Blames firm’s unpreparedness, wrong decision
PRESIDENT Benigno Aquino III on Tuesday said the P8 per kilowatt-hour increase sought by the Manila Electric Co. (Meralco) was too high, and could have been reduced if the company planned ahead for the shutdown of the Malampaya natural gas plant.
“Our impression is there are people who really made a very significant profit from this situation,” the President said, stopping short of confirming allegations that power producers colluded to produce a spike in electricity prices.
Meralco spokesman Joe Zaldarriaga declined to comment on the President’s remark, since the company was not specifically mentioned.
“We’ve already had two meetings on the Meralco increases. The Malampaya shutdown is not an unusual event. It happens every two to three years. It is a foreseeable event,” Aquino said in an interview during the sidelines of the groundbreaking ceremony of the San Gabriel Power Plant in Barangay Sta. Rita in Batangas.
“We don’t think the price increase that is being charged is commensurate to what should have been the case.”
“You (Meralco) know that your power producers will not be able to produce, then you have to find a substitute. So you could have prepared for it; you should have prepared for it,” the President said.
While Aquino said he was eagerly awaiting the resolution of the petition against the rate hikes before the Supreme Court, he said the Energy Regulatory Commission is empowered to “disgorge excessive and unjustifiable profits.”
“As a first step, the Department of Energy is investigating exactly what transpired and why the situation happened. It (the Malampaya shutdown) was a foreseeable event and they could have prepared for it. It appears people did not prepare for it, so we have to identify who is at fault,” he said.
He said it was incumbent upon the government to find out what actually transpired, given the huge impact that power rates would have on the majority of Filipinos, and to find out “what correct actions should be undertaken to address that situation.”
“If it was a commercial decision that was wrong, the government never promised that they will be shielded from their wrong decisions. If it was wrong—and emphasis on if since the investigation is ongoing – consumers must not bear the brunt of the wrong commercial decisions,” the President said.
With the shutdown of the Malampaya gas plant and other power plants, Meralco said it was forced to buy from the Wholesale Electricity Spot Market at peak prices.
Aquino said the government will be proposing to Congress amendments to the Electric Power Industry Reform Act, which deregulated the power sector.
“There are specific amendments—it’s part of the study. I think we are looking at the powers of the ERC. But, again, I am not ready to comment on the specific amendments that we will be proposing to Congress,” he said.
The President, however, was lukewarm to a proposal to revoke Meralco’s franchise, which he described as being good only as headline copy.
Aquino also assured the public that there will be no rotational brownouts since there is enough supply in Luzon.
He also expressed optimism that the power issue will not scare off investors, citing the Batangas San Gabriel project with a total capacity of about 1,242 megawatts that is set to be completed by 2019.
The first phase with a 100-megawatt power capacity is expected to be finished by the third quarter of the year.
“Our plan to guarantee sufficient energy for our country may just be a single item in the catalog of things to be done in the grand and collective task of nation-building, but they are symbols of our
countrys impending success. Projects such as this, after all, do not merely help bring power into our homes and workplaces; they empower the Filipino people as well,” Aquino said.
At the same event, the president of First Gen Corp., which owns the 414-megawatt natural gas plant being inaugurated, said he wlecomed the ongoing investigation into allegations of collusion and market abuse.
Federico Lopez, First Gen president told reporters that an investigation should be conducted to discover why prices went up during the 30-day Malampaya shutdown.
“A proper investigation should be [conducted] so that people can discover exactly what happened and [learn] how [to] you prevent it from happening again,” Lopez said.
He said the industry was “very transparent” and there was a lot of data available.
The Malampaya natural gas facility in northwest Palawan fuels First Gen’s 1,500 megawatts Sta. Rita and San Lorenzo natural gas power plants in Batangas.
Lopez said it was important for consumers to have confidence in a system that was privatized and deregulated.
“If they are not sure about … safeguards in place to protect from this kind of spike, then that’s not good,” Lopez said.
He said the President’s remarks also highlighted one of the safeguards – the ERC’s ability to disgorge unjustified profits.
In the Senate, Aquino’s ally, Senator Antonio Trilanes IV, filed a bill granting the President emergency powers to deal with Meralco’s warning about rotating blackouts.
He said the emergency powers would enable the President to better handle the looming energy crisis.
In the House, Speaker Feliciano Belmonte Jr. said lawmakers would give priority to a review of the Electric Power Industry Reform Act of 2001 (Epira), which deregulated the power industry.
He said it was about time for Congress to review the 13-year-old law to prevent cross-ownership of the three sectors – generation, transmission and distribution, and to prevent market abuse.
The review would also plug loopholes in the law, he said.
“It could become a priority as we learn more about the power problem,” Belmonte said.
Oriental Mindoro Rep. Reynaldo, Umali chairman of the House committee on energy, also said proposed measures seeking to amend or repeal the Epira law will be the priority of his committee when session resumes session on Jan. 20.
He added, however, that measures to repeal the law authored by militant lawmakers were not likely to prosper.
“Off hand, I don’t see a need to repeal the Epira. Nevertheless, we will take up all bills related to the issue. We owe this to the authors but whether to approve or not is another matter,” Umali said.
Eastern Samar Rep. Ben Evardone, meanwhile, filed a bill prohibiting cross-ownership of generation and distribution companies to prevent collusion among industry players.
Evardone said that distribution companies, their subsidiaries, officials, stockholders and their relatives should be banned from holding interest in generation companies, and vice versa.
Marikina Rep. Miro Quimbo, chairman of the ways and means committee, said his panel would also review a proposal to remove the 12 percent value added tax on power generation and distribution charges. With Alena Mae Flores, Maricel V. Cruz and Macon Ramos-Araneta