The Power for People (P4P) Coalition has filed a petition at the Energy Regulatory Commission (ERC) seeking to deny Meralco’s power supply contracts with four fossil fuel plants, which they claim will result in more expensive electricity for consumers.
Meralco, however, said the claims made by P4P are baseless, arguing that they strictly obey government rules in securing power supply contracts.
The country’s largest distribution utility initiated a bidding process that awarded contracts worth 3 gigawatts to fossil fuel plants owned by San Miguel Corporation and Aboitiz Power Corp. early this year.
Two gas plants owned by San Miguel Corp. won 80 percent of said capacity, even as one of the involved gas projects previously walked away from a Meralco contract last year, after incurring losses due to unprecedented high coal prices.
“The terms of these power contracts are unfavorable to consumers and small businesses. Everyone loses except big power players: Meralco, San Miguel, and Aboitiz, who are leaving consumers no choice but to pay for more expensive electricity while their profits are soaring,” said P4P Convenor Gerry Arances.
Meralco said they have secured prior approval from the Department of Energy (DOE) and the corresponding Terms of Reference (TOR) the competitive selection process (CSP).
“In addition, these TORs also considered suggestions of the Energy Regulatory Commission (ERC) Chairperson before they were published,” said Meralco vice president and head of corporate communications Joe Zaldarriaga.
Partido Lakas ng Masa (PLM) President Leody de Guzman emphasized that Meralco and other corporations are squeezing consumers, noting that as the price of electricity increases, less is spent on basic needs such as food.
The groups said the contracts allow the plants to automatically pass on fuel costs to consumers, which is against the “least-cost” provision of the Electric Power Industry Reform Act (EPIRA). They said that if the contracts get approved, consumers will be locked into 15 more years of high power prices.
“This is precisely what Sanlakas warned about two decades ago when Congress railroaded EPIRA under the guise of preventing another energy crisis,” said Sanlakas Secretary-General Aaron Pedrosa.
Privatization inspires corporate greed and these contracts are further proof that these generation companies will willingly throw consumers under the bus to protect their bottom lines,” Pedrosa added.
He said this also raises the question of conflict of interest in the bidding process for two specific plants after Meralco’s power generation arm announced in March a joint venture with Aboitiz to buy into two San Miguel-owned gas assets to develop a massive liquefied natural gas (LNG) facility in Batangas City.
“Even Meralco has to admit that the sequence of events is too fortuitous for San Miguel to not raise eyebrows,” Arances said. The groups argue that the terms of the contracts are anti-competitive in the first place, deliberately keeping out renewable energy projects from entering.
“We are asking the ERC to reject these contracts as part of their responsibility of protecting the public. Otherwise, they will condemn a new generation of consumers to 15 years or more of expensive power.” Arances said.
Zaldarriaga said the CSPs involve an open and competitive process with the ultimate goal to secure the lowest bid from qualified generation companies, with no preferential treatment.
He said previous CSPs of Meralco are also proof of transparency as these are required to comply with the policies of the DOE and rules of the ERC.
“We would like to assure our customers that all power supply contracts resulting from our CSPs undergo a strict review and approval from the ERC before being implemented to ensure that rates are fair and reasonable,” Zaldarriaga said.