HINDI DAPAT MAGING PAMBAYAD UTANG NG NAPOCOR ANG PAGBENTA SA AGUS AT PULANGI COMPLEXES.

This week, I was one of those seated at the conference room of City Council of Iligan.

I was listening to officials of Lanao Power Consumers Federation (Lapocof) express  their vehement opposition to the present administration’s plan to sell Agus and Pulangi complexes in 2011.

Whether income that would be derived from this planned sale will be used to pay for the soaring debt of Napocor, is something that I still need to know.

You may ask me what is the relation of this Agus and Pulangi Complexes  to our lives? My answer is “look at your ceiling and stare your lights.. be it bulb, fluorescent or chandelier… stare at your electric fans, TVs, air conditioners and your electric socket.”

These complexes are the sources of electricity generated by our hydro power plants. And yes, the government is selling these by 2011. So I am inviting you to read the reasons why electric consumers, local officials and NPC officials are opposing this sale.

———

August 28, 2009

This is with regards to a crucial provision of RA 9136 of 2001, the Electric Power Industry Reform Act (EPIRA) which is vital to the development, welfare and future of the whole Mindanao. This is the sale of the Agus/Pulangi Hydro Complexes by 2011.

Chapter V of the EPIRA, Sec 47 (f) “The Agus and the Pulangi complexes in Mindanao shall be excluded from among the generation companies that will be initially privatized… Said complexes may be privatized not earlier than ten (10) years from the effectivity of this Act. The privatization of Agus and Pulangui Complexes shall be left to the discretion of PSALM Corp., in consultation with Congress. READ FULL TEXT & RELATED STORY….

To sustain the discussion about the sale of Agus and Pulangi Complexes by 2011, let me qoute a report from Iligan City Information Office about the position of officials here.
“Subling gipahayag ni Mayor Lawrence Lluch Cruz nga suportado sa mga opisyal sa siyudad ang mga paningkamot karon sa Lanao Power Consumers Federation (LAPOCOF) nga babagan ang privatization sa Agus ug Pulangi Hydro-Electric Plants pag-abot sa tuig 2011.” MORE TO READ…

The local officials of Iligan city fully backed the advocacy of Lanap Power Consumers Federation, a partnership of civil society in Iligan city working for consumers welfare, against the sell-out of Agus and Pulangi complexes in 2011 to cope with its whooping debt of National Power Corporation (NPC).

In fact, as a manifestation of their commitment to pursue this campaign, officials made a resolution:

Resolution urging PGMA, the National Power Corporation (NPC), Power Sector Assets and Liabilities Management Corporation (PSALM) and the Appropriate Committee on Congress to cease and desist from selling the hydroelectric power plants particularly Agus and Pulagui in the disposal of assets of National Power Corporation, pursuant to Electric Power Industry Reform Act of 2001  (EPIRA) Law.

Resolution No 09-246

Whereas, the body deliberated on the disturbing report that the National Power Corporation (NPC) is slowly losing its hydroelectric power plants. According to the report, the PSALM corporation which is tasked of selling seventy (70) percent of the state’s power assets by the end of the year, to fully deregulate the power industry and case government burden brought by NPCs debts, has been ordered by Malacanang to complete the sale of assets to bring about true competition and lower rates;

WHEREAS, it can be recalled that the structure of the power industry in the country, after the passage of Republic Act 9136, otherwise known as EPIRA saw the chopping of NPC into Generation Company and Transmission Company both owned and managed by PSALM. Under EPIRA, the government is required to sell plants with a combined capacity of 4,200 megawatts before 2010;

WHEREAS, Iligan city which hosts three hydroelectric plants in the Agus River Hydro Complex is worried as for decades, these plants have softened the impact of high process of electricity produced by diesel and coal fired plants. It is certain that once sold to private corporatios, specifically foreign-owned it will result to the stratospheric prices of electricity which is beyond the capability of poor people to pay;

WHEREAS, the  body will not raise a howl of protest over the selling of NPC power plants, provided these are only limited to oil thirsty diesel and coal fired plants which pollute the environment and are expensive to operate;

Resolve that the SP urges PGMA, NPC, PSALM and the appropriate committees in Congress to cease and desist from selling the hydroelectric power plants particularly Agus and Polanggui in the disposal of assets of NPC pursuant to EPRIA 2001 Law.

Carried unanimously by the City Council. This resolution is authored by Moises G. Dalisay, Simplicio N. Larrazabal and Orlando M. Maglinao

They also planned to discuss this matter with the following bodies:

a. League of City Mayors

b. League of City Councilors

and c.) sought congressman Varf Belmonte to sponsor a bill amending theEPIRA, a law dubbed by city councilor Chonilo Ruiz as “treacherous.”
View here the powerpoint presentation of Dr. Melchie Ambalong of the Mindanao Commission on Women & Lanao Power Consumers Federation.

∞

This week, I was one of those seated at the conference room of  the City Council of Iligan.

I was listening to officials of Lanao Power Consumers Federation (Lapocof) discussed about their vehement opposition to the present administration plan to sell Agus and Pulangi complexes by 2011.

Whether income that would be derived from this planned sale will be used to pay for the soaring debt of Napocor or not, is something that I still need to know.

You may ask me what is the relation of this Agus and Pulangi Complexes  to our lives? My answer is “look at your ceiling and stare your lights.. be it bulb, flourescent or chandelier… stare at your electric fans, TVs, airconditions and your electric socket.”

These complexes are the sources of electricity generated by our hydropower plants.

And yes, the government is selling these by 20101

So I am inviting you to read the reasons why electric consumers, local officials and NPC officials are opposing this sale.

———

August 28, 2009

This is with regards to a crucial provision of RA 9136 of 2001, the Electric Power Industry Reform Act (EPIRA) which is vital to the development, welfare and future of the whole Mindanao. This is the sale of the Agus/Pulangi Hydro Complexes by 2011.

Chapter V of the EPIRA, Sec 47 (f) “The Agus and the Pulangi complexes in Mindanao shall be excluded from among the generation companies that will be initially privatized… Said complexes may be privatized not earlier than ten (10) years from the effectivity of this Act. The privatization of Agus and Pulangui Complexes shall be left to the discretion of PSALM Corp., in consultation with Congress.

LAPOCOF, an NGO composed of several sectoral, religious, concerned individuals of Iligan City and the two Lanaos are opposed to the privatization of the AGus/Pulangi Hydro Complexes.

EPIRA states that Congress is to be consulted. Also in Chapter VIII, “General Provision Sec 62.  it states that the Joint Congressional Power Commission (JCPC) in (b), endorse the initial privatization plan… for approval by the Presidnet of the Philippines. And in (g)”determine  inherent weaknesses in the law and recommend necessary remedial legislation or executive measures.”

With these powers vested by EPIRA in congress, we humbly ask congress thru our representative, the honorable congressman Varf Belmonte to see to  it that Agus/Pulangi Complexes will not be sold by 2011.

WHY ARE WE OPPOSED TO THE SALE OF AGUS AND PULANGI COMPLEXES?

1. Generation Rate Increases

For the assets to become attractive, electricity rates have to be high. The higher the winning bidder  bids, the higher the electricity price we have to pay in the future so the winning bidder can recover its investment.

This can be observed with the nature of electricity rate hikes. Following the suggestion of the Asian Development Bank (ADB), the National Power Corporation (NPC) petitioned rate hikes in order to attract investors. Out of the Php 1.98/kwhr, NPC petitioned in 2004, P 1.03kWh was approved by the ERC in 2005.

We saw also that as privatization and the bidding process is about to start for the sale of the Transmission sector, charges also increased from P 0.7716/kwh in May to P0.9163/kwh in July 2006.

Last Feb. 16, 2009, ERC granted provisional rate increase to NPC in Luzon at P0.4628/kwh, Visayas at P1.460/kwh and Mindanao at P0.7147 kwh with a public hearing conducted on Feb. 25, 2009. We wrote ERC telling them that the consumers had the impression that the public hearing done after the granting of increase was for the sake of compliance. People believe that there is collusion between the ERC and the government so that NPC can be very attractive to investors by 2011.

Another reason for the price increases is that when retail competition starts, the other generation plants such as coal, geothermal and oil can be competitive against hydro.

We believe that there are going to be incremental hikes again and again till NPC is up for bidding by 2011. This is an irony because the attractive rate of GENCO is for investors to buy GenCo. This same rate is a disincentive for investors to set up plants in Mindanao. Investments generate employment that would improve the buying power of the people which in turn is a driver for businesses to thrive.

We believe that if there is a strong movement opposing the sale of the Agus/Pulangi complexes, then the reason for rate increases to attract investors will stop.

