Sen. Arroyo: Throw ERC into the river
By Gil C. Cabacungan Jr., TJ Burgonio
Philippine Daily Inquirer
First Posted 01:23:00 05/14/2008
MANILA, Philippines--Sen. Joker Arroyo on Tuesday suggested that the Energy Regulatory Commission (ERC) be "thrown into the river" for failing to check abuses in the power industry.
Arroyo called for a revamp of the entire ERC, headed by Rodolfo Albano Jr., to impose more stringent qualification requirements on potential members similar to those prescribed for members of the Monetary Board.
"Whatever problem we have is the fault of the ERC. They are supposed to police the industry and the success of the Epira (Electric Power Industy Reform Act) rests squarely on their shoulders. We're better off tossing them into the river," Arroyo said in an interview with reporters.
Arroyo noted that during the Joint Congressional Power Commission (Powercom) on Monday, both Manila Electric Co. (Meralco) and National Power Corp. (NPC) claimed that all of their moves that were questioned by the lawmakers had all been sanctioned by the ERC.
"The ERC appears to be approving their petitions and moves even if these are patently wrong. That is the danger with the ERC because they could be wrong in their decisions or giving favors to anyone," Arroyo said.
Sen. Francis Escudero said that if the pass-on charges of Meralco were indeed spurious, the ERC should be taken to task for allowing this practice to continue. "They get government salaries to protect consumer interest, I hope that they do a better job of that," Escudero said.
Sen. Miriam Defensor-Santiago, Powercom chair, has ordered the ERC to reject a petition by Meralco and NPC to pass on their mutual obligations to their clients and to impose a limit on how much system losses Meralco could pass on to its customers.
Arroyo welcomed the Powercom hearing as "very timely" considering that it has crystallized the myriad issues that had hobbled the power industry for years.
'Sweetheart deals'
Arroyo said he would have to wait until Meralco and NPC had submitted their papers to the Powercom before he could conclude which of them was responsible for the high electricity rates.
"It's hard to say there was abuse by Meralco because they are denying it. I believe that Meralco should explain all of these charges of overcharging on system losses and self-dealing," Santiago said.
No review power
During the hearing conducted by the House of Representatives energy committee yesterday, ERC Executive Director Francis Juan said that the commission has no power to review "sweetheart deals" between Meralco and Lopez-owned independent power producers (IPPs).
Juan said that the IPP contracts were signed before the ERC was created. "Our coverage only entails ensuring that their supply [rate] is the lowest," he said on questioning by Bayan Muna party-list Rep. Teodoro Casiño.
Asked whether it was better to prohibit such contracts to ensure fair competition and lower rates, Juan said: "We would reserve it to the wisdom of Congress [to decide]."
Juan also said that so far, Meralco has not exceeded the 50-percent threshold for purchasing power from the Lopez-owned IPPs.
Foot-dragging slammed
Other lawmakers took the ERC to task for taking too long to decide on key cases, including the P52-billion debt settlement deal between Meralco and NPC dating back to July 2003.
The solicitor general opposed the settlement, claiming it was disadvantageous to the government.
"You call yourself Energy Regulatory Commission, what are you regulating?" Bacolod Rep. Monico Puentevella said. "It's already 2008, and yet you haven't decided on the case until now. What happened during the past five years? If the consumers have not suffered enough, you won't even move."
Juan explained that the resolution of the case had dragged on because it took the parties a long time to prepare their documents. He said the agency would issue its resolution on the case in a few weeks.
Undermanned
"We are undermanned," ERC Commissioner Alejandro Barin said, eliciting chuckles from the lawmakers. ERC chair Albano is on vacation in an undisclosed place and has not shown up in the Meralco hearings.
Camarines Sur Rep. Luis Villafuerte and Manila Rep. Amado Bagatsing also chided the ERC officials for allowing Meralco to subject its system losses to the value-added tax.
"One way of reducing prices is to reorganize the ERC," Villafuerte said.
Bagatsing also chided the ERC officials for saying that the implementing rules and regulations of the Anti-Pilferage Act allowed Meralco to incorporate systems loss in its operating expenses.
"There's nothing in the law that says you can charge that," he told the ERC officials.
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