MANILA, Philippines--In a bid to bring down the high electricity rates in Luzon, President Gloria Macapagal-Arroyo has asked the country's business leaders to join the government in what could be a "tough legal fight" with the Lopez-led Manila Electric Co. before state energy regulators.

Ms Arroyo herself announced that the Energy Regulatory Commission (ERC) will start hearing on May 6 the government's omnibus petition seeking to force Meralco to bring down the power rates it is charging residents in Luzon, including Metro Manila.

"Please be there with all your legal luminaries because this is going to be a tough legal fight and you will be the beneficiaries, your workers will be the beneficiaries, your consumers will be the beneficiaries, the Filipino people will be the beneficiaries," Ms Arroyo told the Federation of Philippine Industries (FPI) and the Federation of Filipino-Chinese Chamber of Commerce and Industries Inc., (FFCCCII) at the Intercontinental Hotel in Makati Friday.

"You are the ones with the means and articulateness to be able to make a good case before the ERC," she said during the launching of an antismuggling campaign jointly spearheaded by the FPI and FFCCCII.

The President also announced that she had ordered the state power generator, the National Power Corp., to charge Meralco only P4.11 per kilowatt hour, the same rate it charges the Luzon electric cooperatives, instead of the P6 to P10 per kWh that Meralco has been buying from Napocor and the wholesale electricity spot market (WESM).

She said Napocor has done even better. It will now be charging government-run economic zones P3.52 kWh, from P4.11 kWh.

"The generation cost of high-load factor Peza ecozone locators has been reduced to an average Napocor billing rate to Meralco not of P4.11 but of P3.35 per kWh," she said.

Saying that electricity was one of several strategic areas that the government was investing programs in to promote competitiveness, Ms Arroyo said she had been "wondering out loud why power costs in the Luzon Urban Beltway, where many of you operate, should be so high when Luzon is reliant on imported oil for only 1 percent of its power."

"Therefore, we know there is room for improvement in the rates," she said.

Meralco is the country's biggest electricity distributor, with 20 million customers nationwide, 30 percent of whom are in Metro Manila.

Electric bill up by 67.17 centavos

Meralco customers last month saw their electricity bills rise by 67.17 centavos per kWh because of increases in the generation, transmission and systems loss charges. With the increase, residential customers of Meralco who consume 200 kWh a month were charged an additional P149, an increase of 8.95 percent.

System loss refers to electricity lost due to pilferage and heat as it passes through transmission and distribution lines. The loss accounts for 8.0 percent of Meralco consumer's bill or 58 centavos per kilowatt-hour.

As early as February when she addressed the Energy Summit, the President had instructed the Department of Trade and Industry and other government agencies to file petitions with the ERC that would address the public clamor for lower electricity rates, specifically directed at Meralco.

These petitions were as follows: enjoining Meralco from buying electricity from the WESM at peak hours; ensuring preferential treatment for households and power-intensive industries in distribution charges; prohibiting Meralco systems losses from being charged as a separate item; and requiring Meralco to charge the same rate as the Visayas Electric Co., Cebu Electric Co., and Davao Light and Power "whose distribution charges, along with all 140 utilities and cooperatives, are all lower than Meralco."

Arroyo had also earlier asked Congress to amend the Electric Power Industry Act (EPIRA) to remove the requirement of 70 percent power privatization for open access, adding that "open access will allow industrial consumers like you to enjoy the power of choice which will also mitigate the cost of electricity."

Meeting until dawn

In her speech Friday, Ms Arroyo said she met until dawn Friday with senior officials led by Executive Secretary Eduardo Ermita to discuss among other things, how to fast-track the omnibus petition before the ERC.

She invited FPI president Jesus Aranza to participate in the hearing, reminding him and other businessmen that along with the people they stand to benefit from it.

"Remember, these are petitions. We don't know how the ERC will finally judge. They are independent of us. We cannot dictate on them," she said.

Meralco to GSIS: Not true

In a related development, Meralco on Friday said the allegations by Winston Garcia, the Government Service Insurance System president and general manager, that Meralco was denying access to corporate documents were untrue.

In a statement, Christian Monsod, Meralco director and senior consultant to the chair, said Meralco had always been very careful in complying with the law regarding the right of a director or stockholder to examine its records.

"In a long line of decisions, the Supreme Court has provided the guidelines for the exercise of the right to examination: it covers all books and records although that is not absolute; it must be exercised at reasonable hours on business days; and the demand is made in good faith and for a legitimate purpose," he said.

Contrary to Garcia's statements, Meralco had actually repeatedly invited the GSIS head to review requested documents at the Meralco premises any time during office hours, he said. Meralco even provided Garcia with some of the documents he had requested from the company.

The state-run pension firm holds four seats in the power utility's 11-member board. The government has a 33-percent stake in Meralco, of which 23 percent is owned by the GSIS.

In a statement the other day, Garcia alleged that Meralco had "turned a deaf ear" to the GSIS's repeated requests for access to corporate documents.

No special treatment

Monsod said Garcia should understand that Meralco had to treat all its around 80,000 shareholders equally, and that any special treatment to any shareholder would set a precedent that could open the company to suits.

Regarding other issues that Garcia had raised against Meralco, Monsod said the company's management had offered to provide a full briefing, to be scheduled at the GSIS head's convenience.

Meralco treasurer Rafael Andrada said if Garcia wanted a management change in the distribution utility, he would first have to take control of the company's board during this month's shareholder meeting.

Proxy war

"Ultimately, the shareholders will have to decide which management they prefer, the present management or the one that is chosen by Garcia," he said.

Talk has persisted of a proxy war between the Lopez group and the GSIS for control of Meralco.