2. Low Cost of Power. Investor Incentive

Mindanao’s greater competition advantage is the low cost of power it presently enjoys.  Effective March 209, the generation charge for the Philippines approved by the ERC are as follows:

Luzon –    P 4.2648/ kwh

Visayas–  P  4.0339/kwh

Mindanao-P 2.8177/kwh

Mindanao has the lowest generation charge because of the Agus/Pulangi hydro complexes. This is the edge that Mindanao has over Luzon and Visayas. In terms of infrastructure, development, peace and order etc., we lag behind Luzon and Visayas. We cannot afford losing one edge, the low cost of electricity which could be the only major come on for investors to set up establishments in Mindanao.

3.High RORB (Return on Rate Base)

For 2008, the rate base current audited value of all NPC-Agus/Pulangi complexes is P 14,327 billion. The net revenue is P 4,927 billion which gives an RORB of 39.66%

Power distribution utilities are being pegged down by the ERC to an RORB of 12% only. The RORB of 39.66% of the Agus Pulangi complexes is very very high indeed.

The high rate of return is just tremendous at nearly 40% because hydro power relies solely on water to generate electricity. This is God given gift  to the people of Mindanao. A gift that should lead Mindanao to development and progress.

4.Sale of Other GenCos

Our experience with the sale of Masinloc Geothermal Plant located at Zambales. The assets are valued at P930 million. The investors paid only 40% and the remaining balance is payable for seven years at $80 million yearly which is actually the income of the plant itself.

We are afraid, that the Agus/Pulangi complexes will be sold at a giveaway price.

5.Motive for Gain

For NPC to operate and maintain the Agus/Pulangi generating plants, the gain motive is not a factor. There is only the ROI or return on investment to be considered. Except for Agus 1, all hydro plants have high net income even after paying all the financial charges. The net income for 2008 of almost P5 billion is quite a sizable sum added to the coffers of the government. Common business sense dictates that these hydro complexes should be retained at all costs.

6. The WESM (Wholesale electricity spot market)- –EPIRA envisions that with deregulation and a free market in place, electricity rate will go down based on the assumption that retail competition will drive places down.

We are wary of such rosy pronouncement based on our experience with the Deregulation of the Oil Industry which has not driven down the prices of crude and gasoline.

Based on the following observations of the EmPower Consumer group of Luzon, we quote, “contrary to its mission of providing good choice and cheap supply of electricity, WESM has become a trading center of the most expensive electricity in the country. In March, its peak trading was P10.68/kwh. In April, it reached almost P12/kwh. In fact, the recent high rate of electricity in Luzon is because of the more expensive power bought through the WESM which is the heart of the privatization and restructuring program.

One other reason why we are wary of this WESM is the ERC’s dismissal of the Power Sector Assets and Liabilities Management Corporation (PSALM) market abuse case alleged by the Philippine Electricity Market Corporation (PEMC), the operator  of the WESM. The ERC dismissed this for lack of sufficient evidence, despite the detailed market data submitted by PEMC clearly showing that PSALM exercised its market power to raise the WESM spot price.

7. Retail competition in Mindanao

WESM began Commercial Operations in Luzon in June 2006 with 73% of NPC’s assets privatized. Presently groundwork for launching of the Visayas Supply Augmentation Auction (VSAA) is started which in time will lead to WESM operations in the Visayas.

There is yet no mention of any plan to start and open market in Mindanao.

The basis for privatizing NPC assets is for retail competition to start. Since it cannot yet start in Mindanao our Congress need not proceed with the sale of Agus and Pulangi complexes.

8. Market Power /Abuse

The Generation mix of Mindanao is,

NPC (MindGen)                                                                        56.26%

Agus/Pulangi complexes                 (55.38%)

Diesel (IDPP/PB104)                          (00.88%)

IPPs                                                                                             43.74%

Mindanao Coal

Southern Mindanao Power

Western Mindanao Power

Mt. Apo Geothermal 1 and 2

Mini Hydros

Since the Agus/Pulangi Hydro Complex is a significant share of the total capacity available to the Mindanao Market, there is a high possibility that a private firm owning the Agus/Pulangi complex would profitably drive up prices since it controls a significant chunk of the market. Given the weak regulatory tradition in the Philippined, the most likely scenario is the exercise of market power by the firm owning the Agus/Pulangi complex with price manipulation rather than competitive pricing.

Added to that is the possibility that the owner of this major generating plant who can dictate the price would be able to gooble up other smaller plants which cannot withstand the competition. Or smaller plants would be forced to merged with the dominant player. With this scenario, there would be no retail competition defeating the purpose of the EPIRA.

Quoting from EmPower Consumers, “the present Luzon WESM operation brought about a transition from government monopoly to an enhanced private monopoly. The promised competition embodied in the WESM is one of form with little substance. Hence, instead of rate reduction, Luzon have one of the highest rates today.”

We, therefore should do everything in our power to stop the sale of the Agus/Pulangi complexes. The sale for the sake of deregulation to start electricity retail competition in Mindanao will not bring down electricity rates. Possibility of higher electricity rates will be outcome of the Agus/Pulangi sale.

In closing, let us quote PGMA’s and Angelo Reyes’ congratulatory messages published in the July 29, 2009 issue of the Philippine Daily Inquirer for the 3^rd anniversary of WESM entitled, “Brighter Days, Better Way.” PGMA’s message “… WESM have helped ensure that the country will always have a sustainable source of electric power which is necessary to fuel economic prosperity and development. WESM/Reyes ensured private investors a sustainable source of electricity.

Not one word was mentioned regarding lowering cost as promised by EPIRA.

Affordable electricity sounds like a good idea, right? As this article explains, there is a move in the Philippine Senate to pass twin bills to lower electricity costs in the country by reducing government taxes and royalties on distribution utilities and power generation companies.

According to the article, “Reduced electricity cost leaves consumers with more money to spend. On the other hand, as power comprises a significant cost of doing business, lowering power rates will benefit our industries by making their products and services more competitive, especially in international markets. This will, in turn, avert lay-offs and or shutdowns of factories and keep investments here. This shall ensure more jobs for Filipinos.”

The measure sounds noble in intent, except that next year is election year once again. The article continues with this paragraph:

Lowering power costs has long been Enrile’s advocacy even before the senatorial campaign in 2004. The passage of the twin bills will in effect be a fulfillment of the senator’s campaign promise of reducing power costs to provide consumers more purchasing power, and increase the chances for businesses to survive the global economic slump. (emphasis mine)

Quite a load of campaign-common motherhood statements here. “leaves consumers with more money” “lowering… rates will benefit our industries by making their products and services more competitive, especially in international markets.”

Now, I’m a film critic, what do I know? I  may not be the best person to counter this argument, but (and again, I may be wrong) there are things in this article that annoy me (meaning, this is just a personal rant on the article.) If you agree with the proposal, fine. I’m not lobbying here.

1. Electricity rates in the country are indeed one of the highest in Asia. The proposal to lower these rates is to remove or lower govt taxes and royalties on distribution utilities and power generation companies. First question, are these taxes the real reason why the rates are high?

In a normal residential electric bill, the rates are broken down per item to show how a distribution company computes for how much it can charge the end-user (here I refuse the term, consumer – i hate that word.)

A quick read of Republic Act No. 9136, otherwise known as the Electric Power Industry Reforms Act of 2001, commonly referred to as the EPIRA (which I found here), defines the parameters how providers may charge their customers, almost always subject to regulation by the ERC.

Therefore, as I understand it, if the rates are almost always subject to regulation, the rates are not necessarily overcharged. If they are, the ERC, and even the Senate (which I think it has done recently), has jurisdiction over the oversight.

If the taxes are the main culprit, it would be more enlightening to the general public for the article to expound specifics, rather than just make statements palatable to the electorate. Which taxes are these, why are they causing the electricity rates to be high, so on and so forth.

2. “Reduced electricity cost leaves consumers with more money to spend.”

Really? Those who can’t afford, still can’t afford. There are other costs of living which affect the common tao and electric bills are just one of them.

3. “lowering power rates will benefit our industries by making their products and services more competitive, especially in international markets. This will, in turn, avert lay-offs and or shutdowns of factories and keep investments here. This shall ensure more jobs for Filipinos.”

The statement can’t be more incongruous. lowering power rates will directly benefit our industries – correct. By making their products and services more competitive? Not necessarily. Especially in the international markets? It is known that our exports account for a very small fraction of our economy.

The underground economy is about as large as the above-ground economy and is what keeps this country afloat despite the worldwide economic slowdown. That this country is thriving is just a testament to our non-dependency with US credit institutions.

