Consumer rights advocacy group Matuwid na Singil sa Kuryente issued an urgent call yesterday to President Rodrigo Duterte and Energy Secretary Alfonso S. Cusi to stop the six midnight power supply contracts for 3,551-megawatt negotiated by Meralco with project companies controlled by its sister company Meralco PowerGen and to call for a truly competitive biddings to assure power supply in the future.
In a statement, MSK co-convenor David Celestra Tan said its studies showed that the difference in the generation rate of competitive bidding and negotiated contracts is 10 to 15 percent and the difference between negotiated contracts of Meralco sister companies and non-sister companies is another 10 percent.
Tan said these translate to an overprice of P15 to 25 billion a year or P.5 trillion over 20 years tand added that it could be more due to sweetheart contract provisions in fuel pricing, guaranteed take or pay disguised as load factor pricing, downtime allowances, and escalation indices.
Through these questionable agreements, MSK warned of a dangerous situation wherein Meralco is able to create a power cartel that will own and control 14,000 mw of the country’s 18,000 mw of installed capacity by 2020.
The group said that on nationwide basis the overcharge to consumers can total P1.0 trillion over 20 years.
“Cartelization of power is specifically prohibited by the Epira Law of 2001 and the Energy Regulatory Commission is mandated to motu propio investigate and guard against it. The cartelization will also eliminate true competition in the wholesale electricity spot market,” MSK said.
According to the consumer group, Meralco was able to fast-track the negotiation and signing of the six power supply contracts on April 26 and 27, 2016 due to the inexplicable extension by the ERC of the deadline for CSP up to April 30, 2016.
The ERC alleged that the extension was made to allow distribution utilities who have signed contracts as of Nov. 6, 2015 the needed time to complete their ERC application filing.
Meralco PowerGen’s contracts were not signed until 171 days after Nov. 6, 2015. Yet, they were accepted and appear to be on way to approvals. The 3,551 mw of contracts are for delivery from 2021 and 2022 and cover 24.88 billion kwh a year or 80 percent of Meralco’s annual energy purchases.
But the MSK said that the “legislators and the ERC are apparently using President Duterte’s newly issued Executive Order 30 calling for approval in 90 days the “projects of national significance”. These overpriced contracts that were circumventing the CSP policy are indeed projects of national significance but in harmful ways against the consumers.
Further, the creation of a Meralco cartel that as a group control 14,000 mw puts the country in the dangerous path to entrenched oligarchy and imperils the true independence in the future of the Presidency and legislature, according to MSK.
“There is an urgent need for President Duterte and Sec. Alfonso Cusi to look into the cartelization of power which is illegal and would have dangerous political repercussions for the country in the long term. Cartelized power pricing will overprice and hurt the Filipino consumers badly,” the MSK said.
