Meralco overcharging, says Trillanes

Sen. Antonio Trillanes on Thursday threatened Manila Electric Co. (Meralco) with an audit after seeing indications of overcharging as the power distributor begins to implement a three-stage rate increase of P4.15 per kilowatt-hour (kWh).

Trillanes, who raised the issue with Meralco president and CEO Oscar Reyes in a Senate hearing last week, said the distributor was trying to pull a fast one on the public when it said there would be no rate hike in January.

Under the terms set by the Energy Regulatory Commission (ERC), the P4.15 rate increase will be implemented in phases: December at P2.41, February at P1, and March at P0.44.

“They said there will be no increase in January, but it appears that the deception they’re trying to do here is on the computation, that the generation cost will still be based on the December rate of more than P7,” Trillanes said in an interview on radio dzBB.

The ERC has put a cap on power generation charges that Meralco may pass on to its customers.

In an order issued on Friday, the state regulator directed Meralco to “maintain” the generation charge at P7.37/kWh in its January billings.

The order came after Meralco informed the ERC on Thursday that the generation charge for January could be higher than its earlier estimate of P7.37/kWh.

Citing its mandate of ensuring the “adequate promotion of consumer interest,” the ERC put its foot down and directed Meralco to defer “the imposition of any further generation charge adjustment.”

The order also modifies the clearance the ERC earlier gave to Meralco for the imposition of a generation charge of P1/kWh for its February billings and P0.44/kWh for its March billings to recover the generation cost it deferred in its December billings.

Under the order, Meralco must apply to the ERC for approval of every plan for recovery of generation costs.

The agency gave Meralco 90 days to comply with the order.

Too much

Trillanes found Meralco’s P7.37/kWh generation charge too high.

“The point of reckoning should be before the Malampaya shortage when the price was just more than P5.60. They don’t have an increase in January, but the basis is still the December rate,” he added.

Trillanes said that under the plan, Meralco customers who paid P1,000 for their power consumption in November would pay P1,800 for the same amount of power in December as an effect of the initial tranche of the rate increase.

He said Meralco customers would also pay P1,800 for the same consumption in January, something no longer justified.

Meralco asked the ERC to authorize the P4.15/kWh increase to cover higher generation cost.

Puzzling

But Trillanes said he found the higher generation cost a puzzle because the demand was lower and the supply, higher.

“The December increase remains in effect in January even if [Meralco] no longer [has] the reason of the plants shutting down. Meralco no longer has a reason to buy expensive electricity,” he said, referring to the simultaneous shutdowns at seven power plants and the monthlong shutdown for maintenance of the Malampaya gas pipeline.

“Many of our countrymen in Metro Manila will be on vacation and many companies, offices and factories have also shut down operations because of the Christmas break. So the consumption should be low,” he added.

The high cost of power should no longer be reflected on billings for January, Trillanes said.

“[Meralco] said [there] won’t [a rate] increase in January, that [it would] just collect the generation cost. So the question here is why the generation remains high at over P7 per kilowatt-hour?” Trillanes said.

Audit for Meralco

Trillanes said he would move for an audit of Meralco’s books of accounts if the January rate plan pushed through.

The inquiry of the Senate committee on energy into the power rate increase will resume next month when Congress returns from the holiday break.

“This January case involves Meralco…. They didn’t ask for an increase, but … they will also be collecting the December rate in January,” Trillanes said.

“There is deception involved here. So to find out how it works, let us open their books. [The Commission on Audit] can do the audit,” he said.

“Meralco is a public utility imbued with public interest so the government can intervene,” he added.

At the last hearing on the rate increase on Wednesday, Trillanes confronted Reyes with his observation that Meralco appeared to be imposing an additional P2 charge in January based on estimated additional generation cost.

Instead of the P5.6/kWh normal price, Meralco is imposing P7.3 in January, indicating an attempt at “overrecovery,” the senator said.

“We take exception to that. The P3.44 is a general charge that translates into an absolute amount,” Reyes told Trillanes.

“Once we have recovered the absolute amount, we wish to assure your honor that there’s no single cent overrecovery. We will simply recover the absolute amount,” Reyes said.

The P4.15/kWh rate increase, he said, was composed of P3.44/kWh in generation charge plus taxes.

By the end of April, there will be an “automatic rollback,” he said.

Public opposition

The Meralco rate increase has met with opposition from the public, with lawmakers from the Makabayan bloc in the House of Representatives asking the Supreme Court to stop it and rule on the constitutionality of two provisions in the Electric Power Industry Reform Act (Epira) of 2001 that hold that power producers are not public utilities and bar the ERC from regulating their rates.

The National Association of Electricity Consumers for Reforms (Nasecore), the Federation of Village Associations and the Federation of Las Piñas Homeowners Associations have also filed a joint petition asking the Supreme Court to stop the Meralco increase.

On Sunday, Bayan Muna lawmakers said the ERC order stopping Meralco from jacking up its generation charge showed that the commission was wrong in authorizing the rate increase and it was only the public outcry against it that made the commission realize its error.

“This is a fatal admission on their part that they were wrong and were violating their mandate in allowing the provisional increase,” Bayan Muna Rep. Neri Javier Colmenares said in a statement.

“But it is now too late to save their skin from possible civil and criminal cases that will be filed against them if it is proven that they issued the provisional approval because they benefited from that transaction. We will also investigate [to see] if they committed other similar transactions in their approvals of other rate increases requested by other distributors,” he said.

“The ERC order, flawed as it was, is a patent albeit belated admission by the [commission] that Meralco’s staggered increases are capricious at the least and baseless at the most,” said Bayan Muna Rep. Carlos Isagani Zarate.

Misleading lawmakers

Kabataan Rep. Terry Ridon said the ERC order showed that ERC Commissioner Josefina Patricia M. Asirit, a daughter of Cebu Vice Gov. Agnes Magpaje and niece of Cabinet Secretary Jose Rene Almendras, “misled” lawmakers when she testified in the House energy committee probing the rate increase on Wednesday that the commission had no power to stop the Meralco rate increasse.

“With its latest decision, [the ERC] showed that Asirit and her fellow ERC commissioners have the power to stop any unjustified rate hike,” Ridon said. “If they like it, they can find a way. If they don’t, they have many excuses.”—With reports from Gil C. Cabacungan and Riza T. Olchondra

Originally posted: 10:07 pm | Sunday, December 22nd, 2013

 

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