This singular act will avert lay-offs? And create more jobs?

What this article does not discuss is a means to educate Filipinos more on the benefits of renewable energy. That it is imperative that we use alternative sources of energy. That both upper and lower houses of congress are doing stuff to address issues on energy AND the environment. What this article does not discuss is that we citizens of this climate changing world need to be responsible in USING energy, that we need to reduce our carbon footprint, that we need to do so not for our own sake but for the future survival of the human race.

If we’re paying for our electric bills, who’s paying for the environment?

Murang kuryente, my ass. This sounds like another campaign promise.

http://jaimemartin.files.wordpress.com/2008/09/logo_epira1.jpg

Después de dos años de gestación, pocos meses más que el periodo de gestación de un elefante, hoy ha visto la luz del día nuestro chiquito llamado Epira. Y ya tan pronto está dando sus primeros pasitos. Sí, ante la ley ya existe algo llamado Epira que da servicios en Comunicación o sea, es más que una agencia de publicidad y tampoco cabe en la categoría de otros servicios en telecomunicación. Podría decirse que es una consultoría. Y ya está haciendo sus pininos.

Como muchos comunicólogos de la cuarta generación de la Facultad de Ciencias antropológicas saben, Epira surgió en la materia de publicidad con el padrino. En ese entonces realizamos la imagen institucional de FUNDEHY. El paquete fue de lo siguiente: página web, spots, cuñas, documental, logo, hojas membretadas, trípticos, folletos, etc.

En este momento tenemos un gran proyecto en camino, el cual esperamos cristalizar muy pero muy pronto. Ahora en nuestras filas contamos con un número considerable de egresados en Comunicación Social y de Ciencias de la Computación. Y esperamos que hayan más en un corto o mediano plazo. Mientras eso sucede, creo que es un orgullo ser partícipe de este, espero que largo, viaje. Parece que fue ayer cuando debatíamos en ponerle Moskito killer o Mandorla a este muchachón. Qué gran error hubiera sido!

* Texto original de http://jaimemartin.wordpress.com/2008/09/12/hoy-ha-nacido/

Después de dos años de gestación, pocos meses más que el periodo de gestación de un elefante, hoy ha visto la luz del día nuestro chiquito llamado Epira. Y ya tan pronto está dando sus primeros pasitos. Sí, ante la ley ya existe algo llamado Epira que da servicios en Comunicación o sea, es más que una agencia de publicidad y tampoco cabe en la categoría de otros servicios en telecomunicación. Podría decirse que es una consultoría. Y ya está haciendo sus pininos.

Como muchos comunicólogos de la cuarta generación de la Facultad de Ciencias antropológicas saben, Epira surgió en la materia de publicidad con el padrino. En ese entonces realizamos la imagen institucional de FUNDEHY. El paquete fue de lo siguiente: página web, spots, cuñas, documental, logo, hojas membretadas, trípticos, folletos, etc.

En este momento tenemos un gran proyecto en camino, el cual esperamos cristalizar muy pero muy pronto. Ahora en nuestras filas contamos con un número considerable de egresados en Comunicación Social y de Ciencias de la Computación. Y esperamos que hayan más en un corto o mediano plazo. Mientras eso sucede, creo que es un orgullo ser partícipe de este, espero que largo, viaje. Parece que fue ayer cuando debatíamos en ponerle Moskito killer o Mandorla a este muchachón. Qué gran error hubiera sido!

Ang Energy Regulatory Commission (ERC) ay hindi lang nariyan upang duminig sa mga petisyon ng mga kumpanya ng kuryente at iba pang ahensyang may kinalaman sa kuryente. Unang-una, kaya nariyan yan ay upang protektahan ang interes ng publiko sa isang batayang serbisyong nakakaapekto sa kanila nang malaki.

Ang kuryente ay napakahalaga hindi lamang sa pang-araw-araw na gawain ng isang tao. Ito ay mahalaga sa ekonomiya at pag-unlad ng isang bansa. Kaya nga, sa ibang mga bansa, ang pagpapatakbo sa industriya ng kuryente ay patuloy na nasa kontrol ng kanilang estado.

Subalit, nasa kontrol man o wala ng estado ang operasyon sa industriya ng kuryente,  meron talagang ahensyang itinatalaga lagi upang magbantay sa takbo ng industriya at makitang hindi napapagsamantalahan ang mga konsyumer o mga walang kontrol sa industriyang ito.  Ang ahensyang ito ay ang Energy Regulatory body. Nag-iiba-iba na lang ang tawag dito sa iba’t ibang bansa. Pero ang pangunahing gawain nito ay upang mag-regulate sa industriya ng kuryente.

Sa katunayan, napakalawak ng mga gawain ng ERC natin sa ilalim ng Electric Power Industry Reform Act (EPIRA). Subalit, kapos ito sa pagsulong o di kaya’y proteksyon sa interes ng mga konsyumer.  Ni hindi nga nagiging malawak ang konsultasyong isinasagawa nito sa mga konsyumer. Problema rin kasi ang kakulangan ng paliwanag o edukasyon nito sa mga konsyumer kung kaya mababa rin ang antas ng nagiging partisipasyon ng mga konsyumer sa konsultasyong isinasagawa nito.

Sa nangyaring pagtaas ng singil sa kuryente noong Abril, hindi lang sa generation charge kundi maging sa transmission, distribution, at systems loss, nararapat lang na magpaliwanag ang ERC sa mga konsyumer. Hindi na dapat nito hinihintay pa ang mga konsyumer na humingi ng paliwanag.

Sa panahon ng krisis, lalong nagiging mahalaga sa mga konsyumer ang malaman man lang, kung hindi man tuluyang mapigilan, ang anumang pagtaas sa kanilang mga bayarin, lalo na sa kuryente. Umabot ng mahigit isandaang piso, sa average, ang itinaas ng kuryente noong Abril. Sinasabing patuloy pa nga ang pagtaas hanggang Hunyo. Sa ganitong sitwasyon, mas lalong kinakailangang may inisyatiba ang ERC na magpaliwanag at kulumpunin ang iba’t iba pang mga ahensya ng gobyerno at kumpanya ng kuryente na may kinalaman sa pagtaas na ito.

Hindi biro ang binabayaran ng isang pamilya ngayon sa kuryente. Umaabot sa halos 20 hanggang 25 porsyento ng gastusin nila ang napupunta sa pagbabayad lang sa kuryente. Kaya ang impormasyon o kaalaman sa anumang pagbabago ay mahalaga sa kanila,dahil dito rin posibleng magkaroon ng aksyon mula sa kanila at sa mga ahensyang at kumpanyang may kinalaman dito.

May 3, 2008

Ang laki ng itinaas na naman ng presyo ng kuryente ngayong buwan dto sa kamaynilaan at iba pang kustomer ng Meralco.  Sa mga kumukunsumo ng 200 kilowatthour, P150 ang itinaas sa bayarin nila sa kuryente. Dagdag pahirap ito siyempre dahil sa lumiliit na nga ang halaga ng pera dahil sa taas ng mga bilihin lalung-lalo na ng bigas.

Halos 70-sentimos kada kilowatthour ang itinaas sa presyo ng kuryente ngayong buwan. Ito ay dahil sa pagtaas ng singil sa generation, distribution, transmission, at maging sa supply. Pinakamalaking bahagi ng pagtaas ay sa generation charge.  Sinasabi ng Meralco na ito’y dahil sa tumaas ang presyo ng kuryenteng binibili sa Wholesale Electricity Spot Market (WESM).  Nasa P5.94 kada kilowatthour lang diumano ang singil sa WESM noong Pebrero. Subalit noong Marso, ito’y tumaas sa P10.68 kada kilowatthour. Ang ibang pinagkukunan ng kuryente ng Meralco ay Napocor at ang mga ka-kontrata nitong independent power producers na marami dito ay pag-aari rin ng mga Lopez na siya namang may kontrol sa Meralco. 

Hindi kataka-takang umalma na talaga ang mga tao ngayon. Ang EmPOWER Consumers, bagong grupo ng mga konsyumer ng kuryente ay humihingi ng paliwanag mula sa Energy Regulatory Commission at Meralco at iba pang posibleng may mga kinalaman sa pagtaas na ito na magpaliwanag sa mga konsyumer.  Sa liham na ibinigay ng EmPOWER Consumers sa ERC noong Abril 23, isinaad rin nito ang kanilang pagkadismaya sa ganitong pangyayari sa kabila ng pahayag ng ERC kamakailan lamang na walang mangyayaring pagtaas sa presyo ng kuryente sa loob ng dalawang buwan.  Sinabi rin ng grupo na taliwas rin ang pagtataas ng presyo ng kuryente sa pahayag ng Pangulong Arroyo noong Energy Summit noong Pebrero 5 na gagawa ito ng paraan upang maibaba ang presyo ng kuryente.

