Labor group urges ERC to order full stop in rate hike

Workers want a full stop, not a mere recalculation of spot market prices which triggered sharp spikes in the December 2013 and January 2014 billing of Meralco. 

 

It is also demanding for the suspension of operations of the electricity spot market.

 

Groups belonging to the country’s biggest labor coalition Nagkaisa made these calls during a picket held outside the offices of the Energy Regulatory Commission (ERC) this morning, two days after the Commission issued an order voiding the applied rate hike of Meralco. 

 

“It would be pointless to invoke the State’s police powers if the ERC cannot impose a full stop to all rate hike petitions, including that of Meralco and other distribution utilities in Luzon that were affected by ‘market failure’ during the maintenance shutdown of Malampaya gas platform between November and December last year,” declared the group in a statement.

 

Based on the findings of ERC, WESM prices during that period would not qualify as “reasonable”, “rational”, and “competitive”, thus it ordered the Philippine Electricity Market Corporation (PEMC) to do a recalculation of such prices. 

 

But initially the Commission has already found evidence of market abuse by way of physical and economic withholding of capacities by several plants that led to the tightening of supply during the said period. 

 

Nagkaisa, however, was cautious about a recalculation that may simply result to reduction in rates rather than the full prohibition of the amount applied, which in the case of Meralco totalled P4.15/kWh in December and P5.33/kWh in January. 

 

The group added that any collections made by Meralco reflecting such unjust prices must be refunded to the consumers.

 

“Let we remind the ERC of the principle that unjust prices resulting from market failure cannot be passed on to or borne by the consumers,” said the group. 

 

Workers had been accusing the ERC of ‘regulatory capture’ during the last 12 of years of EPIRA implementation.  It also played dead on many reports pertaining to market abuse in the spot market.  No wonder it suffered downright condemnation when it approved the Meralco rate hike of P4.15/kWh last December. 

 

According to the group, the ERC is fully aware that the WESM itself is a failure since it began operating in 2006.  By concept it is supposed to be at WESM where we can buy the cheapest electricity since the product is sold here at marginal cost of declared excess capacities of power plants. 

 

In July 2006 the inaugural price at WESM was P2.00/kWh.  During the Malampaya shutdown between November and December last year prices at WESM breached the maximum cap of P62.00/kWh. 

 

“There is no reason therefore to perpetuate this farce,” concluded Nagkaisa.

Revoke Meralco Franchise, Pull the Plug on EPIRA

Meralco has failed the Filipino people. They promised cheap, widespread access to electricity, yet the only thing they mustered thus far are scandalous electricity rates that they expected ordinary Filipinos to meekly comply with.

Meralco has consistently regarded ordinary Filipino consumers with the heartless, corporate greed for profit. The most recent spike in power rates proved this. Meralco made the absurd argument that it is not responsible for the record-high electricity rates simply because it had no power over the forced outages their power suppliers implemented. It became even more ridiculous when Meralco played the victim by claiming that it had no choice but to source power from the Wholesale Electricity Spot Market (WESM) for the power deficit.



Nothing could be farther away from the truth. Documents submitted to the Supreme Court showed that it was Meralco’s order to power supplier Therma Mobile, which it controls, to bid at the maximum allowable price of P62.00 per kilowatt hour no less than 25 times during that period that was responsible for the skyhigh clearing price at the WESM. In short, Meralco gamed the market to benefit itself and other power producers. By doing so it defrauded its consumers whom it is obligated to supply electricity at the least possible cost.

We belie Meralco’s claims that it was powerless over the simultaneous forced outages of its power producers. The shutdown of Malampaya for maintenance, and the shutdown of two other power plants for the same reason, were all scheduled. Meralco saw it coming, and they took the most convenient and profitable course of action. They chose to sit back, game the power industry, and make consumers pay for it all.

That Meralco systematically abused the Filipino people is but a symptom of the failure of the Electric Power Industry Reform Act (EPIRA). We must not forget that EPIRA is the main source of the problem; it put the whole industry under the gang rule of private power – from generation to transmission sectors, all the way to the cooperatives in the distribution sector. Privatization of the power industry has resulted in monopoly control, inefficient power delivery and sky-high prices, in direct contradiction to the promises EPIRA made to attain efficiency and break the monopoly in the electricity industry, and lower power prices.

That Meralco’s profits have risen over 100 per cent since EPIRA went into effect in 2001, and that Meralco has the power to game the market at the expense of the people is a monstrous example of EPIRA’s failure.
13 years of Meralco’s greed and EPIRA’s exploitation of power consumers have pushed the people to a deeper level of destitution. To this, we raise our voice and declare that this abusive relations is over. We call on the government to heed the people’s call: it is high time the government revokes Meralco’s mega-franchise and pulls the plug on EPIRA.

STOP POWER RATE INCREASE!

Stop the Blackmail, Stop the Fraud! STOP POWER RATE INCREASE!

Oppose Meralco's Threat to Trigger Brownouts if TRO is not Lifted! Revoke Meralco's License and Repeal EPIRA!

Meralco, the electricity monopoly, threatened its 5.3 million consumers with brownouts if the temporary restraining order (TRO) on its scandalous 4.5 peso per kilowatt hour is not lifted.

The threat was made by Meralco lawyer Victor Lazatin during the Supreme Court hearings on the rate hike on Feb. 4.

Consumers will not tolerate this blackmail.

On the pretext of losing vast amounts of money, this monopoly, which made 17 billion pesos in profits in 2013, is trying to derail the investigation of its role in the suspicious series of events that led to the rate increase. Meralco has put the blame on seven of its power suppliers that went offline when the Malampaya natural gas plant underwent maintenance from Nov. 11 to Dec. 10, 2013, allegedly forcing Meralco to go to the Wholesale Electricity Spot Market (WESM) for its power deficit. But documents submitted to the Supreme Court showed that it was Meralco’s order to a power supplier--Therma Mobile—that it controls to bid at the maximum allowable price of 62 pesos per kilowatt hour no less than 25 times during that period that was responsible for the skyhigh clearing price at WESM.

Meralco gamed the market, to the detriment of its consumers whom it is obligated to supply at the least possible cost. Moreover, Meralco would not have resorted to buying at WESM’s inflated prices had it made provisions for reserve power from its suppliers in the event of a foreseeable event like the Malampaya shutdown. As President Aquino himself has said, ““There is periodic maintenance [of Malampaya] required. That’s a foreseeable event. If you know what producers of fuel will not be able to produce, then you have to find a substitute. So preparation should have been made for foreseeable events.”

But the problem goes beyond Meralco. It goes beyond the Energy Regulatory Commission, which is the classic example of a regulator that is in the pocket of the regulated. It goes beyond the Department of Energy, which has shown itself to be completely incompetent in planning for the energy needs of the country. The main source of the problem lies in the Electric Power Industry Reform Act (EPIRA), which has placed power generation, transmission, and distribution completely in the hands of the private sector.

Privatization has resulted in monopoly control, inefficient power delivery, and sky-high prices, not in more efficiency, less concentration, and lower prices. Meralco, whose profits have risen over 100 per cent since EPIRA went into effect in 2001, is a monstrous example of EPIRA’s failure.

13 years of exploiting consumers is enough! We demand the revocation of Meralco’s license and the repeal of EPIRA.