Monday, July 24, 2017

ERC draws heat at House probe into Meralco deals

Published July 8, 2017, 10:00 PM By Ben R. Rosario

A congressional probe into the questionable approval of long-term power supply contracts entered into by power distributor Meralco has led to proposals to hold Energy Regulatory Commission (ERC) officials responsible for administrative or criminal liabilities.
Assistant Minority Leader and ABS Partylist Rep. Eugene De Vera, together with Asst. Majority Leader and 1-Ang Edukasyon Partylist Rep. Salvador Belaro, said Meralco is barred from entering into a 20-year power supply contract when its legislative franchise is due to expire in 11 years.
De Vera said the congressional inquiry into the supposed “sweetheart deal” between Meralco and its sister companies is expected to determine ERC’s role in allowing Meralco to enter into power supply agreements (PSA) with firms co-owned by the firm.
He said ERC is fully aware that Meralco’s franchise is expiring in 2028 while the PSA will end in 2037.
“Hence the contracts appear to be void as Meralco has 11 franchise years only,” De Vera said.
The partylist solon added: “PSAs are impressed with public interests so the ERC should take judicial notice of the franchise.”
Moreover, Belaro said that entering into such contracts is “ultra vires” (beyond the authority) on the part of Meralco because it has no power to carry out provisions of the agreement in the next 20 years.
Consumer groups People Opposed to unWarranted Electricity Rates (POWER) and the United Filipino Consumers and Commuters (UFCC) decried as “illegal” ERC’s extension of the mandatory competitive process that paved the way for Meralco to enter into 20-year supply contracts with its alleged sister companies.
In a letter to President Rodrigo Duterte, the UFCC said the “20-year sweetheart deals effectively tied down Filipino consumers” to power supply deals that could cost R12.44 billion annually.
POWER chided the government power regulatory body for extending the CSP for six months, thus, allowing Meralco to “finish negotiating” power supply agreements with its own affiliated companies.
In a joint hearing by the House Committee on Good Government and House Committee on Energy last July 4, POWER pointed out that the seven PSAs of Meralco with its sister companies cover 3,551 megawatts, or approximately 90% of its power requirements for the next 20-25 years.
“Thus, by extending the deadline by six months, the ERC allowed Meralco to evade competitive bidding for 90% of its power purchases covering the next 20-25 years. Worse, these contracts were with its sister companies,” said POWER Convenor and former Bayan Muna representative Teddy Casiño.
The extension was reportedly upheld by ERC Commissioners Josefina Asirit, Gloria Yap-Taruc and Geronimo Sta. Ana.
Under Sec. 45 of EPIRA, Meralco and other power distributors are allowed to contract not more than 50% of its power requirements from affiliated companies. This is to avoid price manipulation and other monopoly practices.
“Sec. 45 of EPIRA is a token safeguard but a limitation nonetheless on monopoly practices in the power industry. The more Meralco is allowed to buy power from its sister companies, the more they can connive with each other in jacking up power rates,” Casiño said.
During the hearing, Meralco admitted that Meralco PowerGen Corp. owned 48% of Redondo Peninsula Energy Inc., 50% of St. Raphael Power Generation Corp., 100% of Atimonan One Energy, Inc., 49% of Mariveles Power Generation Corp.

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