Ang nakapagtataka, sa kabila ng ilang buwan nang pagpapatakbo sa WESM at eksperiyensya nating laging mas mataas ang presyo nito kaysa Napocor, patuloy pa ring higit sa 10 porsyento ng kinakailangang kuryente ng Meralco ang kinukuha sa WESM.  Ayon sa Electric Power Industry Reform Act (EPIRA) na siyang nag-uutos sa pagbabago sa istruktura ng kuryente sa bansa at siya ring nag-utos sa pagkakaroon ng spot market o ang WESM, minimum na 10 porsyento ang kailangang kunin ng mga distribution utilities mula sa WESM.

Malala ang sitwasyon ng industriya ng kuryente sa bansa. Subalit, mas malala yata ang sitwasyon nating mga konsyumer sa ilalim ng mga mapagsamantala at hindi mapagkakatiwalaang mga kumpanya ng kuryente tulad ng Meralco. Kaya, upang huwag mangyari ito ay dapat na malinaw lagi ang mga pangyayari sa mga mamamayan. Dapat ring magkaroon ng pagbabago sa EPIRA dahil sa loob ng pitong taong pagpapatupad dito, wala pa ring kaginhawaan tayong nararamdaman mula sa mataas na presyo ng kuryente.

April 26, 2008

Isa sa mga tatalakaying panukalang batas sa pagpapatuloy ng sesyon ng Kamara ngayong Enero ay ang pagbabago sa Electric Power Industry Reform Act (EPIRA).  Nakasalang na sa second reading sa Mababang Kapulungan ang amyenda sa EPIRA bago magbakasyon ang Kamara noong Disyembre 2007. 

Isinusulong ng panukalang amyenda na gawing 40% na lang ang dapat na maisapribado sa halip na 70% ng kapasidad ng mga generation plants ng Napocor at ng mga independent power producers (IPPs) bilang  rekisito para sa open access and retail competition.  Ayon sa Chairman ng Committee on Energy ng Mababang Kapulungan na si Rep. Mickey Arroyo, nilalayon daw ng pagbabagong ito sa EPIRA na mapababa ang presyo ng kuryente sa pamamagitan ng pagkakaroon ng kumpetisyon sa merkado ng kuryente. 

Ang 70% pribatisasyon ng mga planta at kontrata ng IPPs na lamang ang natitirang rekisito para sa open access ay  EPIRA. Ang ibang mga rekisito tulad ng pagtitilad-tilad ng bayarin sa kuryente (unbundling of rates), pagtanggal sa cross-subsidy, at pagtatag ng wholesale electricity spot market (WESM) ay naipatupad na.

Nagkakaisa ang mga mambabatas at mga konsyumer ng elektrisidad sa kagustuhang bumaba ang presyo ng kuryente.  Halos beynte porsyento kasi ng kinikita ng isang ordinaryong pamilya ay napupunta lang sa pagbabayad sa kuryente. Samantalang ang kalakhan ng kinikita ng mga maliliit na negosyo ay ipinambabayad lamang sa kuryente.

Subalit sa panukalang amyenda, kahit na maging ganap na ang implementasyon ng open access at retail competition, malabo pa ring mangyari ang pangarap na bumaba ang presyo ng kuryente dahil sa iba pang mga konsiderasyon na dapat ding binibigyang atensyon ng Kongreso na siyang nagpasa ng EPIRA.  Pangunahin na rito ang hindi pagkakaroon ng totoong kompetisyon. 

Kontrolado lang ng iilan ang generation sector na siyang nagpoprodyus ng kuryente. Ito ay ang Napocor, at mga independent power producers (IPPs) sa ilalim ng Power Sector Assets and Liabilities Management Corp. Ang pangatlong may malaki nang pag-aari sa generation sector ay ang mga Lopezes laluna’t sila na ang nagmamay-ari ng 60% ng PNOC-EDC. Sumusunod naman ang Aboitiz na patuloy ngayong namimili ng mga ibinebentang planta ng Napocor.

Ang presyo sa generation sector ay hindi na kontrolado ng Energy Regulatory Commission sapagkat ito’y deregulated na. Pinapayagan ng EPIRA na hanggang 90% ng supply sa kuryente ng mga distribution utility tulad ng Meralco at mga electric cooperatives ay nakatali na sa mga kontrata sa generation companies.  Kaya, sa sinasabing kumpetisyon, kung ito’y inaasahang magmumula sa ibinebentang kuryente sa (WESM) o ang sinasabing merkado ng kuryente, kakaunti na lang ang pwedeng bilhin dito at hindi ganoon kalaki upang makapagpababa sa presyo ng kuryenteng ibebenta sa ibang mga konsyumer tulad ng residential customers at ilang maliliit na negosyo na hindi kayang bumili ng direkta mula sa WESM. Ang maaaring magbenepisyo agad sa open access ay ang mga may buwanang average na peak demand na 1 megawatt (MW). Ito ay ang mga malalaking negosyo o kumpanya na hindi naman, direktang naibabawas sa presyo ng kanilang produkto ang anumang matitipid nila sa pagbili ng kuryente mula sa WESM.

Hindi ang tingi-tinging amyenda na ginagawa ng Kongreso ngayon ang kailangan natin upang masolusyunan ang probolemang mataas na presyo ng kuryente. Dapat rebisahing mabuti ang batas at tingnang maigi rin ang tunay na kalagayan ng industriya ng kuryente at maging ang kapasidad ng mga konsyumer sa pagbabayad.  Dapat ding isama ang mga konsyumer sa proseso ng pagrebisa ng EPIRA o pagtatakda ng bagong batas sa industriya ng kuryente upang sumalamin din ito sa tunay na interes ng mga konsyumer. Tandaang hindi lang mga negosyante o mga kumpanya ng kuryente ang stakeholders sa industriya ng kuryente. Lahat tayo ay apektado kaya dapat na kasama tayo sa anumang mga pagdedesisyon ukol dito.

January 26, 2008

By Jesus Llanto
Researcher, Newsbreak

August 4,2008–Power rates can be reduced by at least P2 per kilowatt-hour (kWh) by adjusting regulatory policies and amending the Electric Power Industry Reform Act (EPIRA), a study by University of the Philippines professors showed.

The study, “Reducing Power Rates By at Least P2.00/kWh”, showed that a combination of regulatory policy adjustments can lower electricity prices of MERALCO consumers by at least P2.0913.

These policy adjustments are:

• reduction of National Power Corporation’s (NAPOCOR) basic average generation charge
• an optimal power mix for MERALCO
• removal of Value-Added Tax (VAT) on systems loss
• amendments on the some provisions of the EPIRA law.

The study, written by professors Allan Nerves, Edna Espos, Ivan Benedicto Nilo Cruz and Rowaldo del Mundo of the UP College of Engineering, said that the amount of reduction that may be estimated at this time using MERALCO’s current supply mix (40% from NPC, 35% from MERALCO IPPs and 25% from others, including WESM), are as follows:

Click here to read the rest of the story.

The EPIRA law requires that those they call the “lifeliners” who consume 100kwh or less of electricity are given discounts ranging from 20% to 50% by the distribution utilities like Visayan Electric and Meralco.

The same EPIRA law allows the utilities to promptly recover the cost of the discounts by collecting from consumers using more than 100 kwh a charge listed in our electric bills as “lifeline rate subsidy”. It is therefore a discount at no cost to the utilities.

Now, look at this daily scene.

The government through the LTFRB requires the jeepney drivers to give a 20% fare discount to senior citizens and students, which compose half of their passengers on a school day. But in contrast to the good fortune of the owners of the giant utilities in their air-conditioned rooms, the hard-driving jeepney drivers who daily brave the dust and the heat of Manila’s streets are made to absorb the cost of the discounts. The drivers effectively give subsidy to the students and the senior citizens, and the drivers are not rich men..

The impetus behind the current crisis is the restructuring of the sector through the Electric Power Industry Reform Act, or EPIRA, one of the first laws signed by President Gloria Arroyo in 2001.

IBON Features– Amid the flurry of accusations between private distributor Manila Electric Company (Meralco) and state-run National Power Corporation (Napocor) over unjust charges, one fact remains clear: privatization and deregulation of the power industry– distribution, transmission and generation– is at the heart of high electricity bills.

For example, consider the multitude of unjust ‘pass-on’ charges levied by Meralco on its customers. These include system losses, in which power lost through pilferage and technical problems are passed on to consumers and P500-million a year of Meralco’s own power consumption which is similarly reflected in electric bills. There is also a reported plan to pass bad debts incurred by the power distributor on to consumers.

