Cartel blamed for plants shutdown

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The simultaneous shutdown of power plants, which triggered the unprecedented increase in electricity rates, is an old tactic employed by a powerful cartel, a party-list lawmaker said.

Bayan Muna Rep. Carlos Zarate sees a pattern in the “synchronized” shutdown of several plants starting from 2011

Zarate said that in October 20 to 26, 2011, the Malampaya natural gas plant shut down for a scheduled maintenance.

Without its usual supply from Malampaya, Manila Electric Co. (Meralco) had to draw its electricity from three independent power producers (IPPs): Quezon Power Philippines Ltd. (QPPL)’s coal-fired facility, the 1,000-megawatt (mW) Sta. Rita plant, the 500-MW San Lorenzo natural gas plant, and the state-owned National Power Corp.


Both Sta. Rita and San Lorenzo plants are owned by the Lopez-led First Gas Holdings.

Zarate said the sequence was repeated from June to July in 2012. After Malampaya plant shut down, the Calaca and Sual plants were hit by outages. Also shutting off was a plant in Pagbilao owned by Team Energy, which also owns Sual, and the Malaya thermal power plant in Rizal.

During that period, Meralco also raised its rates.

“Now these power utilities are singing the same old tune again. The Malampaya facility—supposedly scheduled for a maintenance shutdown only once every two years – is now being shut down almost every year, and, as always it is also accompanied by unscheduled outages of other power plants” Zarate said.

The Malampaya outage “has become an annual event and the consumers are always the victims and at the losing end. This is nothing but a modus operandi of a cartelized industry and the Aquino administration is not doing anything as it is apparently becoming its protector instead,” he added.

At the House Committee on Energy hearing last week, a Department of Energy official revealed at least nine power plants had forced outages beginning in November: Sual, GN Power 2, Sta. Rita Module 20, Sta. Rita Module 30, Ilijan 2, QPPL, Sual 1, Calaca 1, and Masinloc 1.

The plants’ outage coincided with the maintenance shutdown of Malampaya, which was scheduled from November 11 to December 10.

This time, Meralco turned to the Wholesale Electricity Spot Market (WESM), where prices soared from P13.47 to P33.22 per kilowat-hour (kWh) in just weeks.

The Energy Regulatory Commission last week approved Meralco’s petition for a P4.15 rate increase in three installments.

Zarate said that since the Energy and Power Industry Reform Act (Epira) took effect in 2000, power prices have skyrocketed.

“The privatization and deregulation of the power industry is actually a boon only to the corporate players but a bane and a scourge to the people. With Epira, private corporate profits are given absolute priority over consumer welfare and economic development, while the state steps aside,” ended Zarate.

Therma Mobile, who has a short-term contract with Meralco, was supposed to provide 234 megawatts at P8.65 per kWh during this period. But it only sold 100 mW to Meralco, forcing Meralco to buy from WESM.

Zarate said the power industry is controlled by a cartel, similar to that of the oil industry. He pointed out that the plants that went on forced outages are owned by Cojuangco-San Miguel Corporation (Ilijan), Lopez group (San Lorenzo), and Consuji (Calaca). The two smaller groups are Ayala (GN Power) and AES Philippines (Masinloc).

These companies, he said, control 80 percent of the country’s power capacity. Cojuangco has 22 percent, Aboitiz, 20 percent, Lopez, 18 percent, Ty, 12 percent, and Consunji, eight percent, he said.

Meralco slammed
Advocacy groups Bukluran ng Mamamayang Pilipino (BMP) and Kongreso ng Pagkakaisa ng mga Maralita ng Lungsod (KPML) slammed Meralco for the P4.15 increase when “the firm is making so much money to the tune of an expected core net income of P17 billion for 2013.”

“Meralco’s anti-consumer price hike will be too much to bear as it translates to an increase of P830 in the power bill of households which consume 200 kwh every month,” the groups said.

Leody de Guzman, Bukluran president, said the rate hike was ill-timed because, aside from the onset of the Christmas season, the country is still recovering from a string of natural calamities.

“Aside from the economic setback caused by typhoons Santi and Yolanda and the strong tremor that had rocked Bohol and other parts of Visayas, major cities are also confronted with an increase in the prices of LPG (Liquefied Petroleum Gas) and the MRT (Metro Rail Transit) and LRT (Light Rail Transit) fare hikes,” de Guzman said.

Even if the power rate increase will be paid in three installments, “it will still drive millions of wage earners to poverty,” he said.

Gabriela Rep. Luz Ilagan said “it was callous of Meralco to make poor households pay higher electricity rates when the company amassed billions of pesos in profit in 2012.”

The House of Representatives has scheduled an inquiry to determine if the power rate increase is excessive.

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4 Comments

  1. Rep. Carlos Zarate should sponsor a bill that will require first the approval of DOE or ERC before any scheduled and/ or emergency maintenance of these powerful cartel mostly owned by Greedy Tycoons. The DOE should be the one to schedule the yearly maintenance of all power plants including the Malampaya Natural Gas plant that supply fuels to those owned by these HUNGRY and Greedy TYCOONS

  2. rachel aspiras on

    its time all of us filipinos walk to the streets for civil disobedience and ask pnoy to resign

    all basic services went up already!!! but is doing nothing..

  3. The Big Greed of Gridlock Conspiracy creating artificial shortage triggering an automatic surge in demand – a desired condition on these conspirators to make their move and Jack Up prices. Simple economics, but highly Immoral,

  4. If this practice of forced shutdown started in 2011 and was repeated again today, then there is definitely a collusion between Meralco and the power producers. The government is not really considering the welfare of consumers as they are more concerned about the welfare of the power producers and the income of Meralco. Cojuangco controls 22 percent of the country’s power capacity and with four others, they control 80 percent. If welfare of the people is really the government’s concern, owners and officers of such companies should be prosecuted, and that such abusive and greedy companies should be nationalized to protect the people. I doubt however if this government has the guts to face such prominent businessmen especially when a Cojuangco is involved.