Ban on cross-ownership in power sector proposed

MANILA, Philippines — Bayan Muna Rep. Carlos Zarate wants cross-ownership of distribution utilities (DU) and power generation companies banned “to stop the anticonsumer self-dealing transactions” among these firms.

In a statement issued on Sunday, Zarate said there was a need to ban cross-ownership in the power sector while Electric Power Industry Reform Act (Epira) of 2001 was not yet repealed.

Zarate aired the call after the Energy Regulatory Commission (ERC) ordered Manila Electric Co. (Meralco) to recover from its customers P2.38 billion in undercollected generation charges after it told the power distribution giant to refund P1.4 billion worth of electricity charges to its customers.

“These types of ‘bigay-bawi’ (give-get back) schemes are what we are trying to prevent especially since we are still investigating the billions of overcharging of Meralco in the past years,” he said.

The progressive lawmaker also hit Meralco’s continued attempts to customize the terms for the upcoming bidding of power supply needs in favor of its subsidiary Atimonan One Energy Inc.

“The Department of Energy’s (DOE) competitive selection process (CSP), which supposedly provides rules to protect consumers during power supply auctions, is proving useless in stopping the dubious customization of Meralco’s power supply bidding rules,” he said.

A 2015 DOE circular, which originally launched the CSP, stated that a “third party recognized by the DOE shall supervise the bidding process under the CSP policy.”

“But in 2018, the DOE released a new CSP circular, wherein the requirement for a third-party auctioneer has become optional,” Zarate said.

“Instead of an independent third-party auctioneer, the 2018 DOE allowed the DU to create a DU-controlled third party bids and awards committee (TPBAC), tasked to supervise the bidding. Meralco has taken advantage of this change in CSP rules to create a Meralco-controlled TPBAC. Expectedly, the TPBAC is customizing the terms for holding an auction that favors Atimonan One,” Zarate added.

“Only a ban on cross-ownership can now save Meralco customers from higher rates that Atimonan One will submit—and Meralco will surely accept—during the sham Meralco bidding in January 2021,” he added.

Zarate recalled that in 2016, Meralco attempted to award to Atimonan One a 1,200-megawatt power supply agreement (PSA) that a congressional inquiry found to contain terms onerous to consumers.

This PSA, along with six other contracts that Meralco also awarded to affiliate companies, was nullified by the Supreme Court in May 2019.