Meralco accused of price manipulation

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Tuesday, January 21, 2014


(UPDATED) Petitioners against the record power rate hike of the Manila Electric Company (Meralco) accused the firm on Tuesday of price manipulation for its high bids at the Wholesale Electricity Spot Market (WESM).

Bayan Muna Representative Neri Colmenares said in an oral argument at the Supreme Court (SC) that Meralco bought power from WESM through its supplier Aboitiz-led Therma Mobile, Inc. for P62 a couple of times, especially when the Malampaya gas facility off Palawan underwent a maintenance shutdown from November to early December last year.

Meralco had said it had nothing to gain from the generation charge it will pass on to its nearly five million customers although Colmenares pointed out that the distribution firm had control over the price offers to WESM.

He alleged that Meralco practically increased to P62 the price of electricity it purchased through the WESM.

"These acts are antagonistic to the interest of Meralco's customers, and in violation of Meralco's duty under Section 4 of its franchise which provides that Meralco 'shall supply electricity to its captive market in the least cost manner,'" Colmenares said.

This led Senior Associate Justice Antonio Carpio to surmise that Meralco could have profited from the transaction since it should only collect P8.65 from consumers as pass-through charge because this is its highest contract price with Therma Mobile.

The petitions also scored the Energy Regulatory Commission (ERC) for approving the P4.15 per kilowatt-hour rate hike without due notice and hearing and for failing to curb market abuse.

Leonard de Vera, counsel for petitioner National Association of Electricity Consumers for Reforms (Nasecore), said the
Court must stop the automatic rate adjustments or increases to recover generation costs as unconstitutional for violating consumers' right to due process.

He cited an SC ruling in 2006 that slammed the ERC for approving Meralco’s application for the increase in generation charge from P3.1886 per kWh to P3.3213 per kWh in June 2004 for lack of publication and hearing.

For his part, Associate Justice Roberto Abad suggested that the petitioners should give the Court reason to annul the Electric Power Industry Reform Act (Epira), as the law provides that the ERC cannot regulate the prices charged by suppliers.

Last December 23, the SC issued a 60-day temporary restraining order (TRO) on the power rate hike, basing on three petitions filed by the Makabayan bloc in the House of Representatives, a group of Meralco consumers and other militant groups.

The petitioners had already asked the SC to declare Sections 6 and 29 of the Epira unconstitutional in declaring that power generation supply are not public utilities and their charges are beyond government regulation.

"These problems that the millions of Meralco consumers are facing now is driven by the fact that prices imposed by generation companies and suppliers of electricity are not subject to regulation by the State, as these sectors are no longer considered public utilities," said Bayan Muna Representative Carlos Zarate.

Meralco, the government and generation companies will present their side on February 4.

The Court also ordered the Department of Energy (DOE), Philippine Electricity Market Corp. (PEMC), National Grid Corporation of the Philippines (NGCP), Power Sector Assets and Liabilities Management (PSALM), Meralco and ERC to submit several documents by January 30.

These include the Philippine Energy Plan and Power Development Program from 2010 to 2013, list of power plants, their owners and stockholders and power supply agreements, among others.

The hearing was greeted by protests calling on the High Court to permanently stop Meralco from collecting high generation charge from consumers.

Various youth groups including Anakbayan and Kabataan partylist joined people’s organizations and consumer groups in “occupying Padre Faura Street” in Manila where the SC is located.

Members of Anakbayan also marched to nearby Meralco Bustillo branch in Manila and pelted it with red paint while a “blackout” protest was held on Tuesday night in several communities in Manila, Quezon City and neighboring cities.

Last December 23, the SC issued a 60-day temporary restraining order (TRO) on the power rate hike, basing on two petitions separate petitions filed by the Makabayan bloc in the House of Representatives, a group of Meralco consumers and other militant groups.(Sunnex)

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