Workers to ‘gods of Faura’: Stop power firms’ blackmail, fraud

While politicians and businessmen have joined President Aquino for the National Day of Prayer and Solidarity to the victims of natural and man-made calamities, workers in Metro Manila belonging to the labor coalition Nagkaisa, trooped to the Supreme Court to seek relief and ultimate deliverance from unjust power rate hikes.

The fifteen (15) justices, also known as ‘The gods of Faura’, were set to hear oral arguments tomorrow on several petitions seeking injunctions to Meralco’s P4.15/kWh rate increase. Prime in the agenda to resolve are questions on whether or not the Energy Regulatory Commission (ERC) committed grave abuse of discretion in approving Meralco rate hike; whether or not automatic rate adjustment is valid; and whether or not the generation sector is not a public utility and therefore beyond regulation by ERC, among others.

“We pray that the justices deliver us from a decade-old fraud and industry blackmail,” said Nagkaisa in a statement released during their picket at the gates of the Supreme Court building. The group was referring to frauds committed under the Electric Power Industry Reform Act (EPIRA), including the latest allegations on collusion and market abuse among power firms and the latter’s threat of rotating blackouts had they fail to collect rate increases.

Nagkaisa asserted that since the enactment of EPIRA which led to the deregulation of the generation of generation sector, privatization of Napocor assets, the creation of spot market, and the introduction of performance-based regulation, fraud became the norm in the power industry as shown by rising prices and cartelization.

“It is no secret that owners of power firms, the so-called Voltage 5 (Aboitiz, Lopez, San Miguel, Henry Sy, and Pangilinan) have been earning record high profits from record high tariffs of their power-related firms,” said Nagkaisa.

The labor coalition recalled that lowering the cost of power was the pledge of the Arroyo administration when it prodded Congress to pass the EPIRA upon assumption to power 13 years ago today.

Nagkaisa explained further that since 2008, many of its convenor groups have attended, submitted position papers, and argued against the ills of EPIRA before committee hearings of both houses of Congress, including those conducted by the powerful Joint Congressional Power Committee (JCPC). Yet no actions were made to address those concerns.

It likewise chided the Executive for peddling the line that the only choice for now is between expensive power, or having no power at all.

“We hope the Supreme Court brings light to a dark decade of power hikes, naked greed, and blackmail amid unreliability of power supply,” concluded Nagkaisa!

Workers back Pres. Aquino: IPPs, Meralco stop passing the buck to consumers

The Trade Union Congress Party (TUCP), a party-list with broad membership of workers in the country, welcomed the statement of President Benigno S. Aquino III that power firms should not pass on to the consumers unwarranted costs resulting from their wrong business decisions or practices.

Rep. Raymond D.C. Mendoza of TUCP Partylist said that the power firms – both the independent power producers (IPPs) contracted by Meralco and Meralco itself – must exercise prudence in their charges to consumers. 

It is already immoral that consumers are always held hostage and taken advantage of by these power firms. And it is greed at its highest form when these immoral acts are done even under the situation when the country is in a state of national calamity.

Pres. Aquino declared a state of national calamity three days after typhoon Yolanda hit the country in November last year, thereby freezing the prices of basic commodities and services at the level before the disaster or calamity occurred. 

In December 2013, MERALCO began the staggered collection of P4.15 per kilowatthour increase in power rates due to increase in its generation costs, but this was stopped by the 60-day restraining order issued by the Supreme Court before Christmas last year. MERALCO claimed that the scheduled maintenance shutdown of Malampaya from November 11 to December 10 purportedly compelled it to get more expensive power from the wholesale electricity spot market wherein the main sources are diesel plants.

Malampaya provides natural gas to independent power producers (IPPs) which have power purchase agreements with MERALCO. These IPPs which provide 40% of the electricity needs of Luzon are the 1000-MW Sta. Rita and 500-MW San Lorenzo facilities of First Gen Corporation owned by the Lopezes, and the 1,200-megawatt (MW) Ilijan owned by Kepco Philippines Corporation. 

The TUCP party-list solon said that the actions by MERALCO and these IPPs were unacceptable. He cited the following reasons why this should not be allowed:

• The scheduled maintenance of Malampaya was planned ahead of time, thus the cost consequences should have already been considered in the power supply agreements of Meralco with the independent power producers and this was already imputed in the MERALCO rate. If MERALCO did not prudently build this into their rate or in the power supply agreements then it should bear the loss, not the consumers. 

• Meralco has long been in this business to know that it is both unwise and imprudent not to insure against all risks. If there is a force majeure outage, MERALCO and the power producers that it contracted for power supply should be insured against possible spikes in costs under such circumstance. MERALCO must not pass the burden to consumers when MERALCO should actually insurance itself from the force majeure outages as its power suppliers as well as acts of God. If MERALCO did not enter into any form of insurance or contract stipulation as to who will pay for the alternative supply in case of an outage (i.e. such as in sourcing it from the wholesale electricity spot market or WESM), then it has acted imprudently and must bear this cost. 

