Is regulatory capture now a matter of policy?

Ben D. Kritz

Ben D. Kritz

AS expected, the Energy Regulatory Commission (ERC) gave its approval for Meralco’s Prepaid Retail Electric Service (PRES), authorizing, provided a number of conditions are met, the country’s largest electric distributor to expand the service to as many as 140,000 customers by the end of next year.

The approval was virtually guaranteed by the ERC’s earlier nod to Meralco’s capital expenditure plan for 2015-2016, which took the full capex for the PRES to at least P1.09 billion.

As part of the plan, Meralco proposed to recover its capex costs through a pass-through charge to its 5 million regular postpaid customers, a sort of do-it-yourself feed-in tariff that would cost each of those customers an average of P218 to pay for a service none of them are using.

A late effort to challenge the presumptive approval of the Meralco PRES by the National Association of Electricity Consumers for Reforms, Inc. (Nasecore) was rejected on several technicalities by the ERC, as was a motion for reconsideration. The ERC’s subsequent rubber-stamping of the Meralco application, thus, raises a number of alarming possibilities:

• Acknowledgement of Meralco’s regulatory capture of the ERC is now a matter of policy: Meralco, in being permitted to recover its PRES development and roll-out costs through a levy rather than through revenue gains like most normal for-profit companies, is being given an unfair advantage over other electric distributors (at least three) who also have PRES programs but are not attempting to unload their capex burdens on their customers.

The simplest explanation is often the correct one. What we may be seeing is exactly what it looks like—Meralco will be more often than not allowed to bend or modify the rules and common sense as it sees fit, because it’s Meralco, it has physical control over the country’s most critical strategic infrastructure, and what Meralco wants is the way things are going to be.

• The pass-through cost is a new tariff the ERC just created: In which case, electric cooperatives in Batangas and Bohol should be allowed to modify their capex plans and rate schedules to take advantage of the funding mechanism. Whether any laws or regulations were actually violated in creating a new tariff through this backdoor method is something that will need expert investigation.

• The ERC is not actually aware that they made a mistake: It seems unlikely, but there is at least some possibility that the Commission and its staff simply did not think this one through. If that is the case, then having this issue brought to their attention—again—should inspire them to take the necessary steps to rectify the error.

Another aspect of the regulatory shortcomings revealed by what appears —from Meralco’s point of view, anyway—to be a s uccessful conclusion to a multi-year struggle to implement a prepaid electric program is the discouraging lack of credible, competent public interest advocates. Presuming the process was otherwise handled with regularity on the ERC’s part, having a petition asking permission to file a dissent to Meralco’s PRES application dismissed for reasons of bad form does not serve the public interest any more than ERC’s nutty decisions do.

The ERC needs to carefully consider the message it intends to send with approval of Meralco’s no-cost PRES program, and assess whether its decision is an accurate reflection of policy. Those who fancy themselves guardians against corporate and regulatory excesses, on the other hand, need to ask themselves why they keep losing. “Fighting the good fight” is admirable up to the point at which one realizes it has never accomplished anything, nor is it likely to; then it just becomes pathetic and annoying.


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  1. Amnata Pundit on

    Par for the course in an oligarchy. All over the world the cry is the same: “The oligarchs are the enemy of the people ! “

  2. Maria Stevens on

    This is just another Meralco SCAM…Why must I pay for a service that I do not need.

  3. What CRAP of an AGency is this ERC under NOYnoy?
    Dapat yan charged to customers who avail of the service la-ang!

  4. Claro Apolinar on

    Under the hypocritical government of Abnoy Aquino, what was only a sneaky and corrupt regulatory capture in previous regimes is going to be CORRUPT actual policy. That is why the great Business and Industry houses and families are all supporters and even members of Abnoy’s Yellow Army.

    Which is also why the foreign press are going along with the LIE that Abnoy’s is a reform and anti-corruption administration.