Business Mirror
THURSDAY, 12 JANUARY 2012 21:46 BUTCH DEL CASTILLO / OMERTA
THE public knows only too well that more often than not, the wheels of justice in this country grind ever so slowly.
But can’t Ombudsman Conchita Carpio-Morales step on it a bit by giving top priority to the graft complaint filed recently against the entire five-man panel of the Energy Regulatory Commission (ERC)?
The graft complaint was filed by three consumerist watchdog groups led by the National Association of Electricity Consumers for Reforms Inc. (Nasecore) headed by Pete Ilagan, president.
Specifically the complaint is about the ERC’s “hasty and railroaded” approval last month of the latest distribution-rate increase application of the Manila Electric Co. (Meralco).
The ERC announced its approval of Meralco’s application for a 26.9-centavo-per-kilowatt-hour increase only three weeks ago.
With this approval, the ERC allegedly gave Meralco “unwarranted benefits, advantage or preference,” in violation of Section 3 (e) of Republic Act 3019, otherwise known as the Anti-Graft and Corrupt Practices Act.
All those charged members of the ERC panel were appointees of the Arroyo administration. ERC Chairman Zenaida Cruz-Ducut, in fact, is a cabalen and personal friend of the former president. If the Ombudsman gives this complaint the attention it deserves, millions of disgusted Meralco customers would surely cheer her on and become her instant fans.
As far as I know, this criminal complaint is unprecedented. It’s the first of its kind ever filed against an entire quasi-judicial regulatory panel, which the complainants claim has done nothing but enrich Meralco stockholders beyond their wildest dreams by granting all of its rate-increase applications.
How did the ERC make this possible? By ignoring repeated public demands to regularly audit Meralco’s books and determine once and for all Meralco’s actual cost of service.
A regular regulatory audit is the only way Meralco customers can rest assured they are not being bled dry by the giant utility.
As I said in a previous column, not once under Ducut’s chairmanship did the ERC ever disapprove a Meralco application for rate increase.
The ERC’s seeming tendency to favor Meralco was what made our power rates soar to stratospheric heights. As a country, the Philippines now has the dubious honor of having the highest power rates in Asia, if not in the world. That’s quite a feat for a country that is not even highly industrialized.
No wonder most foreign investors would rather go to Vietnam or even Laos to put up their businesses.
Ombudsman Carpio-Morales would be doing the 4.5 million Meralco customers a great service if only she would bother to sit down and take a closer look at this graft case filed by Nasecore et al.
She would surely realize that all the nasty things that have been said against the ERC and Meralco have a solid basis after all. She would come to realize that Meralco’s pricing practices all these years have been nothing short of predatory, with the ERC a constant partner in paving the way for such abuses.
Ombudsman Carpio-Morales might even realize that among the lengthening list of alleged crimes against the people by the Arroyo administration, this one deserves closer scrutiny.
As it is now, there is regulatory failure because the ERC, which was created as a regulatory authority under the Electric Power Industry Reform Act of 2001(Epira), has not lived up to its mandate. Its duty under the law is to determine, fix or set “just and reasonable rates” benefiting the public.
Section 43 (f) of the Epira lays down the standards that must be followed by the ERC in setting power rates as follows:
“In the public interest, establish and enforce a methodology for setting transmission and distribution wheeling rates and retail rates for the captive market of a distribution utility, taking into account all relevant considerations, including the efficiency or inefficiency of the regulated entities….The rates must be such as to allow the recovery of just and reasonable costs and a reasonable return-on-rate base (RORB) to enable the entity to operate viably….”
Under this provision, the ERC has a twin purpose of allowing the utility to recover only—and that is a big only—its just and reasonable costs and a reasonable RORB to enable it to operate viably.
The ERC, however, has consistently been allowing Meralco to recover much more than “just and reasonable costs.” Meralco customers generally feel they are being systematically robbed, but can’t do anything about it, being captive customers.
To determine or fix what would constitute fair power rates, Pete Ilagan of Nasecore has repeatedly told the ERC that “there is a need to determine Meralco’s actual cost of service.”
But how can the ERC do this when it has consistently rejected suggestions that it formally ask the Commission on Audit (COA) to inspect Meralco’s books of accounts on a regular annual basis? Only through a yearly regulatory audit can Meralco’s actual cost of service be at last discovered by the public.
As it is, there has been only one occasion when the COA actually looked into Meralco’s financial operations. That was when the Supreme Court ordered the agency to do the audit in connection with an overcharging case.
In that audit, the COA discovered that the giant utility had long been charging its customers billions of pesos of expenses that are totally unrelated to the delivery of electricity. Nasecore suspects that the practice continues to this day because no audit has been requested by the ERC.
(Incidentally, the COA audit report done in compliance with the court order was suppressed by the ERC before it approved the distribution-rate increase applied for by Meralco only last month. The findings in that report clearly showed that the 26.9-centavo-per-kilowatt-hour increase sought by Meralco would only increase the fabulous profits already being raked in by the utility. The fact that the rate increase had been apparently railroaded became the basis of the graft case against Ducut et al.)
At one time, however, the ERC seemed open to the idea of some sort of audit. For a while, it was citing findings made by a foreign accounting firm called Sinclair Knights Merz (SKM). It was soon learned that the accounting firm was hired by Meralco!
Nasecore said in its latest pleading:
“The honorable commission cannot remain obstinate on its failure to perform or cause the performance of a regulatory audit, especially after the recent COA findings that showed overcharges of Meralco of P8 billion in 2004 and P4 billion in 2007, thus establishing that the rates granted by the commission to Meralco in May 2003 was indisputably unjust and unreasonable….
“Without a regulatory audit, there is no way the [ERC] can determine that the rates it granted to Meralco in previous years were just and reasonable,” Ilagan said.
Without a regulatory audit, he said, the holding of public hearings is an exercise in futility. It can only be interpreted as the ERC’s regulatory failure.
The present state of affairs where the ERC has proved to be inutile in checking the abuses of Meralco has bolstered the common observation that “nothing cripples the Filipino household more than the price of electricity…. Clearly, the ever-increasing price of electricity is the thief in the night that steals the purses of unsuspecting mothers and fathers who are not slow in complaining but are always left without a solution.”
The ERC’s abdication of its duty has emboldened scores of other power distributors in the rest of the country to commit Meralco-type abuses on their customers. The Visayan Electric Co. or Veco is now to Cebu what Meralco is to Metro Manila; which is to say they have become the most unpopular companies in the country today. And that’s a big understatement!
Without an ERC to rely on, which agency can the hapless public turn to? The Office of the Ombudsman, perhaps?
Let’s see.
Omerta_bdc@yahoo.com
No comments:
Post a Comment