TUCP: 11% of income goes to electric bills
By ELLSON QUISMORIO
September 23, 2011, 6:36pm
MANILA, Philippines — The Trade Union Congress Party (TUCP) Friday called for drastic reforms in the Energy Regulatory Commission (ERC), pointing out that the Philippines now has the highest power rates in Asia.
Gerard Seno, national vice president of the Associated Labor Unions (ALU)-TUCP, said a good chunk of the total monthly income of Filipino workers – around 11 percent – goes to their electric bills.
He lamented that the residential power rates in Philippines – now higher than those of Indonesia, Singapore, and Thailand – are eating away at the Filipino family’s budget.
“This is compounded by the inflating daily wage amount caused by the rising cost of basic commodities and services,” Seno said.
“The workers’ sector is calling on President Aquino to make politically difficult decisions beginning with a directive to the ERC to suspend all pending hearings on petitions for higher electricity rates and strategize the best approach to bring the cost to a reasonable level,” he added.
“The TUCP calls for drastic reforms in the ERC which failed to protect the interest of ordinary workers and consumers against the greed of powerful industry players in the generation, transmission and distribution sectors,” said TUCP Party-List Rep. Raymond Mendoza.
Mendoza, speaking at a press conference Friday in Makati City, underscored the plight of workers, saying they are bearing the brunt of the high cost of electricity.
“For every centavo increase per kilowatt hour, ordinary workers and employees must bear a corresponding cut in their budget for food, water, shelter, clothing, fare, health, education, and other essentials,” said Mendoza.
Mendoza, on the other hand, said the government ought to appoint workers and consumers’ representatives to ERC “to countercheck the influence of the power cartel.”
ERC formula ‘anti-consumer’
The TUCP also slammed ERC for crafting and implementing the so-called Performance-Based Rate (PBR) formula which is further contributing to the skyrocketing prices of electricity.
Under the PBR scheme, a distribution utility (DU) or an electric cooperative can file a petition for a rate hike after meeting a certain performance criteria such as good management practices and efficient systems and operations.
“The ERC formula is nothing less than a license for DUs and electric cooperatives to jack up prices without any regard for actual economic conditions,” Mendoza said. “In effect, the ERC is telling the utilities that greed is good.”
The TUCP, the country’s largest workers’ party, also criticized the ERC for what it called its “lack of consultation with consumers and other stakeholders.”
Meanwhile, the Freedom from Debt Coalition (FDC) joined the mounting calls and criticisms directed at the ERC.
Milo Tanchuling, FDC secretary-general, said they are still awaiting feedback from the ERC regarding the seven-page paper it submitted to the regulatory body weeks ago on how to address the problems besetting the local power industry.
Titled, the “Declaration of Unities and Action Points,” the paper contains a long list of proposals on topics such as renewable energy; debts of the National Power Corporation; how to reduce power rates; making power industry more efficient, reliable and secure; regulation; and, women under power privatization and the regime of Electric Power Industry Reform Act of 2001 (EPIRA).
To lower electricity rates, Tanchuling urged ERC commissioners to stop the indexation of or pegging the prices of natural gas and geothermal steam to the international prices of oil and coal, respectively.
“This indexation makes the prices of electricity generated using natural gas and geothermal steam become higher… and vulnerable to price fluctuations in the world market for oil and coal.”
FDC also urged ERC to stop the incorrect implementation of ERC’s PBR methodology. The ERC’s PBR method allows power firms to increase rates in anticipation of future expansion and other capital expenditures.
“We believe that the ERC’s version of PBR methodology is unfair and unjust to consumers. Instead of increasing the efficiency and lowering the tariffs that commonly followed the implementation of PBR in other countries; those of local distribution and transmission utilities have been increasing at an average of 63 percent and 40 percent, respectively, in the Meralco franchise area,” said Tanchuling.
Questionable deals
Meanwhile, House Deputy Speaker Lorenzo “Erin” R. Tañada III said questioned the sale and bidding of power plants with the Power Sector Assets and Liabilities Management (PSALM) Corporation, saying these may be the cause of increasing power rates.
Tañada said he received reports that PSALM, a government-owned company created under Electric Power Industry Reform Act (EPIRA), allegedly facilitates an anomalous selling and bidding of power plants, citing the case of the Naga Independent Power Producer Administrator (IPPA) contract.
“Based on reports reaching my office, the bidding of the Naga Independent Power Producer Administrator (IPPA) contract is being negotiated by a power plant located beside the Naga IPPA,” Tañada said.
“We want PSALM to hold in abeyance the Naga IPPA bidding until it has clarified issues regarding how the bidding rules have been designed,” Tañada said.
Citing a land-lease agreement, the veteran lawmaker explained that Salcon Power Corp. (SPC) was given the right to top by five percent whatever is the highest bid for the Naga IPP.
“Can PSALM explain the ‘right to top’ given to SPC through the land lease agreement? If that is the case, no interested bidder in his right mind will even bother participate. They will all be discouraged,” Tañada said.
“We have the highest electricity rates in Asia at P8.14 per kilowatt hour. This is a major reason why our industries are hardly competitive. EPIRA failed to arrest the financial hemorrhage of the PSALM and Napocor (National Powere Corporation),” Tañada added.
Stressing that PSALM has only created more problems in the power industry, Tañada also questioned the sale of the Manila Thermal Power Plant, the Bohol-Dingle plants, and the Pagbilao Power Plant IPPA bidding.
“The transactions under question are a wanton disregard of the mandate of EPIRA, which is to bring down electricity rates and improve delivery of power supply to end-users by encouraging greater competition and efficiency in the electricity industry,” Tañada pointed out.
Earlier, it was learned that the PSALM filed petition for the recovery from consumers P65 billion for stranded debts, and another P74.3 billion for stranded costs covering the years 2007 to 2010.
The Commission on Audit had also found out that PSALM even paid excessive amounts in professional fees to legal advisors, consultants, and contractors, and also gave high incentives to employees.
“PSALM’s debts and losses should be recognized as a key policy issue that cannot be left to its failing management,” Tañada stressed. (With a report from Rio Rose Ribaya)
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