• The natural gas IPP plants are combined-cycle plants – the most expensive type of plant – thus it is highly doubtful that the true replacement cost such as diesel power can be more expensive than these.

"The fact that some power plants were charging P62 per kilowatthour taking advantage of WESM is evidence of price gauging and gaming of the market," the solon added.
Rep. Mendoza reiterated a wide range of interventions that the President can exercise his police powers when public interest so requires. He can

• Suspend the operations of WESM, to compel recourse so that MERALCO and the power producers enter into cheaper bilateral contracts between themselves. Without WESM, the power producers have no choice but to sell under bilateral contracts to MERALCO which constitutes 70% of the market, and has market dominance. In short it should be a buyer's market – in this case, MERALCO;

• Conduct an independent investigation;

• Ask the power players to lower their profit margins because public interest requires it. 

NCR minimum wage now at P466/day after P15 increase

Minimum wage workers in the private sector in Metro Manila are due an increase of P15 this month in their basic pay, the Department of Labor and Employment (DOLE) said.

The minimum daily wage in the National Capital Region for non-agricultural workers now stands at P466.00. For other private sector works, the minimum wage is at P429.00.

DOLE Secretary Rosalinda Baldoz, quoted in a report of the Philippine News Agency, said that the increase in basic pay stems from the implementation of Wage Order NCR-18 approved in September last year.

Baldoz reminded employers that the increase is the result of the integration of half of the P30.00 cost of living allowance into the computation of basic pay.

"It also means an increase in minimum wage earners' 13th month pay, overtime pay, night shift differential pay, and other statutory benefits because the integrated P15 COLA is included in the computation of these benefits," the DOLE chief said.

She also said the raise translates to a P330 increase in the minimum monthly basic pay of NCR workers."

Baldoz said the new minimum wage rate shall apply to all minimum wage workers in the private sector in Metro Manila regardless of their position, designation, or status of employment, and how they are paid.

Excluded from the new wage rate are:

- household service or domestic helpers
- persons in the personal service of another, including family drivers
- workers of duly registered Barangay Micro Business Enterprises with Certificates of Authority.

Wage Order NCR-No. 18 also states that workers paid by result, including those who are paid on piecework, "takay," "pakyaw," or task basis, shall be entitled to receive the prescribed minimum wage per eight hours of work per day, or a proportion thereof for working less than eight hours.

Compliance in NCR is at 61.7% of inspected establishments

According to labor standards enforcement figures of the DOLE as of the first quarter of 2013, minimum wage compliance among unionized establishments in Metro Manila was at 95.8 percent. Some 623 unionized workplaces were surveyed.

The DOLE inspected 120 NCR workplaces during the quarter and found that 105 of them had labor standards violations and only 61.7 percent complied with the minimum wage back then of P456 for non-agricultural workers and P419 for other types of workers.

Nationwide, the minimum wage compliance rate upon inspection was at 81 percent, but by region, compliance varied widely from the lowest at 37.8 percent in Mimaropa (Mindoro, Marinduque and Palawan) to the highest at 94.5 percent in Region XII (SOCCSKSARGEN). — ELR, GMA News

If Petilla can offer his head, why can’t Ducut and Ocampo do the same?

The news of Department of Energy (DoE) Secretary Jericho Petilla tendering his resignation in the wake of failure to meet his self-imposed deadline in bringing back electricity to areas ravaged by typhoon Yolanda is all over the air.  Whether the President will accept his resignation or not can be part of a ploy. But nevertheless, Petilla had the guts to place his head on the chopping board.

We wonder, however, if other inept officials in the energy family – particularly Energy Regulatory Commission (ERC) Chairperson Zenaida Ducut and Philippine Electricity Market Corporation (PEMC) head Mel Ocampo can do the same.

Petilla who heads the DoE is equally responsible for the government's failure to stop the P4.15/kWh rate increase imposed by Meralco.  But Ducut and Ocampo who are in the frontline and supposed to be the first persons to detect market failure and protect consumers' welfare stood idle before the coming tsunami of power hikes. They therefore should go.

Truth is, throughout their tenures, they have consistently failed to discharge their duties of regulating the power industry properly. The latest fiasco is just the culmination of years of ineptitude and incompetence.

As early as 2012, they were aware of scheduled maintenance shutdown and yet they did nothing to prevent the largest market failure in the power sector to date. In the process they unduly enriched Independent Power Producers (IPPs) to the tune of 10 billion pesos for a month's worth of power outages!

They should go based on the principle of command responsibility. At the least, they allowed the electricity market to be gamed, and at the most, they are a party to the reported collusion among power firms.

Ducut and Ocampo should be investigated for possible charges of economic sabotage.

It's also the time for the regime of Electric Power Industry Reform Act (EPIRA) to go.

- NAGKAISA! Statement