AGHAM – Advocates of Science and Technology for the People Secretary General Jona Yang expresses dismay over the decision of the Supreme Court favoring Meralco’s power rate hike in 2013 at P4.15 per kilowatt hour increase.
“This unprecedented increase in the cost of electricity is the making of big energy companies profiteering at the expense of the consumers,” said Jona Yang, AGHAM Secretary General. “AGHAM is alarmed over this decision as consumers are being abused by Meralco and the generation companies enabled by the law privatizing the power industry. The government, through the Department of Energy (DOE) and the Energy Regulatory Commission (ERC), amiss their responsibilities to protect the consumers from the unjust actions of the energy corporations.
Meralco’s power rate hike in 2013 emanated from what was said to be a power supply shortage when the Malampaya gas pipeline was shut down for maintenance between the periods of November 11 to December 10, 2013. This was followed by the shutdown of power generation plants. At this time, Meralco bought supply of electricity from the Wholesale Electricity Spot Market (WESM) that, incidentally, is at its high cost upon the Malampaya shutdown.
WESM is the venue for the trading of electricity as a commodity between the buyers and the sellers wherein the price is based on the demand and supply of electricity. The formation of WESM is stipulated in the Electric Power Industry Reform Act (EPIRA) of 2001. Based on the said law, only 10% of the supply of electricity can be bought from WESM.
“Contrary to the purpose of the EPIRA, the promise of free competition did not exist with the monopoly and cross-ownerships of distribution utilities and power generation companies that allow collusion from among themselves in order to influence the price of electricity,” Yang added. “This was very evident in 2013 with the declaration of the power outages that is used by Meralco as a basis for purchasing electricity at WESM.”
In the 2013 power rate case, it should be noted that the 20 largest power plants were the ones with the dependable capacity, which includes San Miguel Corporation, Aboitiz Power Corp, the Lopezes power corporations, Power Sector Assets and Liabilities Management Corporation (PSALM) / National Power Corporation (NPC) and others. From these 20 power plants, there were seven major generators that were capable of influencing the price of electricity in the WESM. They can offer any price and are dispatched when the price is high.
Even the ERC in March of 2014 ordered the Philippine Electricity Market Corporation (PEMC), the operator of WESM, to recompute the rates on the spot market as the increase in electricity prices that coincides with Malampaya shutdown cannot be considered as “reasonable, rational and competitive”. Then there was also the issue of power shortages that can be staged in order to create a scenario of a looming power crisis that would result in buying electricity even at a higher price.
In the research study conducted by AGHAM in 2015, it took a closer look on the country’s energy industry and how private entities control and dominate the industry in order to gain profit.
The study showed the inconsistencies in declaring power supply shortfall by the DOE based on the declared available capacity and the dependable capacity of energy to be able to get the net reserve. The forced and planned outages have been arbitrarily considered in the computation when in fact, generation companies, specifically the Philippine Independent Power Producers Association (PIPPA) were positive in providing additional capacity to avert the possible power shortage. Declaring power outages and the maintenance of power plants are a good formula to influence the cost of electricity at a higher price. The said power plants are also known traders in the WESM.
“With the Supreme Court decision upholding Meralco’s claim of ₱22.64 billion from the consumers, the government continues to protect not the consumers, but the energy private companies from their abuses,” said Yang. “The 2013 ERC petition to allow the Meralco power rate increase is a great example of the worsening situation of the power industry under a privatized energy security. These types of abuses will persist for as long as the policy regime for the energy industry remains monopolized and governed by the private companies. Ending the manipulation of the price of electricity can only be done if we end the EPIRA and demand strong government accountability in managing our energy industry.”
 AGHAM Bits on Power Shortage and Emergency Power, research paper of AGHAM-Advocates of Science and Technology for the People, https://www.slideshare.net/AGHAM/agham-bits-power