Activists slam NPC’s “bigay-bawi” scheme, defective provisional authority

MANILA, Philippines – The petition for an increase in generation rates being sought by the National Power Corporation lacks a solid ground to stand on and is another harsh imposition on the people already suffering from high prices – including electricity – and joblessness.

This was according to the Freedom from Debt Coalition (FDC) which the other day filed its formal opposition to the joint application for a rate increase filed before the Energy Regulatory Commission by the National Power Corporation and the Power Sector Assets and Liabilities Management Corporation.

The group finds the petition to be another maneuver of the NPC to get a rate increase just two months after the ERC rejected the same petition filed in June 2008. Said petition was dismissed by the ERC for lack of merit because the NPC submitted its assets in 2002 and 2004 rather than the 2007 assets as its basis for the new RORB (return on rate base).

In a statement, the FDC argued that since the NPC is undergoing privatization and its assets significantly diminished as a result, a lower RORB is therefore expected which should result in lower, NOT higher, electricity rates.

The FDC also noted that in 2007 the NPC had even declared an “unprecedented net income of P136.07 billion pesos,” the highest in NPC's 71-year corporate history.

“And where did that money come from? It came from the people – from the hapless consumers who have already been paying for the most expensive electricity in the world,” lamented FDC’s Wilson Fortaleza.

In their joint petition before the ERC dated January 26, 2009, the NPC and PSALM have asked for the maximum allowable increase of 12% on its RORB, from the 8% approved rate in 2005. That would translate to an increase in generation rates equivalent to 83.32 centavos per kWh in Luzon, P1.3815 per kWh in Visayas, and P1.0687 per kWh in Mindanao. If granted, this will be the second biggest rate increase the NPC enjoyed upon privatization. The first one was the P1.03 per kWh increase in 2004.


Among the reasons cited for the need to increase the NPC rates is to recoup the losses due to previous incentives given out to consumers including the 30 centavos per kWh mandatory discount provided for under the EPIRA. Another one is to adjust the rate of return allegedly required under the loan covenants with the World Bank and the Asian Development Bank.

“The first reason stands on flimsy ground as the NPC and PSALM resorted to promoting a ‘bigay-bawi’ scheme wherein incentives mandated to be enjoyed by the consumers are being recovered behind their backs through a rate increase. The second reason is more insidious as they seek to satisfy the requirements of the Banks rather than our people's long quest for affordable electricity,” FDC said.

“The worst that this government can do in the midst of the global financial crisis is to secure the privileges being demanded by the World Bank and the ADB before the interest of the Filipino people,” Fortaleza said.

Moreover, FDC strongly objects to a provisional rate hike granted by ERC to Napocor before conducting a formal public hearing, the first of which is scheduled only on Tuesday, February 24.

“Defective provisional authority”

“We are appalled that this power to grant provisional authority is being abused repeatedly by ERC at the expense of the consumers, even after it has been censured by no less than the Supreme Court. The ERC's argument that any difference between the provisionally-approved and the formally approved rate can always be refunded to consumers is outrightly inept and grossly irresponsible as it makes people pay for a fee that was never meant for them in the first place,” FDC said.

FDC added that “by granting the provisional hike to Napocor, the ERC blesses the same maneuvers it had rejected just two months ago. Worse, it is requiring electricity consumers to give an unjustified cash advance to NPC when their purses are already practically empty.”

“In the first place, the petition filed by NPC and PSALM is highly defective because the application itself lacks the proper documents to support its justification. They did not even include a financial statement – which is to include loan terms and conditions – to justify their rate hike” FDC asserted.

“This makes the provisional authority by ERC anomalous and biased,” FDC concluded.

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