme Court.

Under the ERC decision, residential consumers using up to 200 kilowatt-hours of power monthly would be paying 77.84 centavos per kWh or 36 percent more, as distribution charges.

The increase in distribution charges for other consumers is 31.5 percent to 1.1522 pesos for 301-400 kWh monthly use, 29 percent to 1.5046 pesos for 301-400 kWh, and 27.5 percent to 2.1186 pesos for 401 kWh and above.

Winston Garcia, GSIS president and general manager, said it is "criminal" for the Lopez-controlled Meralco to increase its distribution rate by 14 centavos per kilowatt hour.

"Considering that Meralco’s rates are 30 percent higher than most other local electric distributors, this increase is unconscionable and indefensible – criminal even," he said.

He asked ERC to reconsider its decision.

Garcia said ERC may be held accountable before the Ombudsman for dereliction of its duty to promote the interest of electric consumers and to protect them against unreasonable power rate hikes.

"We cannot understand why Meralco had been granted further rate increase by ERC when it already charges the highest in the country," he said.

Garcia also sought a review by the ERC of the rentals paid by Meralco to its independent power producers, which are also Lopez-owned, to the tune of P20 billion a year.

"These rentals are illegal, oppressive, unconscionable, and in violation of the very franchise of Meralco, which compels it to distribute power to its captive market in the least cost manner," said Garcia.

Garcia said the impact of Meralco’s power hike will not be offset by another order of the ERC for Meralco to refund its customers P3.9 billion in overcharges. "Meralco customers will just be fried in their own fat."

"This because the 14.6-centavo refund will only be for one year, while Meralco’s 14-centavo distribution rate hike will be forever," he stressed.

Garcia said the senators’ silence on the rate hike is deafening.

"I’d like to think they are busy with some other equally important things but what can be more pressing and what can be more needful of our senators’ attention than this injustice being foisted by Meralco on our people?"

Garcia said that people he had talked to had surmised that the Lopezes’ media network, especially with the 2010 elections just around the corner, may be intimidating politicians enough to keep them mum.

"The Lopezes may think of themselves as untouchables if this goes on," he said.

Elpi Cuna, Meralco vice president for corporate communications, twitted Garcia for criticizing the power utility’s adherence to Performance Based Regulation.

"Garcia’s slip is showing. Obviously, he has absolutely no understanding on how the power sector works. I believe that as a director of Meralco he should know that it has been more than five years since Meralco was last allowed to increase its distribution rates. The last time Meralco had an adjustment was in June 2003 when the bill was unbundled," Cuna said.

"What is also important is that this signals stability in the regulatory process and a drive towards efficiency. It is a fact that all private DUs (distribution units) are mandated to enter PBR."

"With this shift in the distribution rate-setting methodology, consumers can likewise expect higher levels of service as PBR incorporates incentive and penalty mechanisms related to the electric and customer service performance of distributors."

Cuna also said that in addition to the benefits distribution utilities and electricity consumers may reap from this shift to PBR, this would likewise give the DUs a more stable and predictable regulatory environment that can eventually lead to continued investments in the distribution sector.

"Is Mr. Garcia suggesting that the company where he heavily invested the hard earned money of pensioners not be viable financially? Is he an investor or a fake crusader? Even if it is not his own money, does he want their investment in Meralco that he is managing for the government workers go the way of the reported failed GSIS investments in the GIF. I hope he is not using the entry of Meralco into PBR as a smokescreen for the various issues he is now facing and must explain to the public."

Cuna also chided Garcia for saying that Meralco rates are the highest in the country. "By simply going to the ERC, he could have found out that, unlike other electric distributors in the Philippines, Meralco’s distribution rates were designed by the government to favor small consumers such that small consumers are charged lower distribution rates, while those consuming more are charged higher rates. It is called socialized pricing. He is also dead wrong in saying that Meralco’s rates are the highest in the country. There are at least 37 other distributors whose residential rates are higher than Meralco’s.