Palace opposes lifting of TRO on power rate hike
MANILA, Philippines—Malacañang on Wednesday joined calls against lifting the Supreme Court’s suspension of the P4.15 per kilowatt-hour rate increase, reminding Manila Electric Co. (Meralco) that its distribution business—along with the rest of the power industry—was “imbued with public interest.”
“Government believes that unjustifiable price hikes should not be passed on to the people,” Communications Secretary Herminio Coloma told reporters, the day after Meralco told the high court that the temporary restraining order (TRO) on the rate increase would lead to power outages.
“Therefore, the proposed petition for the lifting of the TRO is not consistent with the public interest,” Coloma said.
The 60-day TRO on the rate increase, the biggest so far, will expire on Feb. 23.
The Palace said President Aquino remained “firm on the general welfare provision of the Constitution,” amid proposals that the government consider taking over Meralco to prevent power disruption in the future.
“He always reminds us, whenever we have discussions on issues, that if there are doubts or something is not clear regarding the interpretation of different laws, the President has the responsibility to ensure the general welfare of the citizens,” Coloma said.
Article continues after this advertisementP18B owed
Article continues after this advertisementDuring oral arguments on Tuesday, Meralco lawyer Victor Lazatin said the company owed power generators P18 billion because of the TRO issued by the Supreme Court last Dec. 23 froze the P5.67 per kWh in generation charge.
But Justice Marvic Leonen corrected Lazatin, saying the suspension affected only application for a P4.15/kWh increase to be implemented in December, February and March.
Lazatin said unpaid suppliers would stop delivering fuel to power plants that in turn would stop generating and delivering electricity to Meralco. The result, he said, would be blackouts.
While power supply was sufficient “for now,” the demand would increase in the summer months, with the demand peaking at 17 percent in April. In the end, the economy would suffer from the rotating brownouts, the Meralco lawyer told the high court.
Simultaneous shutdowns
After the Malampaya plant went on scheduled shutdown from Nov. 11 to Dec. 10, which overlapped with the shutdown of generating plants, Meralco was forced to buy power at a high rate from the Wholesale Electricity Spot Market (WESM).
The simultaneous shutdowns created a 45-percent shortfall in the average 6,000 megawatts (MW) that Meralco supplies to customers.
The Senate energy committee has opened an inquiry into the possible collusion that led to high power rates.
Foreseeable event
Malacañang reiterated the President’s position that the maintenance shutdown of the Malampaya natural gas plant was a “foreseeable event for which Meralco and other industry players should have prepared.”
“The President also believes in enforcing the provision of the Epira (Electric Power Industry Reform Act) on possible disgorgement of profits if current investigations by the DOE (Department of Energy) and the DOJ (Department of Justice) will establish that there has been collusion among the industry players,” Coloma said.
Face public wrath
Sen. Antonio Trillanes IV scoffed at the power distributor’s warning of power outages if it failed to pay power generation costs, threatening to summon its owners to face public “wrath.”
Trillanes said Meralco should not be issuing such a threat because there was sufficient power supply.
“There’s enough supply. So we’re not expecting any shortage to cause brownouts in the next few months,” Trillanes told reporters, reacting to Meralco’s arguments before the Supreme Court.
Then he added: “However, if they would dare to do so, as a blackmail to the Supreme Court and the government, then we will call all of its owners and make them face the wrath of the people.”
He was referring to the Senate inquiry into the record P4.15 per kWh rate adjustment that Meralco was to collect from its 5.3 million customers to pay for at least P9.6 billion in additional generation costs until it was restrained by the high court.
Dare to Meralco
Bayan Muna dared Meralco to carry out its threat of power outrages.
In a press conference, Bayan Muna Rep. Neri Colmenares said that such course of action would compel the government to take over Meralco’s operations to ensure stable power supply in the country’s biggest franchise area.
“Meralco’s threat has no basis because there is no question on supply. Meralco itself told the Supreme Court that total national supply was at 11,000 MW while peak demand was only 8,500 MW. There is no shortage, so why should there be brownouts?” asked Colmenares, one of the petitioners in the high court against the Meralco rate increase.
Colmenares said that based on Meralco’s arguments (since it could not pay the generation companies for power it used in November-December, power generation companies would stop supplying Meralco, which will then be forced to cut its service), the biggest issue was money and not supply.
“If they will cut power supply, then we will urge the government to exercise that provision in the Constitution allowing government takeover of companies in case of emergency. I hope Meralco does not push through with this threat because the people will surely not accept brownouts caused not by undersupply but by commercial reasons,” he said.
‘Smoking gun’
Colmenares said Meralco’s own admission that it forced Therma Mobile of Aboitiz Power to buy at P62 per kWh at WESM was the “smoking gun” the Supreme Court needed to rule against the P4.15 per kWh increase.
Colmenares said his group would pursue criminal charges against Meralco and its power generation firms for manipulating the surge in power prices during Malampaya’s monthlong shutdown.
“One possible motive of Meralco in the collusion is to lay the groundwork for its eventual entry into power generation, especially since its planned power plant in Subic had been stopped by the court,” he said.
Rotating brownouts
Told about Meralco’s warning of rotating brownouts if the power distributor was not allowed to collect the increase in generation charge, Coloma said the government was “serious in saying that the business of power distribution is imbued with public interest.”
“And the public interest mandates that that service be delivered without justifiable interruption,” he said.
He said unjustifiable price hikes would not be tolerated. “Second, collusion will not be allowed. [Power utility companies] should prepare for what is supposed to be forseeable, and they can’t just reason that they were not able to prepare,” he said.
Threats
But Coloma said neither Meralco nor the government should resort to “threats” over the issue of power rate increase.
“Under a democracy, we use reason, not threats,” he said.
Despite Aquino’s strong position against unjustifiable increases, Coloma said the Office of the President was not “prejudging” the outcome of the investigation of a possible collusion among power players, which led to the huge increase.
“There’s no conclusive determination yet and we have no prejudgment because all processes, including the one at the Supreme Court, are still ongoing,” he said.
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