20 June 2003
The Energy Regulatory Commission (ERC) and Meralco made a series of announcements that the PPA no longer exists in unbundled electric bills. This prompted the PPA Abolition Team to conduct an investigation on 20 June 2003 to disprove the omissions peddled by the ERC and Meralco.
Through its investigation, the PPA Abolition Team uncovered that
1. Contrary to pronouncements of the ERC and Meralco (Manila Bulletin and Manila Times, 03 June 2003), consumers will continue to pay for the purchased power adjustment (PPA).
ERC Case no. 2001-646 and 2001-900 (“ERC Unbundling Order dated 30 May 2003”) states that “Meralco is directed to discontinue charging the PPA upon effectivity of the approved unbundled rates; any change in the cost of power purchased shall be reflected as deferred charges or credits that shall be recovered through the Generation Rate Adjustment Mechanism (GRAM).”
The components of the PPA – the fuel cost adjustment and the purchased power cost adjustment – are “bundled” in the Generation Charge. Any fluctuations that will affect the cost of generation shall be recovered through GRAM.
Aside from the GRAM, other components of the PPA such as systems loss, government tax, and foreign currency adjustment are now part of separate items in the new electric bill – systems loss, franchise tax, and currency exchange rate adjustment.
The ERC and Meralco cannot claim that the PPA will not be collected because the take-or-pay provision of Meralco’s contract with its energy suppliers (NPC, First Gas-Sta-Rita, First Gas-San Lorenzo, and Quezon Power) was not cancelled. This take-or-pay agreement causes consumers to pay for electricity they never used, or electricity that was never produced.
As long as these contractual provisions exist, consumers will continue to pay the PPA.
2. Meralco spokesperson Elpi Cuna said, “In the unbundled Meralco rates, customers will clearly see what they are paying for… (Manila Bulletin, 03 June 2003)” Even Energy Secretary Vincent Perez claimed that unbundled rates will bring transparency to consumers’ electric bills (BusinessWorld, 13-14 June 2003).
Instead of transparency, the rates unbundling hides the most onerous item in the consumers’ electric bill – the PPA. In an ironic twist, the unbundling of rates “bundled” the cost of unutilized power, which has the biggest share in the PPA – the fuel cost adjustment and purchased power cost adjustment – inside the Generation Charge. Consumers will still be made to pay for the unutilized electricity that was already contracted by Napocor and Meralco from the independent power producers (IPPs).
3. The ERC boasts purported savings through the unbundled rates (Manila Times, 03 June 2003). On the contrary, consumers will experience a round of rates increase.
Aside from hiding the truth about the PPA, there is also an attempt to misinform the public. The small savings given to consumers is cancelled out by a rates increase of P0.17/kWh, of which Meralco gets P0.0865/kWh that is imbedded in the distribution charge.
Further, Meralco will collect its deferred PPA of P0.1002/kWh that the ERC ordered on 19 December 2002 (ERC Case no. 2001-383). This is added to the Generation Charge in the unbundled electric bill.
After its investigation, the PPA Abolition Team concludes that
- The ERC and Meralco omitted important details regarding the unbundling of rates, attempting to dupe consumers through a well-publicized campaign that the dreaded PPA no longer exists. Such tactics manifests Meralco’s – and the Lopezes’ – greed and duplicity, attempting to dupe consumers and milk them of their hard-earned money.
- Electricity rates will remain high until the onerous IPP contracts are cancelled.
- Consumers will continue to troop the streets, the ERC office, and Meralco payment centers to demand the total abolition of the PPA, or any item that replaces it!
(The PPA Abolition Team is composed of members of the Freedom from Debt Coalition)