Meralco 20-year supply deals hit

Philippine Daily Inquirer / 08:25 AM July 06, 2017

http://newsinfo.inquirer.net/911350/meralco-20-year-supply-deals-hit

It is “unacceptable” to let the Manila Electric Company (Meralco) and its power suppliers dictate the electricity rates that their consumers would be paying for up to 20 years, a militant party-list congressman said on Tuesday.

Bayan Muna party-list Rep. Carlos Zarate said that it was to the benefit of the consumers to keep rates pegged for a long period, and that it was unacceptable to rely on the assurance of Meralco and its power suppliers.

The militant lawmaker gave this statement during the continuation of the joint House panel’s investigation on allegations the Energy Regulatory Commission (ERC) extended a deadline to comply with competitive bidding rules to favor Meralco.

Meralco first vice president Ivanna de la Peña said during the hearing that there was one variable of the power supply contracts that was beyond their control—the fuel costs.

“There is a component there that is beyond our control, which is the fuel cost. Any power supplier would not accept that it is fixed for the entire duration [of the contract].

“So if there is escalation, it’s in the fuel cost. The only variable cost is fuel cost,” she said.

Meralco’s legal and corporate governance head, Bill Pamintuan, said all seven power supply deals “complied with all legal requirements.”

The joint panel was composed of the committee on good government and public accountability and the energy committee of the House of Representatives.

The panel tackled House Resolution No. 566 filed by Zarate, who is questioning the seven proposed power supply agreements that Meralco had submitted to the Energy Regulatory Commission (ERC).

‘Midnight deals’

Zarate has called these seven contracts “midnight deals.”

He said consumers could lose P12.44 billion annually due to the seven Meralco power supply agreements that were accommodated because of a six-month extension granted by the ERC beginning in November 2015.

According to Zarate, the ERC commissioners allowed Meralco to forge the 20-year supply deals with seven affiliates of the power utility without a competitive selection process.

“We can theoretically agree on something here, but in reality we’ll be tied up for 20 years, there is a claim earlier that were lower prices. Why didn’t Meralco choose those,” he said during the hearing.

BH party-list Rep. Bernadette Herrera-Dy echoed Zarate’s concerns.

“I would like to listen to the side of Meralco and ask: What is our flexibility clause in the contracts?” she said.

“It’s frightening to approve a 20-year contract that we don’t know the price flexibility clause that we have. Alternative energy can decrease anytime, cheaper than what is being stated in the contract,” Dy noted.