These charges have been approved by the government Energy Regulatory Commission (ERC), which is tasked to regulate the rates of electricity distributors. Although blame has been placed on the ERC’s lax regulation for such excessive ‘pass-on’ rates, in truth the regulatory environment has become lenient because of deregulation of the power sector and while moving towards full privatization.

It should also be noted that although Meralco is a public utility with a congressional franchise, its essential nature is a private, profit-oriented corporation listed in the Philippine Stock Exchange. Thus, it should not be surprising that the company exploits legal loopholes to levy such unwarranted charges in order to fatten its bottom line and make its stockholders and owners happy.

The privatization of the power sector created profit opportunities for private-sector independent power producers (IPPs). In order to quickly attract investors to the sector, government had to ensure the power producers’ profitability. Thus, onerous provisions such as ‘take or pay’ (which required Napocor to buy 70% to 100% of power producers’ output) and ‘fuel cost guarantee’ (which obligated Napocor to source and pay for fuel used by IPPs) were tacked onto IPP contracts. These provisions bloated consumers’ power bills through charges such as the infamous Purchased Power Adjustment (PPA). They also contributed to Napocor’s skyrocketing debt burden.

It will be remembered that a government-mandated review of 35 IPP contracts during the Arroyo administration found that only six were “clean” or without financial or legal issues. Five were found to contain “onerous” terms that were “grossly disadvantageous to government”. However none of these contracts were cancelled, and were instead “renegotiated”.

High transmission charges have also been blamed as a factor in high power rates. But the National Transmission Corporation (Transco) is also set for privatization, and thus, needs to charge high rates in order to attract potential investors. It should also be noted that transmission charges are regulated by the ERC as well.

Open Access

The impetus behind the current crisis is the restructuring of the sector through the Electric Power Industry Reform Act, or EPIRA, which was one of the first laws signed by President Gloria Arroyo in 2001.

Before EPIRA the sector was composed of generation, transmission and distribution sectors. Napocor generated electricity on its own and bought electricity from IPPs, and transmitted this to distributors and large industrial customers through high-voltage wires. Distribution of electricity to end-consumers was done by privately-owned electric utilities, a few government-owned utilities and electric cooperatives.

Under EPIRA, the various components of the power sector are separated into generation, transmission, distribution and supply. Generation and transmission assets of Napocor would be privatized while distribution would continue to be handled by the private sector. The end goal of the sale of Napocor’s generation assets is “open access” which is government’s supposed answer to high electricity prices. “Open access” ostensibly aims to introduce competition into the industry by allowing consumers to select their supplier.

EPIRA advocates claim that competition would lower rates, particularly with a provision which states that no power generator should control more than 30% of supply in a given grid and ostensibly prevents monopolies. But the experience of the deregulation of the downstream oil industry demonstrates that such “competition” does not bring down prices. Deregulation has resulted in new players taking 12% of the market while the big three oil firms (Petron, Shell and Chevron) share the remaining 88% or an average of 29% per firm. This has not stemmed cartel-like behavior with oil industry players raising pump prices nearly simultaneously. It has also not resulted in lower prices, as pump prices of all petroleum products have raised an average of almost 580% since deregulation of the industry was implemented in 1996.

EPIRA also notably allows cross-ownership between distributors and generators. This has allowed the Lopez family to own a controlling share in Meralco while also owning IPPs. This situation has led to questions of conflicts of interest as Meralco would naturally be more inclined to buy power from its sister firms regardless of whether it is cheaper than electricity sourced from Napocor IPPs.

Reversing Privatization

In the light of high costs in power rates, the reversal of privatization of the entire power sector becomes an increasingly viable answer. This entails the repeal of EPIRA law, reversal of the privatization of Napocor’s generation assets, and government control over the entire power sector – distribution, generation, transmission and supply.

Of course many would question the return of state control over the industry, particularly in light of corruption allegations against Napocor such as its alleged overbilling of customers by some P10 billion and its purchase of overpriced coal for its power plants.

However there remains no substitute for responsible state control in an industry such as the power sector whose natural monopolies will inevitably be exploited by private interests for maximum profit even at the expense of the public. And as a state-run industry, the people must have the right to subject the power sector to scrutiny and demand transparency in its operations. Effective state control remains the best solution to address high power rates– even as it is acknowledged that leaving the power industry to an administration known for allegations of corruption, unaccountability, and subservience to elite interests compromises achieving a pro-people power sector.

Here are two articles on power written in 2006 but which are still very relevant in the current debate on high power rates. The major points remain unchanged even if the quantitative data are those obtainining in 2006. We will update the data this weekend.

Ever increasing rates from the EPIRA:
A closer look at the electric power industry in the Philippines
BY DR. GIOVANNI TAPANG, ENGR. RAMON RAMIREZ, KIM GARGAR

Electric power is a basic service that is needed by households in everyday activities and is equally important for industries to operate. The failure of the government to provide electric power was evident when the country faced massive blackouts in the late 1980s and early 1990s due to a shortage of power supply. Download article here

E-VAT on Electricity: Short-circuiting the People’s Interest
BY MON RAMIREZ
Contributed to Bulatlat

Upon the passage of the Value Added Tax (VAT) law, the Arroyo administration assured the public that the imposition of VAT on power will have very minimal impact on our electric bill. True to its form, the Arroyo administration has been caught lying again with the latest electric bill. Download article here

May 6’s episode of GMA7’s Reporter’s Notebook, entitled “Kalbaryong Kuryente,” was a very educational presentation on why the country has the second highest cost of electricity in Asia and third in the world. The Coalition presented data and valid arguments and analysis on the issue.

To view video, please click here:
http://www.gmanews.tv/video/22230/Reporter’s-Notebook-Kalbaryong-Kuryente, or visit GMANews.TV and go to the video section (Public Affairs).

Also, GMA7’s interview with our campaigner, Job Bordamonte, representing EmPower Consumers, came out in 24 Oras (May 7) and Unang Hirit (May 8). View videos here:

http://www.gmanews.tv/video/22287/Groups-want-system-loss-charges-from-Meralco-bill-removed

http://www.gmanews.tv/video/22253/Consumers-want-Meralco-to-lower-system-loss-charges

Further, our statement and protest action against the high electricity rates came out in various online and print newspapers: May 8 – The Philippine Star (Page 4); May 7 – BusinessMirror (Page 1 story and banner photo); The Daily Tribune (Page 1 story); Malaya (Banner photo); BusinessWorld (Page 12/S1 photo); Tanod (Banner photo); People’s Journal (Banner photo); Pang-Masa (Page 2 photo); Taliba (Page 3 photo); May 5 & 6 – GMANews.TV; NewsBreak; and, ABS-CBNNews.Com. We also came out in RPN9.

The Philippine Star
08 May 2008, Page 4

http://www.philstar.com/index.php?Headlines&p=49&type=2&sec=24&aid=20080507126

Headlines
ERC tells DTI to clarify petition for power rate cut
By Donnabelle Gatdula

(Con’t)

The Freedom from Debt Coalition (FDC), for its part, said the administration’s effort to bring down power rates is “piecemeal and selective” and is unlikely to have significant impact.

“Filipinos, rich and poor alike, pay the second highest electricity rates in Asia. So, any move by the government to reduce exorbitant power rates in the midst of a devastating food crisis and the rising costs of other goods and services is welcome news to our people,” the FDC said in a statement.

“We believe, however, that piecemeal and selective action such as the bid by the Arroyo government to cut down Meralco’s distribution rates will not bring significant reduction in power rates,” it added.

[READ MORE]

BusinessMirror
07 May 2008, Page 1

http://www.businessmirror.com.ph/05072008/headlines03.html

Relief from high power rates?
By Paul Anthony A. Isla
Reporter

(Con’t)

Meanwhile, the Freedom from Debt Coalition (FDC) enjoined other stakeholders in the power industry to find ways to relieve consumers from the burden of high electricity prices.

“Filipinos, rich and poor alike, pay the second-highest electricity rates in Asia. Thus, any move by the government to reduce exorbitant power rates in the midst of a devastating food crisis and the rising costs of other goods and services, is welcome news to our people,” FDC said in a statement.

FDC said it believes that that piecemeal and selective action such as the bid by the government to cut down distribution rates of Manila Electric Co. (Meralco) will not bring any significant reduction in charges.

[READ MORE]

Photo by Nonoy Lacza

The Daily Tribune
07 May 2008, Page 1

http://www.tribune.net.ph/headlines/20080507hed3.html

Gloria calls on masa to pressure Meralco
By Sherwin C. Olaes

(Con’t)

The Freedom from Debt Coalition for its part, urged the Arroyo government should stop the operation of the Wholesale Electricity Spot Market (Wesm.)

