Households in Metro Manila face a possible 780 percent increase in their water rates, Manila Water warned, while a fifth of all areas in Mindanao remains without electricity.
Manila Water cautioned the Supreme Court that water rates could shoot up 780 percent if the justices fine it P921 million for alleged violations of the Clean Water Act.
The Court had fined Manila Water for failing to complete its sewerage projects by 2009, or five years after the Clean Water Act took effect and slapped on an additional running daily fine of P322,102 until the projects are completed.
In a motion for reconsideration filed last week, the water concessionaire said the decision had no basis and urged the Court to reverse its ruling, saying its rates could go up by as much as P26.70 per cubic meter.
The company argued that Section 8 of the CWA did not require the completion of the projects, but merely the interconnection of existing water lines to available sewer lines.
The law, it added, also penalizes only the polluters or their positive acts of commission. An act of omission such as a failure to interconnect is not punishable.
If the concessionaires were to compress into five years as the Court ruling wants, what was planned as a 40-year project, the hundreds of billions of pesos required would lead to an increase in the water bill of subscribers, leaving them less money for other necessities and triggering higher inflation.
Worse, traffic is also expected to worsen, since hundreds of kilometers of roads, including EDSA, which are part of the Manila Water’s East Zone, would have to be dug up all at the same time.
The daily loss of P3.5 billion caused by existing traffic congestion could balloon significantly, it said.
Senate Majority Leader Juan Miguel Zubiri, for his part, challenged Energy Secretary Alfonso Cusi and other department officials to join him in parts of Mindanao that have no electricity yet. To know how difficult life without electricity can be, he suggested they stay for a week in unenergized places, without a refrigerator where they can store their food.
In a budget hearing, Zubiri said the low electrification rate in Mindanao was disturbing, given that the region had the highest incidence of insurgency.
“When the barangays and sitios are unenergized, they’re living in abject poverty and darkness,” Zubiri said.
Based on the Energy Department presentation, 78.2 percent in Mindanao has electricity—which means more than 20 percent has no electricity. In the Visayas, 94.1 percent have electricity; in Luzon, 100 percent have power.
Administrator Edgardo Masongsong of the National Electrification Administration acknowledged that many places in the Bangsamoro Autonomous Region in Muslim Mindanao, Zamboanga Peninsula, SOCCKSARGEN and Davao have no electricity.
Meanwhile, the Court also ruled that the approval by the Energy Regulatory Commission of Manila Electric Co.’s unbundled rates, its appraisal of its properties and its rate hike of P0.168/kwh in 2014 were in violation of its mandate to protect the interest of consumers.
In an en banc decision authored by Senior Justice Antonio T. Carpio, the Court partially granted the petition filed by National Association of Electricity Consumers for Reforms Inc. (Nasecore) seeking to nullify ERC’s order issued on June 21, 2011 upholding its decision issued on May 30, 2003, which granted Meralco’s application for unbundled rates.
The ERC sided with Meralco’s arguments that the rate increase was intended to cover its growing operation and maintenance expenses, which include leased properties on customer premises, construction work in progress, and building plants for future use.
But the Court nullified the adoption by the ERC of the current or replacement cost in the valuation of Meralco’s asset base, and remanded the case back to the agency for a proper determination of the power company’s assets.
In particular, the Court ordered the ERC to determine whether expenses directly and entirely related to the operation of a distribution utility should be passed on wholly or partially to the consumers, in order that electricity would be provided to consumers in the least costly manner.
The tribunal ruled that ERC’s approval of Meralco’s unbundled rates was in violation of its statutory mandate to approve rates that will provide electricity to consumers “in the least cost manner.”
Consumer advocate Romeo Junia lauded the ruling, calling it “a tectonic shift in rate regulation that will benefit consumers and captive consumers.”
“The Court practically overturning the ERC determination of the opening regulatory asset base favors consumers. The asset base of Meralco increased to P134 billion from about P66 billion because of a novel valuation system that ignored historical cost of the assets. The rate of return also increased to 14.9 percent from the 12 percent cap, raising Meralco return on capital from P3.2 billion under RORB to over P20 billion today,” Junia said.
“The SC order for ERC to go back to the asset base valuation could reduce the rates by a significant amount. The directive for ERC to consider the parameters whether expenses that are not directly and entirely related to the operation practically overturns the Performance-Based rate-setting adopted by ERC to replace RORB (Return on Rate Base), and restores the 12 percent cap on return set under RORB,” he added.
