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Evil ‘Transformers’ DIE HARD III Herman Tiu Laurel 08/29/2011

Monday, August 29, 2011

Evil ‘Transformers’

Herman Tiu Laurel
No, it’s not the sci-fi action flick we are writing about. It’s about the real “Transformers” in our world — those giant, steel-hearted, mechanical monsters roaming the boardrooms of power companies that “transform” public utilities into humongous profit machines. It’s about power companies that transform the public’s need for electricity into an unimaginable nightmare for millions of Filipino consumers.

Once the Lopez Group, the Philippine Electric Corp. (Philec) and the Manila Electric Co. (Meralco) are both seen in this light. One supplies actual power transformers and related equipment to the other at what many consider as massive transfer prices of up to 500 percent or more. Our source, who will only testify in public once Congress musters the courage to conduct an honest-to-goodness investigation, claims to have the goods on this.

For a time, as Meralco transitioned from the old guard to the new, sanguine hopes about the eventual dissolution of the tight embrace between the two said companies were raised. It was even claimed that power prices will be brought down since that kind of a set-up will end with the change in management.

It has been pointed out by industry watchers that these so-called “sweetheart deals” form a major component of Meralco’s capital base submission to the state regulatory body, the Energy Regulatory Commission (ERC), upon which the past 12-percent Return-on-Rate Base (RoRB) and the current 15.8-percent Performance Based Regulation (PBR) rate setting schemes are computed. If the supplies and equipment — from transformers, electric poles, to project costs of installations such as substations or plants — are overpriced by exponential percentages, then so are our electricity rates.

The source of this news has, in fact, gone directly to the original equipment manufacturers (OEMs) of Philec which price power transformers for each mega volt-ampere (MVA), similar to horsepower in engines.
In the Taiwan OEM plant visited by our informant for the purpose of getting the real bottom price, for instance, a quote of P250,000/MVA was given — far less than the P600,000/MVA reported in the Philippines, even if the usual discounts of 30 and 15 percent given to buyers, including most Philippine electric cooperatives, were to be deducted.

Further, if a high-end Japanese brand is preferred, which the Taiwanese plant also officially produces, then a simple expedient of tacking on the Japanese brand’s steel plate for it to be priced higher is resorted to. Is this what Meralco does?

In claiming the need for a top-of-the-line variant, it uses the Japanese name plate to increase the quote as well as its capital base with the ERC — which the regulating agency unfortunately approves without as much as a whimper — to the tune of P1,600,000/MVA!

When the Lopez Group sold control of Meralco, there was indeed that opportunity to cut the monopolistic relationship between the two inextricably linked power firms, with hopes that rates will go down in spite of the already escalating bent of the onerous PBR. But nothing has changed. Filings made for the power distributor’s capital expenditures continue to be based on vastly overpriced claims; hence, its 80 to 90 percent yearly profit increases.

Fortunately, power consumers all over the country have begun to understand more comprehensively the massive swindle that is the Electric Power Industry Reform Act (Epira), or the post-Edsa II power privatization law that has spawned many “monsters:”

From the ERC that is believed to be captured by Meralco; to the state holding firm Power Sector Assets and Liabilities Management Corp. (Psalm) that is petitioning for consumers to shoulder the Universal Charge that will pay for $18 billion (still!) in National Power Corp. (Napocor) debts, which were promised to have been paid with privatization but never were; to the National Grid Corp. of the Philippines (NGCP) that wants to raise rates to pay for damages caused by typhoons “Ondoy,” “Basyang,” etc., leaving its multi-billion insurance untouched; to the Philippine Electricity Market Corp. (Pemc) that wants to raise rates for “administrative modernization” (a euphemism for raising officers’ salaries); to its adjunct, the Wholesale Electricity Spot Market (Wesm), which averages rates based on the highest (instead of the lowest) fluctuations, there are certainly more Epira monsters to discover — and decipher.

What puzzles is that Congress, which is into every sort of investigation imaginable, has not touched on the festering and oppressive electricity scams being perpetrated right before our very eyes. It seems the likes of Rep. Henedina Abad and Sen. Serge Osmeña, who head their respective chamber’s energy committees, are oblivious to appearing as stooges of these power giants.

Given this, will anyone else take the cudgels for the suffering Philippine economy, our industries, and our people? Or is everyone just too scared of the Philippines’ very own, steel-hearted, steel-fisted “Transformers”? The answer need not be more than meets the eye.

(My new e-mail: mentong2011@gmail.com. Tune in to Sulo ng Pilipino/Radyo OpinYon, Monday, Wednesday, Friday, 5 to 7 p.m., and Tuesday, Thursday, 5 to 6 p.m. on 1098AM; Talk News TV with HTL, Saturday, 8:15 to 9 p.m., with replay at 11 p.m., on GNN, Destiny Cable Channel 8; visit http://newkatipunero.blogspot.com for our articles plus TV and radio archives)

(Reprinted with permission from Mr. Herman Tiu-Laurel)

SourceThe Daily Tribune

URL: http://www.tribuneonline.org/commentary/20110829com5.html


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