Senate starts probe on alleged power sector collusion

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Wednesday, December 18, 2013

SENATORS on Wednesday grilled the Energy Regulatory Commission (ERC) amid allegations of collusion among power producers in the country.

Senator Antonio Trillanes IV, during the joint hearing of the committee on energy and committee on trade, commerce and entrepreneurship, said the several shut downs lately of power plants in Luzon was a reflection of the weak hand of government in the power sector.

Trillanes said it is clearly stated under the Electric Power Industry Reform Act (Epira) that any questionable behavior of possible market manipulation is a violation of Section 45 and therefore can be charged before the court.

"If there is collusion, then they can be held liable under Sec. 45 with a maximum penalty of P50 million and can be place behind bars," he said.

He said the Department of Energy (DOE) should set directions while the ERC should be overseeing the several stakeholders in the energy sector.

Meralco president Oscar Reyes said the country's biggest power distributor was forced to buy power from sources, which offers these at high spot prices, because of the shutdown of the power facilities.

But when asked by Trillanes on the possible rollback of electricity rate by April next year, Reyes refused to say anything prompting the senator to call the attention of ERC.

"ERC, kailangan siguro i-review n'yo ito. Maliwanag na pinalulusutan na tayo rito," Trillanes said.

Senate Majority Leader Alan Peter Cayetano asked Meralco if the government will have any gain in this increase.

"Let's just be straight to the Filipino people. Tataas ng P4.15 per kilowatt hour (kwh) at ang P3.44 per kWh pupunta ito sa generation cost. Pero ang P0.71 ay gobyerno ang kukuha nito?" asked Cayetano.

Reyes explained that Meralco has no gain in this increase and was merely following the dictate of the market. He maintained that the small amount that goes to Meralco is merely for transmission.

Meralco's franchise area covers 31 cities and 80 municipalities in Metro Manila and several provinces in Luzon, and is home to 24.7 million people, a fourth of the Philippine population.

Senate President Pro Tempore Ralph Recto asked both the ERC and Meralco the possibility of suspending the scheduled increase considering the present situation of the economy and the allegations of collusion.

ERC chairperson Zenaida Cruz-Ducut, who was present at the Senate hearing on Wednesday, said that they will study this possibility and will give feedback to the senators the soonest time.

Ducut promised to punish those who take advantage of the situation and recover the charges that were passed on to the consumers.

Senator Sergio Osmena III asked Ducut if she was aware of the calculation of loss load estimate for Luzon.

Ducut admitted that she is not aware at all on the exact formula and the supposed reason why the level of reserve, which should be 32 percent, was lowered to 18 percent.

"I'm sorry your honor," Ducut said during the hearing.

Earlier, power producers initially assured the DOE officials they would meet the supply gap expected to be caused by the scheduled monthlong maintenance shutdown of the Malampaya natural gas pipeline, based on DOE preliminary investigation report.

But when the Malampaya pipeline was shut down from November 11 to December 10, the DOE was caught flat-footed as power industry players failed to fulfill their commitments.

While the Malampaya pipeline was shut down, natural gas-using plants that supplied Meralco with power had to shift to more expensive fuel to keep on generating power, jacking up Meralco’s generation charge.

"We agreed to use liquid fuel to maintain supply to avoid power outage but liquefied fuel is more expensive than natural gas from Malampaya," Reyes said during the hearing.

Senators urged their colleagues to seriously consider revisiting the provisions of the Epira, saying that the law has proven to be a failure in lowering the cost of electricity in the country.

Senator Juan Edgardo Angara, who chairs the Senate committee on ways and means, said Congress must try to determine what are the areas that need to be revisited, and where the law was rendered ineffective.

Senator JV Ejercito, who filed Resolution 416, said Epira has failed to protect consumers from the sudden increase of power generation charges and lower electricity rates.

He said the Epira, after 12 years of existence, has also failed to dismantle the cartel and provide inexpensive power supply.

Ejercito said that if the government does not act against the alleged collusion, the power producers will persistently take advantage of the situation.

Senators Trillanes, Ejercito, Angara and Bam Aquino agreed that it is high time that the law is reviewed and possibly amended, to bar corporate greed and abuse of law by power distribution utilities.

Meanwhile, former Senator John Osmeña, Epira author, said that those sitting in the government, specifically the current ERC chief, do not know anything about electric power industry as he blamed former President Gloria Macapagal Arroyo for the power sector mess.

He also called for a review of the law, saying that some of the provisions of the Epira do not match the present times anymore.

"Dapat ipagbawal na ang direct or indirect control or participation of generating utilities by distribution utilities. We should review thoroughly and carefully," Osmeña said. (Camille P. Balagtas/Sunnex)

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