Bobby Diciembre of the Freedom from Debt Coalition said that contrary to its supposed mission of providing cheap supply of electricity, power sourced at Wesm was deviously high since it operated in July 2006, from a low of P2/kwh to as high as P12/kwh this month of April 2008. Because of this Psalm was charged for market manipulation in the Wesm, only to be cleared by the ERC for no plausible reason.

“Meralco must not oblige its customers to pay for pilferages and system losses incurred regularly.

Meralco’s system losses are beyond the responsibility of customers.”

[READ MORE]

Malaya
07 May 2008, Banner photo
Photo by Rolly Salvador

BusinessWorld
07 May 2008, Page 12/S1
Photo by Jonathan Cellona

Tanod
07 May 2008, Banner photo
Photo by Charlie Magno

People’s Journal
07 May 2008, Banner photo
Photo by J.R. Labanero

Pang-Masa (PM)
07 May 2008, Page 2
Photo by Boy Santos

GMANews.TV

http://www.gmanews.tv/story/93550/Govt-bid-to-reduce-power-rates-piecemeal-selective—group#

Gov’t bid to reduce power rates ‘piecemeal, selective’ – group
Article posted May 06, 2008 – 12:39 PM

MANILA, Philippines – The Philippine government’s proposal to bring down rates charged by Meralco, the country’s largest electric company, is merely “piecemeal” and “selective,” a coalition said.

In a statement, the Freedom from Debt Coalition (FDC) said that while it was supportive of the government’s attempt to reduce power rates, Malacañang should undertake a whole menu of reforms which would translate to lesser energy costs.

Besides calling for the cancellation of contracts with independent power producers—which force consumers to pay for ungenerated electricity—the group also clamored for the removal of the 12 percent value added tax on power.

[READ MORE]

Photo by Charlie Magno

ABS-CBNnews.com / NewsBreak
05 May 2008

http://www.abs-cbnnews.com/storypage.aspx?StoryId=117213

http://newsbreak.com.ph/index.php?option=com_content&task=view&id=4564&Itemid=88889051

Consumer group blames IPPs for high power rates
By Aries Rufo

The onerous contracts entered into by the Ramos government with the independent power producers (IPPs) are the “root cause of high power rates,” the Freedom from Debt coalition said.

FDC media campaigner Bobby Diciembre told abs-cbnNews.com/Newsbreak that the power purchase agreements by government with IPPs is primarily the culprit for the high cost of power and that President Arroyo should take the blame as well for failing to renegotiate these the past seven years.

Diciembre said IPP contracts are clearly disadvantageous as they oblige government to pay for the contracted generation capacity of IPPs whether such was consumed or not.

[READ MORE]

GMANews.TV

http://www.gmanews.tv/story/93134/Consumers-welcome-govt-move-to-hold-meeting-about-power-rate-hike#

Consumers welcome govt move to hold meeting about power rate hike
Article posted May 03, 2008 – 12:47 PM

MANILA, Philippines – A local alliance of electricity consumers welcomed the Energy Regulatory Commission’s (ERC) move to hold a consultative meeting on May 6. Besides bringing consumers and members of the energy industry together, the meeting intends to seek an explanation regarding the recent increase in electricity costs.

In a statement, EmPOWER Consumers also said that the “consultative meeting must be regularized.”

“ERC must no longer wait for consumers to ask for this meeting,” Maris dela Cruz, the group’s spokesperson said. “On its own, the agency should conduct meetings to explain sudden changes in the electric bills and other matters regarding developments which affect electricity pricing. The consumers have the right to know this especially during this time of crisis when every centavo is important to us.”

[READ MORE]

PRESS STATEMENT

Cong. Teofisto “TG” Guingona III

2nd District, Bukidnon

May 5, 2008

Privatize Napocor and Electric Rates Will Be Reasonable

All of us, whether Administration or Opposition, want electric rates to go down. But do you know that generation charges make up sixty percent (60%) of our total electric bill? So, if we bring down our generation charge, we will bring down our total electric bill dramatically. The solution is in implementing the EPIRA law. EPIRA mandates that by 2009, seventy percent (70%) of NPC owned or controlled electric generating capacity should be privatized[1].

One of the purposes of EPIRA was to ensure affordability of supply of electric power[2], as well as transparent and reasonable rates, through a regime of free and fair competition[3]. Today, seven (7) years after EPIRA has become a law, NAPOCOR still owns or controls seventy percent (70%) of generating capacity. Prior to EPIRA, it owned or controlled ninety-five percent (95%) of generating capacity. This means that it took them seven (7) years to privatize twenty-five percent (25%). This is obviously too slow.

That is where the cause of high electric rates lies: monopolistic dominance of NAPOCOR of the generation of electricity. The evil of this monopolistic dominance is obvious.

Tingnan na lang natin yung nangyari sa WESM noong Agosto 2006[4]. Itong WESM ay isang palangke, pero sa halip na pagkain ang ibinibenta, kuryente ang ipinagbibili. Nahuli ng manager ng palengke ang NAPOCOR na nagbigay ng instruksyon sa kanyang mga planta na kailangang magkasabwatan sa pagtaas ng presyo ng kuryente. Parang pumunta ka sa palengke at gusto mong bumili ng galunggong. Sa palengkeng iyon, tatlo lang ang tinderang nagbebenta ng galunggong, si Neneng, si Selya, at si Doray. Wala nang iba. Pagdating mo sa palengke, napansin mo na napakataas ang kanilang presyo at pare-pareho. Yung pala, magkapatid sila at ang kanilang ama ay si NAPOCOR. Nadiktahan sila ng kanilang ama. Ganoon din po sa kuryente, nakakadikta ang NAPOCOR ng presyo ng kuryente sapagkat ito ang may-ari o kontrolado niya ang pitumpong porsiyento (70%) nito.

The solution to lower electricity rates is genuine competition amongst private generation companies in a regime of free and fair competition on a level playing field.

Privatize NAPOCOR and electricity rates will be reasonable.

[1] sec. 47-I, EPIRA

[2] sec. 2-b, EPIRA

[3] sec. 2-c, EPIRA

[4] Market Surveillance Committee Report, dated Nov. 20, 2006, addressed to the Board of the Philippine Electric Market.

For the past six years, the Filipino people have long endured the skyrocketing price of electricity – a far cry from the government’s promise to bring down electricity rates with the passage of the Electric Power Industry Reform Act (EPIRA) in 2001.  To date, the Filipino people have yet to see a significant decrease in their electric bill and not mere drops in the bucket. Prior to the EPIRA, the electricity rate of residential consumers was P5 per kilowatt-hour (kWh).  Today, it has more than doubled at P11/kWh. Meanwhile, industrial electricity rates in the country as of 2006 made the Philippines no.1 in terms of highest electricity rates in Asia.  Electricity rates may increase thrice its pre-EPIRA amount with an additional P2.60/kWh for the recovery of generation companies that traded electricity at WESM  rates. Add to this the P2/kWh that will be recovered from the consumers for the stranded costs of the National Power Corporation (NPC) and the Power Sector Assets and Liabilities Management Corporation (PSALM). The P2/kWh stranded cost recovery is for the $9.1 billion NPC debts assumed by the national government and for the government’s financial obligations under its contracts with the independent power producers (IPPs).  The Department of Energy said the debt would be paid either through an increase in rate or through borrowings.  Either way, the Filipino people would be saddled by this $9.1 billion debt which far outweighs the potential $329 million debt from the anomalous ZTE contract for the National Broadband Network project. Consumers would also be facing compounding burdens with the Energy Regulatory Commission’s move to change the rate determination from return on rate base to performance-based rate. If this rate methodology is adopted, further increase in power rates will be shouldered by the consumers as the profit margin of distribution utilities will go beyond the current 12% RORB cap.  Thus, we, electricity consumers in the Philippines, have come together under the alliance – EmPOWER Consumers – to put a halt to our misery and seek redress from all the burdens the government and electric companies have caused the people. We, the EmPOWER Consumers, unite to demand from the government to fulfill its promise to bring down electricity rates.  The fulfillment of this promise is long overdue. Enough of band-aid solutions and empty rhetoric! We oppose the privatization of the National Transmission Corp. (Transco) and the continuous payments to the onerous IPP contracts guaranteed by the government. These will only further aggravate the already high power rates while ensuring risk-free profits for the private sector.  We call for the removal of the Value Added Tax on power.  VAT, effectively, adds 10 percent to the electric bill of consumers, which adds up to the financial burden of the people. In truth, what we have paid for both consumed and non-consumed electricity is enough to make us consumers part owners in the electric power industry! Hence, we seek the democratization of access, ownership, and control in the power industry to give us a voice in decisions affecting the generation, transmission and distribution of electricity – a vital necessity in this modern life and progress. 

