LAWMAKERS on Tuesday slammed the alleged sweetheart deals entered into by officials of the Energy Regulatory Commission to favor power distributor Manila Electric Co. to lock down consumers in its franchise areas to disadvantageous and predatory power rates for up to 25 years.
Bagong Henerasyon Party-List Rep. Bernadette Herrera-Dy said the power supply agreements entered into by Meralco with its sister generation companies and affiliates were made possible by ERC’s effort to hold off the competitive selection process under which power supply contracts should have gone through competitive biddings.
‘’The CSP requirement was designed to lower power rates by subjecting power supply contracting to competitive bidding,” Herrera-Dy said in a statement. “But when the ERC postponed the competitive selection process for power supplies in December 2015, it effectively allowed Meralco to lock consumers into self-dealing contracts with its sister companies for up to 25 years,” she added.
Cebu Rep. Gwendolyn Garcia, a deputy speaker, shared Herrera-Dy’s view.
At a joint congressional hearing conducted by the House committees on good government, public accountability, and energy, it was revealed that on Nov. 6, 2015, the Energy Department and the ERC ordered distribution utilities to conduct competitive biddings to prevent the charging of self-negotiated generation rates and thus lower power costs to benefit consumers.
However, the ERC delayed by five months the implementation of the DoE circular, during which Meralco was able to corner the lion’s share or 3,551MW out of the 4,500MW in aggregate supply covered by all the 93 PSA applications filed with the ERC during the extension period.
Meralco was able to secure the 3,551MW supply through just seven agreements it negotiated with its own power generation companies and affiliates. The remaining 86 PSAs covered less than 1,000MW, triggering suspicions that the Meralco contracts were sweetheart deals.
For his part, Bayan Muna Rep. Carlos Zarate said the ERC move to extend the implementation of the competitive bidding circular denied consumers the benefit of competition even as it exposed them to potentially overpriced contracts between Meralco and its own generation companies.
Zarate said the seven contracts entered into by Meralco and its affiliated generation companies are clearly “midnight contracts” since they were signed only four days before the new deadline set by the ERC on April 30, 2016 to conduct competitive supply biddings.
He said the resulting damage to consumers from the alleged midnight deals would easily translate to P12.44 billion a year. Moreover, he said the deals foreclosed any form of open market competition and ties down consumers to Meralco’s dictated supply rates for at least two decades.