The
Energy Regulatory Commission (ERC) has again approved new rates for
Meralco for the regulatory year starting July 1, 2012 to June 30, 2013
on the strength of only a PA (provisional authority) given before some
pending issues are resolved. The latest provisional authority is being
issued on top of several previous PAs for 2010, 2011 and 2012. Lualhati
has pending, unresolved petitions insisting the MAP (maximum average
price) of Meralco should only be P 0.90/kwh against ERC approved rates
ranging in and around P 1.60/kwh (now being raised to P 1.6303/kwh),
Borja has produced evidence of overprice of up to 900 percent of Meralco
costs used as its basis for applying for rates with ERC, and both of
these are already brought to the Courts to resolve yet ERC continues to
issue PAs. What is the urgency of issuing rate increase for Meralco
using the PAs when Meralco has continued to reflect annual increases in
profits since 2006 through to the current year.
Last February 2012 it
was announced that “’Meralco profit surges 40 percent’ … Meralco said
core net income, which strips out currency and derivatives-related
items, climbed 22 percent to P14.9 billion from a year ago. It exceeded
the profit guidance of P14.5 billion.… Meralco, which is indirectly
controlled by Hong Kong-based First Pacific Co. Ltd. and partly owned by
San Miguel Corp., …had 5.3 million customers last year, up 3.7 percent
from a year ago.” Meralco claims its profits rose due to increased
number of customers, but a 40 percent increase in profits cannot be
solely from a 3.7 percent increase in customer base that its own media
statements claims. That increase in profit is from simply from the price
gouging rates ERC has been giving “provisional increases” to Meralco
over at least the past three regulatory years.
From a recent letter
of our colleague Butch Junia: “Meralco’s net earnings have soared year
on year : P3.1 billion in 2008; P6.3 billion in 2009; P10.1 billion in
2010; P14.8 billion in 2011. For the year 2010, customer base grew three
percent; sales increased 11 percent, but, earnings soared 67 percent —
which obviously came from rate increases rather than market growth or
operational efficiencies: best for the utility, hardly good for the
public.”
With such profits, what is the urgency of granting PA’s for
rate increase to Meralco? And such profit surges are only possible with
the massive overpricing of Meralco costs, such as 500 percent on the
tens of thousands of power transformers, 900 percent on electric poles,
and similarly overpriced sub-stations, contractors, ad nausea. At the
heart of the abuse, however, is an ERC decision that blatantly defies a
20004 Supreme Court under CJ Reynato Puno affirming the 12 percent RoRB
as the legal and just basis for setting power rates. As Junia recaps:
“Shortly
after that (SC) decision, the ERC started the shift from Return on Rate
Base (RoRB) to Performance Based Regulation (PBR) with the adoption of
rate unbundling in 2003, and full PBR in 2007. Under RoRB, the
distribution, supply and metering charge of Meralco was P0.70/kwh; under
rate unbundling it was P0.90/kwh. With PBR, it was P1.2227/kwh in 2009,
P1.491 in 2010, P1.6464 in 2011, P1.60 in 2012, to go up to P1.633 in
July 2012-June 2013.” The PBR rate raises the return-on-rate base to
over 15 percent but that is not all, the ERC also provided incentives
that added on pushed DU returns to as high as 17 percent. But these are
not the only problems residential consumers have, but are rarely told,
with the present power rates system.
As Junia writes in his letter,
“…The Energy Regulatory Commission (ERC) is mandated by the Electric
Power Industry Reform Act (Epira) to ‘… ensure (for consumers) a
reasonable price of electricity. The rates prescribed shall be
non-discriminatory,’” yet we see in Meralco’s petition:
“For
distribution charges Meralco wanted an increase to P1.962/kWh from
P1.078/kWh for residential consumers using up to 200 kWh, P1.5535/kWh
from P1.3851/kWh for those consuming 201-300 kWh, P1.5535/kWh from
P1.3851/kWh for consumers of 301-400 kWh and P2.4780/kWh from
P2.3096/kWh for those that use over 400 kWh per month. Industrial users,
meanwhile, with a minimum demand of 40 kW to less than 200 kW would
have their supply charges raised to P990 from the current P910 under the
Meralco petition. Large industrial users that consume 200 kW to less
than 750 kW will pay supply charges of P4,110 while industrial users of
750 kW to less than 10,000 kW have to pay P14,920, the firm said.”
Note:
Up to 10,000kW industrial users pay P1.49/kW but residential consumers
using 201kWh to 400kWh pay P1/55/kWh to P 2.30/kWh; industrial and
commercial power consumers using even higher kWhs, such as shopping mall
which go into millions of kWhs, can pay as long as P 0.20/kWh
distribution charge.
Residential power users consume roughly 35
percent of Meralco power but provide around 65 percent of Meralco’s
revenues, inversely proportional to industrial/commercial power users.
Residential consumers subsidize everyone else. Soon the “open access”
policy will soon push even higher rates for residential consumers as
Meralco and DUs court industrial/commercial consumers with lower rates
to prevent them from setting up their own power plants. Meanwhile,
“Shares of Meralco closed at P253.40 on Friday, up 0.96 percent from its
previous close of P251 apiece,” as the national economy suffers as
exemplified by the recent statement of Businessman Robert Go, director
of the Philippine Retailers Association and chairman of the Economic
Development Committee of the Regional Development Council, “Because of
this big power expenses, most of the profit of businessmen in the past
year was wiped out and if this will continue, the workers will be
affected because their employer can hardly adjust wages.”
The power oligarchs are killing everyone of us.
(Watch
Destiny Cable GNN’s HTL edition of Talk News TV, Saturdays, 8:15 to 9
p.m., with replay at 11:15 p.m., this week senatorial candidate Joey de
Venecia; visit http://newkatipunero.blogspot.com)
Budding
videographer and gynecologist Hayden Kho may have lost his license as a
physician but he will always remain the undisputed Dr. Love.
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Two
people were killed after a wall collapsed from heavy rains that pounded
Metro Manila yesterday, bringing floods that have been worsened by
garbage clogging the city’s sewers and drains, officials said.
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Dynasty-building
appears to be in the mind of President Aquino, who is himself the son
of a former President, the late Cory Aquino, with his cousin, Bam
Aquino, now in the administration’s Liberal Party (LP) senatorial
shortlist.
