20 July 2003
The Freedom from Debt Coalition assails the purported “win-win” settlement between Meralco and National Power Corporation (NPC) over their 10-year contract, because of the terms that will unduly benefit Meralco and burden consumers with even higher electricity rates.
According to the terms of the settlement, Meralco will pay NPC P20 billion for reneging on its obligations. On the other hand, Meralco IPPs will be allowed to run at minimum contracted levels. This means that NPC will have to take a hit and reduce its supply to Meralco.
We are not impressed with this solution, because the P20-billion settlement will be passed on to consumers as additional generation charge of P0.13/kWh. Consumers will have to pay for five years to cover this amount.
In the first place, what is so special with Meralco’s contracts with Quezon Power, First Gas-Sta. Rita, and First Gas-San Lorenzo that they should take precedent over Meralco’s contract with NPC?
Further, why should consumers bear the burden of Meralco’s questionable business decisions? With its battery of lawyers, Meralco should know the penalty of entering in other contracts that can impair its existing contract with NPC. This burden should be borne by Meralco alone, and consumers should not be made to suffer for Meralco’s indiscretions and dubious policies.
Allowing Meralco IPPs to run at contracted levels will mean more profit to the Lopezes, who own a substantial stake in First Gas Corporation. The settlement will further enrich them at the expense of consumers.
On the other hand, Meralco argues that its IPPs running at contracted levels will lower generation costs, offsetting the increase brought by the P20-billion settlement.
We dispute this assertion, because Meralco’s move will result to NPC lowering energy offtake from its own plants and IPPs. This will result in an increase in undispatched contracted electricity, which can contribute to higher stranded costs to be passed on to all consumers through the Universal Charge.
The Freedom from Debt Coalition demands that the Energy Regulatory Commission, as the final arbiter in the Meralco-NPC settlement, revoke this agreement for unduly enriching one family at the expense of public interest. Further, consumers should not suffer for Meralco’s problems.