Too Much is Enough!

Government should take immediate steps to scrap PPA and to stop the ballooning power rates!

Consumers continue to suffer from government’s inability to protect them, amid the left and right increases in power rates.

We, the Freedom from Debt Coalition, decry the government’s failure to decisively address the increasing PPA, and its inability to protect consumers, especially the poor. Consumers should not be forced to pay for electricity that they did not consume, nor for electricity that was not produced.

When President Arroyo called for a reduction in the PPA in May 2002, the PPA dropped to P1.7/kWh in July 2002 from P3.3/kWh in May 2002. But the GMA policy to reduce the PPA proved to be a mere palliative to appease consumers. Since then, the PPA has increased to P2.784/kWh and could even surpass the levels of the pre-suspension rates.

This month, there will be yet another 11.5-centavo increase, bringing the PPA to P2.899/kWh. Meralco justifies the increase because of fluctuations in fuel prices and foreign exchange.

The Energy Regulatory Commission (ERC) has also approved the collection of Meralco’s deferred PPA, amounting to P5.76 billion. The deferred PPA represents Meralco’s under-recovered amount from January 2000 to September 2002. The collection of the deferred PPA will be implemented once ERC also approves Meralco’s rate unbundling application.

This increase in PPA collection will come on top of Meralco’s P1.12/kWh rates increase petition, which is consolidated with its unbundling of rates application. The ERC is set to decide on Meralco’s rate unbundling petition within the next few weeks.

Further, Meralco has yet to refund P28-billion, the estimated amount of income tax expenses which it passed on to consumers since 1994. The Supreme Court already ordered Meralco to refund the amount to consumers.

FDC believes that government should take immediate steps to get us out of the rut. The immediate and necessary steps that it should take are the following:

Cancel IPP contracts that contain onerous provisions proven to be grossly disadvantageous to both government and consumers. The oppressive PPA is a result of onerous provisions of IPP contracts, where consumers are forced to pay for electricity they did not consumed, or electricity that IPPs did not produced.

The on-going government renegotiation should not fall short of canceling IPP contracts containing onerous provisions.

2. Compel and ensure Meralco to renegotiate its contract with its affiliated IPPs to scale down the PPA.

Meralco maintains an exclusive contract to buy power with Quezon Power and the Lopez-owned First Gas Power (Sta. Rita and San Lorenzo). It also has a 10-year power supply agreement with National Power Corporation (NPC).

Meralco sources its power requirements from Quezon Power at P6.54/kWh, First Gas-Sta. Rita at P5.41/kWh, First Gas-San Lorenzo at P4.89/kWh, and NPC at P3.62/kWh.

It is very disturbing that Meralco pays for higher electricity when there is a cheaper supplier available. If Meralco wants to save money, it should buy its energy requirements from the cheapest source, which is NPC. But why does it buy power from IPPs that have higher rates if not only to funnel money from Meralco to the Lopez-owned IPPs?

The government should exert its political will and moral suasion to compel Meralco to renegotiate its contracts with its IPPs and lower the PPA that it unjustly collects from consumers.

3. Full public disclosure of the results in the on-going government renegotiation with the IPPs.

Government announced that it saved around P44 billion by renegotiating some IPPs of NPC. Despite this pronouncement, consumers continue to groan under the oppressive burden of higher electricity rates.

Any savings through the renegotiation should translate into an immediate relief to consumers.

Aside from translating these savings into lower PPA, it is the government’s responsibility to the people to fully disclose, not only the details of the renegotiation efforts, but more importantly the results of the review. The government should expose the onerous nature of the contracts and the IPPs that unduly profit from the public.

4. Refund Meralco’s overcollection of P28 billion into consumer shares of ownership. Government should speed up the P28-billion refund of Meralco’s excess collection, convert this amount into consumer shares of ownership, and democratize the ownership and management of Meralco.

Consumers have been reeling under the oppressive rates that Meralco unduly imposes on them. The high power rates are matters that consumers can no longer bear. That is why government should immediately refund the P28-billion, and convert it into consumer shares of ownership. By owning Meralco and democratizing its management, consumers can ensure that the public is protected from unjust power rates.

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