“Considering that Meralco’s rates are 30 percent higher than most other local electric distributors, this increase is unconscionable and indefensible – criminal even.”
by Ducky Paredes
Senator Loren Legarda who used to work for ABS-CBN has no fear of the wrath of the Lopezes. She asked the Energy Regulatory Commission to review its decision in allowing Manila Electric Co. (Meralco) to increase its rates by P0.14 per kilowatt hour (kWh) effective next month. The ERC cannot allow this, according to the senator, without first justifying its provisional rate increase of 12 centavos per KWh in 2003. The Supreme Court has so decided. Loren is the only senator who has reacted to the increase,
Winston Garcia, who is on the board of Meralco representing the shares held by the Government Service Insurance System (GSIS) called the increase in distribution charges “criminal.”
Winston says: “Considering that Meralco’s rates are 30 percent higher than most other local electric distributors, this increase is unconscionable and indefensible – criminal even.
“We cannot understand why Meralco had been granted further rate increase by ERC when it already charges the highest in the country.”
This is the first distribution rate increase for Meralco since 2003.
What makes the Meralco rates the highest in the country? This is not in the distribution charges but in Meralco’s supply charge. Meralco does not purchase all of its power from the National Power Corporation (NPC), which is much cheaper than the main Meralco power source. Garcia points to the P20 billion yearly rentals paid by Meralco to its private independent power producers, which are owned by the Lopez family. The Lopezes hold about the same number of shares as does the GSIS.
The higher supply charge is a forever arrangement. As long as the Lopezes control Meralco, our total power rates – distribution and power combined — in the Meralco franchise area will be higher than anywhere else in the Philippines – and perhaps most of the world!
“These rentals are illegal, oppressive, unconscionable, and in violation of the very franchise of Meralco, which compels it to distribute power to its captive market in the least cost manner,” says Garcia.
As a matter of fact, the ERC, before its present chairperson took office had already agreed to yearly rate increases for Meralco up to the year 2011.
The present increase was in response to Meralco’s application to translate into new rates the maximum allowable price (MAP) that it could charge its customers this year, under its approved performance-based regulation (PBR) application. This MAP is part of the EPIRA Law. It sets the Maximum Allowable Price for electricity rates. This is applied for by the utility and approved by the ERC after hearings.
Note though that the ERC reversed its position and subsequently argued before the Supreme Court that “income taxes . . . are reasonable costs that may be recoverable from the consuming public.” In a petition to reverse the decision on Meralco’s charging its income taxes to its consumers, the ERC said that it “agrees with Meralco that to disallow public utilities from recovering its income tax payments will effectively lower the return on rate base enjoyed by a public utility to 8%.”
Of course, the ERC approved the MAP set by Meralco.
For the second regulatory period, or from 2007-2011, the ERC allows Meralco to charge a maximum distribution charge of P1.167 per kWh this year, P1.260 per kWh in 2009, P1.361 per kWh in 2010 and P1.471 per kWh in 2011.
However, due to delays in the implementation of the new rates, the MAP for the 2009 regulatory year, or from July 2008 to June 2009, was adjusted to P1.3607 per kWh. This was the rate on which Meralco based its computation of rate adjustments for the individual customer classes.
Under the approved rate structure applying the 2008 MAP, the distribution charges for residential and general service customers are as follows:
Consumption of up to 200 kWh—77.84 centavos per kWh from the existing 57.29 per kWh or a 20.65 centavo increase;
201-300 kWh—P1.522 per kWh from 87.65 centavos per kWh or a 64.58 centavo increase;
301-400 kWh—P1.5046 per kWh from P1.1628 per kWh or a 34.18 centavo increase; and
401 kWh and above—P2.1186 per kWh from P1.6815 per kWh or a 43.71 centavo increase.
Somehow, these per kWh increases (in centavos) of 20.65, 64.58, 34.18 and 43.71 translates to only 14 centavos per kWh?
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The fact that Alan Greenspan himself admits to shock and disbelief at what has happened to the world’s financial markets tells us how badly the United States has been regulating these markets. Basically, they have been able to get away with everything – even the moral equivalent of murder!
Greenspan admits that ‘’this crisis has turned out to be much broader than anything I could have imagined.
“Those of us who have looked to the self-interest of lending institutions to protect shareholder’s equity – myself especially – are in a state of shocked disbelief.
A congressman told Greenspan and the present Treasury officials: “The reasons why we set up your agencies and gave you budget authority to hire people is so you can see problems developing before they become a crisis.
“To say you just didn’t see it, that just doesn’t satisfy me.’’
The Bank for International Settlements, is the only institution that tracks the derivatives market, which caused part of the world’s financial debacle. It recently reported that global outstanding derivatives have reached 1.14 quadrillion dollars: $548 Trillion in listed credit derivatives plus $596 trillion in notional/OTC derivatives.
What is a Quadrillion? One and 15 zeroes! $1,000,000,000,000,000. Multiply that by 49 to the dollar to get the value in pesos. It is more than all the money in this world.
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The British Broadcasting Company (BBC) is considered to have apologized for an episode in a comedy program that showed a Filipina maid grossly gyrating while her employer tells her to “mate” with his friend.
The show’s producer, Tiger Aspect Productions sent a letter written by its chief executive Andrew Zane that reads: “We’re sorry to anyone who was in any way offended by the program. This certainly was not our intention.”
I guess that counts as an apology considering how many of us Pinoys found fun in Borat Sagdiyev, the fictional character created and portrayed by British comedian Sacha Baron Cohen in his satire on Kazakhstan. If we can find that funny, why should we be insulted when the same type of humor is inflicted on us Pinoys? The way I look at it. If something is funny when it affects Kazakhs, it ought to be just as funny when this is at the expense of us Pinoys.
Otherwise, if we will be so onion-skinned we should also have complained about how Kazakhs have been treated by the British film industry.
British humor can be brutal; we ought to just accept that fact and live with it and not take everything – even the pranks of funny men — as if they were official statements of their government.
By the way, Sacha Cohen won the 2007 Golden Globe Award for Best Actor in a Comedy/Musical for his portrayal of Borat.
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hvp 10.26.08)
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