Thursday, May 22, 2008 ERC chief denies knowing Meralco's pass-on practice
ENERGY Regulatory Commission (ERC) chairman Rodolfo Albano does not know that the Manila Electric Company (Meralco) is billing its consumers for its own electric consumption, saying this is a wrong practice.
"I myself was taken aback when I was cruising in the Mediterranean Sea," Albano told House committee on energy chairman Juan Miguel "Mikey" Arroyo during Wednesday's hearing.
Albano was absent in the initial committee hearing last week when congressmen berated the ERC for its failure to control the cost of electricity.
He denied what called "malicious imputations" that he met with Meralco owner Manolo Lopez during his trip to Europe, saying the vacation with his family, including his son, Isabela Representative Rodito Albano III, was scheduled as early as March.
"I did not see the face of Mr. Lopez nor his shadow," he said. "The travel was not intended to absent myself in the hearing but now, I'm happy to be back."
The elder Albano said it is within the power of the ERC to revisit its Implementing Rules and Regulations (IRRs) and possibly amend it to stop the practice of passing on to consumers the electricity bills of distribution companies like Meralco.
"Company use should not be passed on to consumers," he said when asked by Arroyo if the "mistakes" in the ERC's IRR can be "rectified."
On the questioning of Camarines Sur Representative Luis Villafuerte, Chairman Albano said he has found out that the practice of allowing power distributors to charge one percent of its own power usage to consumers was authorized by the old Energy Regulatory Board (ERB) when it issued its guidelines during the 1990s.
"We just inherited this," he said, retorting to Villafuerte who stressed that such practice is not provided for by Republic Act (RA) 7832 or the Anti-Electricity and Electric Transmission Lines-Materials Pilferage Act of 1994 which allows distribution utilities to charge systems losses worth 9.5 percent of its total losses.
The ERC's IRR still allows the recovery of company use-up to one percent or actual whichever is lower.
Meralco charges consumers its company use under its systems loss charges, which is defined as the portion of electricity, which is either pilfered or lost during transmission.
Meralco's 9.5 percent system loss has been heavily blamed for high electricity rates.
The Lopez-controlled power distributor has said that at a pass-on rate of P5.7 per kilowatt-hour, Meralco's consumption is worth P427.5 million yearly.
Villafuerte said there is a glaring mistake in the implementation of RA 7832 because the practice is clearly not within the ambit of the law.
"While the law authorizes the recovery of losses through a (price) cap, it should be technical and not company use," he said.
He said the government should also stop imposing a 12 percent expanded value-added tax (e-VAT) on systems loss because it is not a commodity.
Meralco vice president for utilities Ivana dela Pena said Meralco had a total systems loss worth P165 billion last year and only charged P16 billion of it to consumers based on the 9.5 percent legal pass-on rate.
She said the company did not even breach the one percent pass-on rate for company use and only charged .27 percent for a total systems loss pass-on amount of P16.593 billion, which Villafuerte still found dubious.
Meralco president Jesus Francisco said they come up with the amount by monthly monitoring their sales and comparing it to the amount of the electricity supply they buy from generation companies including the National Power Corporation (Napocor).
Meanwhile, a Meralco official has called the statement issued by Winston Garcia, president of Government Service Insurance System (GSIS), that the Lopezes are engaging in dirty tricks as "irresponsible and downright false".
"It was and will never be the policy of Meralco management to engage in dirty tricks. I don't know if that holds true with Mr. Garcia. In fact, if observers will note that we never engaged Garcia in a word war ever since he started peddling his unsubstantiated claims. But it seems he has made it his resolve to continue his tirades that are devoid of facts. I would like to categorically state that the Meralco management never solicited proxies after the deadline lapsed last Saturday. Mr. Garcia's claim is false, untrue and devoid of any factual basis," said Elpi Cuna, Meralco vice president for corporate communications.
According to Cuna, Garcia and his spokesperson, Estrella Elamparo, have "made it a habit to spew false information and unsubstantiated claims."
He also reiterated that no effort was spent on the part of the Meralco management to solicit proxies. "We have always upheld what is legal and right," he said.
Cuna also pointed out that Garcia's claim during the Cabinet meeting in Panglao, Bohol that the officials of Meralco are paying a flat rate on their electricity bills was outright falsehood.
"I pay what all customers exactly pay. Translated on a per kWh basis, I pay about 10 pesos per kWh while a marginalized consumer pays only about four pesos per kWh because of the lifeline rates. This benefits almost half of the entire residential customers or close to two million residential customers. Mr. Garcia and Atty. Elamparo are welcome to scrutinize and look at my electric bill if they want," he added. (WV/MSN/Sunnex)