Our press statement which we sent as Letter to The Editor, with FDC secretary general Milo Tanchuling as the signatory, came out in Philippine Daily Inquirer 15 March 2008 titled “Greedy cabal taking control of power sector?”

Inquirer Opinion / Letters To The Editor

http://opinion.inquirer.net/inquireropinion/letterstotheeditor/view/20080315-124830/Greedy-cabal-taking-control-of-power-sector

Greedy cabal taking control of power sector?
Philippine Daily Inquirer
Posted date: March 15, 2008

In an effort to appease a Metro Manila public crushed by unstable jobs and livelihood and ever-rising prices of basic commodities, power and water, Gloria Macapagal-Arroyo called on Manila Electric Co. (Meralco) to reduce its rates. For this purpose she directed the Department of Trade and Industry to file an omnibus petition with the Energy Regulatory Commission (ERC).

[READ MORE]

BusinessMirror
29 February 2008, Page 1

http://www.businessmirror.com.ph/0229&012008/headlines03.html

PSALM sets 70-percent privatization by year-end
By Paul Anthony A. Isla
Reporter

(Con’t)

In a separate development, the Freedom from Debt Coalition (FDC) denounced the government’s “ploy” to appease the public by reducing prices of basic commodities and power and water bills despite tightly managed consumption.

FDC said the current administration even asked the Department of Trade and Industry to file an omnibus petition with the Energy Regulatory Commission to require power distributor Manila Electric Co. (Meralco) to slash its rates.

“While the action is welcome and, in fact, long overdue, we are wary of the timing and motives behind this order. President Arroyo is under pressure to resign from office in the face of serious allegations of corruption and evilness,” said FDC.

[READ MORE]

PRESS STATEMENT
Freedom from Debt Coalition
11 Matimpiin St., Brgy. Pinyahan, Quezon City 1100
Tel. No.: +632 9211985; Telefax: +632 9246399
Email: fdc_media@yahoo.com

Contact persons:
Milo Tanchuling, FDC secretary-general, @ 0920-9018711
Bobby Diciembre, FDC media campaigner, @ 0920-9059856

FOR IMMEDIATE RELEASE
28 February 2008

Power Play for a Power Grab of the Power Sector?

In an effort to appease a public in Metro Manila crushed by unstable jobs and livelihoods, constantly increasing prices of basic commodities and ever rising power and water bills despite tightly managed consumption, Mrs. Gloria Macapagal-Arroyo called on MERALCO to decrease its rates. For this purpose she directed the Department of Trade and Industry to file an omnibus petition with the ERC.

While the action is welcome and in fact long overdue, we are wary of the timing and motives behind this order. Mrs. Arroyo is under pressure to resign from office in the face of serious allegations of corruption and evilness. And if we are to believe the scuttlebutt, her family has more than a foothold in the power sector. For these reasons we question the offensive on MERALCO as a sinister attempt to consolidate her family’s stake in the power sector in the guise of a desperate attempt to gain some public sympathy.

Lest we forget the Arroyo family now has a sizable influence in TRANSCO, courtesy of the recently questionable winning bid of Monte Oro Grid Resources for the transmission monopoly. Diosdado “Buboy” Macapagal, the President’s brother, is closely affiliated with Walter Brown, one of the owners of Monte Oro. Another stakeholder, Enrique Razon, is a close friend of First Gentleman Mike Arroyo and the treasurer of the administration’s Team Unity in the senatorial campaign last year.

Ownership and control of the national transmission grid is highly lucrative and very strategic. It can be used to favor one generator over another, to favor loyal supporters over critics. While transmission is regulated by the ERC, let us not forget it is Mrs. Arroyo who appoints the ERC Commissioners and that Congressman Mikey Arroyo heads the Energy Committee of the House of Representatives. This is rent-seeking of the highest order.

We remain critical of MERALCO’s high electricity rates and denounce the practice of the Lopezes of favoring affiliated IPPs even when cheaper electricity is available. We have long maintained that Metro Manila consumers rightfully own MERALCO. This however does not mean that we condone a power grab by a power hungry and infinitely greedy Arroyo family.

The Electric Power Industry Reform Act (EPIRA) was one of the first laws signed by Mrs. Arroyo in 2001. Like the ZTE deal, she knew it was flawed but she signed it nevertheless. Unlike the ZTE deal, the EPIRA has been in effect for the past seven years and has resulted in 15 rate hikes instead of the promised cheaper electricity. The onerous IPP contracts were reviewed and found to be onerous, but not renegotiated. And now the flaws are being used to the advantage of Mrs. Arroyo and her cabal.

The Freedom from Debt Coalition vehemently condemns this.

We reiterate our call for affordable electricity and for a new energy law that does not contribute to global warming and that recognizes consumers as equal partners in the sector. We will pursue our vision of an environmentally sustainable, accountable and democratic power sector in a post-Arroyo scenario. -30-

In her speech during the Philippine Energy Summit, Mrs. Arroyo echoed our position “that electricity rates being charged by Meralco would be far lower if it buys entirely from Napocor.” In today’s issue of The Daily Tribune, the reporter noted that under usual electricity rate disputes that reach the ERC, FDC is one of the three consumer groups (the other are Oil Price Watch and Nasecore) that petition against Meralco.

The Daily Tribune
06 February 2008, Page 8
http://www.tribune.net.ph/business/20080206bus1.html

Gloria goes on the offensive, hits Meralco for high rates
By Riza Recio

A day after former Speaker Jose De Venecia Jr. zeroed in on her and the First Family for a string of cases on graft and corruption, poll fraud and human rights abuses aired lengthily in a cable TV channel of the Lopez group, President Arroyo went on the offensive in the closing of the Energy Summit yesterday, practically blaming the Lopez-controlled utility firm Manila Electric Co. (Meralco) for the high cost of electricity in the country.

Mrs. Arroyo directed the Department Of Trade And Industry (DTI) and the Bureau of Consumer Protection to file petitions before the electricity regulatory body Energy Regulatory Commission (ERC) to seek the lowering of various charges of Meralco to bring down electricity costs.

Among others, she said Meralco has been charging the highest rate among the country’s 114 distribution firms with a 16-percent return-on-rate-base (RoRB), which prior to the implementation of the Electricity and Power Industry Reform Act (Epira) was pegged at only a 12-percent return on investment.

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Philippine Daily Inquirer
Breaking News / Nation, Page A4

http://newsinfo.inquirer.net/breakingnews/nation/view/20080206-117097/Energy-summit-failed-militant-group-claims

Energy summit failed, militant group claims
By Jerome Aning
Posted date: February 06, 2008

MANILA, Philippines — Militant groups on Tuesday said the energy summit organized by the government was a failure because it lacked credibility, urgency and boldness to address the pressing concern of escalating oil prices.

The Bagong Alyansang Makabayan (New Patriotic Alliance, Bayan) and its allied organizations held a protest rally at the SMX Convention Center in Pasay City on the last day of the three-day summit Tuesday.

“The public gained nothing from this extravagant show by the Department of Energy. Instead, the people will be burdened with more foreign debts that will be used to facilitate the increased foreign plunder of our energy resources,” said Arnold Padilla, a spokesperson for Bayan.

The Freedom from Debt Coalition said that “without changing the paradigm and current policies of the government, the summit’s resolutions would end up as mere palliatives to a chronic crisis.”

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GMANews.TV
05 February 2008, Online

http://www.gmanews.tv/story/79323/Activists-hit-Arroyos-Energy-Summit-resolutions-stage-protest-action#

Activists hit Arroyo’s Energy Summit resolutions, stage protest action

Various activist groups on Tuesday hit the Energy Summit sponsored by the government, saying it did not offer any real or lasting solutions to the problems facing the oil and power sectors.

The Freedom from Debt Coalition (FDC) said it believes that “without changing the paradigm and current policies of the government, the summit’s resolutions will end up as mere palliatives to a chronic crisis.”

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GMANEWS.TV
Business
http://www.gmanews.tv/story/84668/Consumer-group-wants-Meralco-stripped-of-AGRA

3/13/2008 | 05:34 PM

MANILA, Philippines – A group of electricity consumers called the EmPower asked Thursday the Energy Regulatory Commission (ERC) to scrap the pricing scheme to prevent the Manila Electric Company (Meralco) from allegedly implementing non-transparent electricity rates increase.

