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By Efren L. Danao, Senior Reporter
Deals of the Manila Electric Co. (Meralco) with
its sister companies enabled the latter to almost double their
income even as Meralco was asking for another power rate increase,
Winston Garcia, president of the Government Service Insurance System
(GSIS), charged on Monday.
Garcia told the Joint Congressional Power
Commission (PowerCom) that Meralco bought P55-billion worth of
supplies from its sister companies in 2007 as he questioned the lack
of Meralco’s transparency in these contracts, including those with
its own independent power producers (IPPs).
Meralco admitted at the same joint hearing that
it has been passing on to its customers the cost of 72 million
kilowatt-hours that its offices are consuming each year.
Garcia told the PowerCom jointly headed by Sen.
Miriam Defensor Santiago and Pampanga Rep. Juan Miguel “Mikey”
Arroyo that Meralco buys its supplies of meters, distribution and
power transformers, ballasts, circuits and other electrical supplies
from inter-locking companies.
Santiago later remarked that this indicated the
existence of a “syndicate” at the power company.
“Meralco should keep its private interests at
arm’s length in dealing with the public,” she said.
Santiago also favored the proposal of Garcia to
break up the Meralco franchise into three. She cited the case of the
National Water and Sewerage Authority or Nawasa that was broken up
into two franchises, resulting in better water supply “although
one franchisee was not earning as much as the other.”
Jesus Francisco, Meralco president, said the
contract for the supply of electric meters is subject to public
bidding, as he denied that Meralco has been favoring its sister
companies.
Garcia, however, revealed that the bidding for
meters was won by GE, which was partly owned by Meralco and of which
Francisco is a director.
He blamed the “mismanagement” of Meralco by
the Lopezes as the main reason why the power rates in the
Philippines are one of the highest in the world, and are second only
to Japan, a very rich country.
“Meralco’s distribution charge is higher
than that in Cebu, Cotabato, Davao, Dipolog, Bataan and Bohol. This
is an anomaly. It has 20 times more consumers so it should charge P1
less because of economies of scale if management is efficient,”
Garcia said.
He also charged that Meralco is even worse than
the government bureaucracy because it has more supervisors than
rank-and-file. Earlier, Santiago said the top nine Meralco officers
are earning P159 million a year.
Francisco contended that Meralco’s
classification of “supervisors” included professionals such as
engineers and lawyers with no actual supervisory powers.
He said the rates being charged by Meralco are
unavoidably high because of the big number of customers in Manila
consuming not more than 100 kilowatt-hours a month, and were being
subsidized by those consuming more.
Francisco insisted that the rates of the
independent power producers supplying power to Meralco are lower
than those of National Power Corp. (Napocor). Santiago sought
clarification of reports that Meralco was deliberately buying power
from the Wholesale Electricity Spot Market (WESM) during peak hours
so it could say that its power producers’ rates are lower than
those of Napocor.
Francisco said it has not been shown that WESM
rates are expensive, and that majority of its purchases from the
spot market were off-peak.
Cyril del Callar, Napocor president, denied that
the government-owned agency’s rates are higher than those of
Napocor IPPs and contended that WESM sold 80 percent of the power to
Meralco during peak hours from January to April this year. He said
the higher rate of power purchased by Meralco during peak hours is
passed on to its customers.
Consumers footing Meralco bills
Ireneo Acuna, Meralco assistant vice president,
confirmed earlier reports received by Sen. Juan Ponce Enrile and
GSIS spokesman Estrellita Elamparo.
Elamparo said the power consumption of Meralco
offices is being paid for by the utility’s customers.
Acuna said all 72 million kilowatt-hours of
electricity used by Meralco every year are footed by Meralco
customers because this was allowed under Republic Act 7832 that
antedated the Electric Power Industry Reform Act (Epira) of 2001.
“We are being fried in our own lard!” Enrile
remarked after eliciting this admission from Acuna.
He said this meant Meralco was not only paying
for its own consumption but was even profiting from it by passing it
on to its consumers.
“Most of power users are poor and it is
unconscionable for Meralco to saddle them with paying for the
electricity that Meralco itself had used,” Enrile added.
The 72 million kilowatt-hours are estimated to
cost P427.5 million annually at P5.7 per kilowatt-hour.
Santiago said the hearing indicated there was no
single entity to blame for the high power rates and that there was a
need to amend Epira. She directed the Energy Regulatory Commission
to lower the energy loss that is now pegged at 9.5 percent.
At the Department of Finance, Undersecretary Gil
Beltran said the call of the Lopezes to lift the value-added tax
(VAT) on oil will not solve the country’s problem on high
electricity rates.
Beltran added that such move will only take away
P45.7 billion in revenues, which can be allocated by the government
for social services for the poor. He said the suspension of VAT will
benefit only the higher-income group, or the rich families.
“Our studies show that 40.7 percent of the
benefits from suspension will accrue to income groups earning
P250,000 and above, another 41.3 percent will accrue to income
groups earning P100,000 to P249,999,” Beltran told reporters.
-- With Chino S. Leyco
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