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Solon questions ERC approval of power supply deal despite House probe

04:31 PM September 27, 2017

Oppositors to Meralco’s power supply agreements rally outside the House of Representatives Tuesday to reiterate their opposition to the approval by ERC of the said deals. CONTRIBUTED PHOTO

One of the seven controversial power supply agreements between the Manila Electric Company (Meralco) and its affiliated generation companies that have been tagged as “sweetheart deals” by critics had already been approved by the Energy Regulatory Commission.

This was revealed in Tuesday’s joint hearing of the House Committees on Good Government and Public Accountability and Energy.

Asked by Bayan Muna Party-List Rep. Carlos Zarate if it was true that at least one of the seven questionable PSAs had already been approved by the regulator, ERC Commissioner Josefina Patricia Asirit confirmed that “provisional authority” had already been given to Panay Energy Development Corporation (PEDC).


Under the deal, Meralco will purchase up to 70 MW from PEDC, which operates the 2 x 82-MW coal-fired power generating facility in Brgy. Ingore, La Paz, Iloilo, and another 150-MW plant in the same location.

PEDC is a subsidiary of Global Business Power Corporation (GBP), one of the largest power producers in the Visayas.

Surigao del Sur 2nd district Rep. Johnny Pimentel, chairman of the House Committee on Good Government, asked Asirit if by provisional authority she meant that, in principle, the PSA had already been approved.

“It gives the utility the ability to draw power from the existing plant, especially…if I’m not mistaken, this one was…to augment the supply status that the demand of Meralco needed at a particular period,” Asirit said, adding there’s an “approval subject to final determination.”

Zarate said this provisional authority to PEDC should not have been given. Instead, he said the regulator should have rejected the PSA applications submitted after the deadline of the mandatory Competitive Selection Process.

“ERC apparently disregarded due consideration of the ongoing congressional probe and in effect gave Meralco-affiliated gencos unwarranted treatment,” Zarate said on the sidelines of the inquiry.

Zarate also questioned why the 20-year term of the seven PSAs is longer than Meralco’s franchise life, which expires in 2028.

Pimentel, on the other hand, said the applicants or gencos should have submitted their requirements way before the ERC deadline.


Asirit said three of the PSAs have yet to undergo hearings due to the lack of environmental compliance certificate (ECC). “For the others, we are still in the process of resolving–and some of which have been resolved–the interventions and motions to dismiss [filed] by parties.”

In the previous House hearing, Zarate had chided the ERC’s failure to submit copies of the seven Meralco PSAs and the minutes of ERC’s deliberation on the extension of the Competitive Selection Process deadline.

For allegedly failing to address graft and corruption issues that continue to hound the commission, the ERC budget was initially slashed to just Php 1,000 from its Php 351-million proposal, before the House Appropriations Committee chose to restore it last week.

Various consumer groups have questioned the legality of ERC’s extension of the mandatory competitive selection process that paved the way for Meralco to enter into 20-year supply contracts with its alleged sister companies.

They claim the 20-year PSAs effectively tied down Filipino consumers to power supply deals that could cost Php 12.44 billion annually.

They pointed out that the seven PSAs of Meralco with its sister companies cover 3,551 megawatts, or approximately 90 percent of its power requirements.

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TAGS: Carlos Zarate, House of Representatives, MERALCO, news, power sector, power supply agreements, Probe
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