In a statement, EmPower wanted the automatic generation rate adjustment mechanism or AGRA junked. The group also asked ERC to prohibit Meralco from enjoying cross ownership besides barring the firm from participating in the wholesale electricity spot market (WESM).

The group, which is an alliance of electricity consumers in the country, warned that Meralco might again reflect in its charges within the month almost a 20-centavo per kilowatt-hour increase in generation charge.

“This will mean a total increase of about P45/kwh to P67/kwh for those consuming 200 to 300 kilowatt-hours a month,” EmPower said.

EmPower said that the AGRA mechanisms being implemented by the ERC has treated electricity consumers as mere recipients of notices and announcements of increases in the generation charges without conducting public hearing and consultation with consumer leaders.

“It is very seldom that ERC finds over-charging in the generation charge and that the refund to be implemented after discovery of over charges, if there were any, does not truly return the true cost of money paid by people based on the experiences in past refunds by Meralco,” EmPower said.

The group disputed Meralco’s claim that generation charge is a pass through charge and that nothing goes to Meralco.

“Such may be true for distribution utilities that do not buy electricity from their sister generation company. But because the Electric Power Industry Reform Act (EPIRA), which governs the power industry in the country allows for cross ownership between generation and distribution companies, the Lopezes who control Meralco are able to benefit from the transactions between Meralco and its electricity supplies that area also Lopez-owned,” the EmPower said.

The group said that cross ownership between generation and distribution and all other subsectors in the power industry must be prohibited to prevent price collusion, manipulation and market abuses.

“Surprisingly, even when Meralco only gets 10 percent of its electricity requirement from WESM, the overall generation charge to be collected from the consumers has still increased. Meralco can actually get cheaper electricity if the interest it truly protects is that of its consumers and not of its owners who have also stakes in the generation sector,” EmPower said.

EmPower said that the Lopezes through the First Pacific Holdings Corporation have about 18 percent ownership in Meralco while the government only has a little more than 20 percent through the government financial institution that have investments in the utility.

EmPower said the Lopezes may now already have about 34 percent ownership of the country’s biggest distribution utility if the buyout of its partner in First Philippine Union Fenosa that have a 9.1 percent share in Meralco and buyout of 6.6 percent of the issued shares of Meralco from the Meralco pension fund had pushed through.

They added that the Lopezes also get some 40 percent of its electricity from sister companies First Gas Sta. Rita, First Gas San Lorenzo and Duracom.

EmPower said the ERC has not also resolved the price manipulation in WESM that happened in 2006.

“Because of price manipulations, the prices of electricity have shot up in 2006 from less than P3/kwh to about P5/kwh. How sure are we this time that such abusive behavior in WESM does not exist anymore and that the prices of electricity price have P3.40/kwh to about P6/kwh like in the past,” the EmPower said.- GMANews.TV

PRESS RELEASE

October 1, 2007

EmPower Consumers Alliance bares $9.1 billion power sector debts,

P5.60/kWh electricity rate hike

Group vows to block increase

Electricity consumers are up for a surprise next year as electricity rates are expected to increase three times than its price six years ago prior to the passage of the Electric Power Industry Reform Act (EPIRA).

EmPOWER Consumers, a newly-formed broad alliance of electricity consumers – residential and industrial/commercial, bared this during its launching today as they vowed to block such onerous hike that would be heavily and unnecessarily burden the poor electricity consumers.

The electricity consumers’ alliance is composed of the Freedom from Debt Coalition, former Akbayan Partylist Rep. Etta Rosales, NASECORE, Katipunan ng mga Magsisibuyas sa Nueva Ecija, and a number of groups that are either residential, industrial or commercial electricity consumers.

Former Akbayan Partylist Rep. Etta Rosales pointed out in her presentation the $9.1 billion power sector debts which dwarf the amount of potential debt from the ZTE-NBN deal is one of the two reasons for the increase. The other reason is the recovery of generation companies from traded electricity at the wholesale electricity market (WESM).

“The generation companies would be recovering P2.60/kilowatt-hour with the decision of the Energy Regulatory Commission absolving the Power Sector Assets and Liabilities Management Corporation (PSALM) from price manipulation which kicked up trading prices to P10 per kWh last year,” explained Pete Ilagan of NASECORE.

Besides this, the national government and PSALM would also be recovering P2/kWh from their stranded costs, largely due to the contracts undertaken by the state-owned power company with the independent power producers (IPPs).

“The Department of Energy said the $9.1 billion debt would be paid either through an increase in electricity rate or through borrowings. Either way, the Filipino people would be saddled by this $9.1 billion debt which far outweighs the potential $329 million debt from the anomalous ZTE contract for the National Broadband Network project,” said FDC Secretary General Milo Tanchuling.

The group also hit Meralco following the announcement of the National Power Corporation (NPC) that a 12-centavo per kilowatt-hour rate reduction will be experienced by Meralco customers for the electricity Meralco had sourced from NPC for the past 10 months.

EmPOWER Consumers said the rate reduction could have been enjoyed earlier and could have been higher had Meralco acted on this earlier and taken more electricity from NPC early on. “Meralco deprived consumers of such relief as it only sourced about 30 percent of its load requirement from NPC while a bigger volume of electricity is sourced from WESM until late last year despite NPC’s lower price.”

Meralco recently sources 15 percent from the WESM despite the volatility of its prices while the rest is from independent power producers owned by the Lopezes. Instead of getting the full 30 centavos per kilowatt-hour rate reduction, consumers would be getting only 40 percent of it..

EmPOWER Consumers said it would demand from the government to make true its promise to bring down electricity rates.

“The fulfillment of this promise is long overdue. Enough of band-aid solutions and empty rhetoric!” the group said.

EmPOWER Consumers vowed to oppose the privatization of the National Transmission Corp. and the continuous payments to the onerous IPP contracts by the government. It also called for the scrapping of the Value Added Tax on power which adds up to the financial burden of the people. (30)

MANIFESTO

OF ELECTRICITY CONSUMERS

AGAINST HIGH ELECTRICITY RATES

For the past six years, the Filipino people have long endured the skyrocketing price of electricity – a far cry from the government’s promise to bring down electricity rates with the passage of the Electric Power Industry Reform Act (EPIRA) in 2001. To date, the Filipino people have yet to see a significant decrease in their electric bill and not mere drops in the bucket.

Prior to the EPIRA, the electricity rate of residential consumers was P5 per kilowatt-hour (kWh). Today, it has more than doubled at P11/kWh. As a result, industrial electricity rates in the country as of 2006 made the Philippines no.1 in terms of highest electricity rates in Asia.

Electricity rates may reach P15/kWh—thrice the pre-EPIRA amount—because of the additional P2.60/kWh for the recovery of generation companies that traded electricity at WESM rates and the P2/kWh that will be recovered from the consumers for the stranded costs of the National Power Corporation (NPC) and the Power Sector Assets and Liabilities Management Corporation (PSALM).

The P2/kWh stranded cost recovery is for the $9.1 billion NPC debts assumed by the national government and for the government’s financial obligations under its contracts with the independent power producers (IPPs). The Department of Energy said the debt would be paid either through an increase in rate or through borrowings. Either way, the Filipino people will be saddled by this $9.1 billion debt which far outweighs the potential $329 million debt from the anomalous ZTE contract for the National Broadband Network project.

Consumers would also be facing compounding burdens with the Energy Regulatory Commission’s move to change the rate determination from return on rate base to performance-based rate. If this rate methodology is adopted, further increase in power rates will be shouldered by the consumers as the profit margin of distribution utilities will go beyond the current 12% RORB cap.

Thus, we, electricity consumers in the Philippines, have come together under the alliance – EmPOWER Consumers – to put a halt to our misery and seek redress from all the burdens the government and electric companies have caused the people.

We, the EmPOWER Consumers, unite to demand from the government bring down electricity rates.

We call for a halt to the privatization of the National Transmission Corp. (Transco) and of the generation plants using natural resources such as hydropower and geothermal, as well as the continuous payments to the onerous IPP contracts guaranteed by the government. These will only further aggravate the already high power rates while ensuring risk-free profits for the private sector.

We call for the removal of the Value Added Tax on power. VAT, effectively, adds 10 percent to the electric bill of consumers, which adds up to the financial burden of the people.

We also call for the genuine democratic ownership of the 119 electric cooperatives.

In truth, what we have paid for both consumed and non-consumed electricity is enough to make us consumers part owners in the electric power industry! Hence, we seek the democratization of access, ownership, and control in the power industry to give us a voice in decisions affecting the generation, transmission and distribution of electricity – a vital necessity in this modern life and progress.

October 1, 2007