THE Manila Electric Co. (Meralco) and other power generators could be held liable for economic sabotage if they are found to have conspired to manipulate electricity prices, Presidential Communications Operations Office Secretary Herminio Coloma Jr. said on Friday.
Coloma said that under the Electric Power Industry Reform Act (Epira), any entity that committed abuses must be held accountable.
“I think it is incumbent upon us to know what really transpired and what corrective measures to take to address the situation, as this greatly affects the welfare of so many of our countrymen,” he said.
Coloma said President Benigno Aquino 3rd is determined to get to the bottom of the unprecedented rate increase the Manila Electric Co. wants to charge its customers.
“Government is committed to ensure sufficient supply of electricity to households and industries at reasonable rates and foster a business climate that encourages continuing investments in energy development,” he stressed.
Coloma said there are corrective measures the government can carry out to prevent another spike in electricity rates.
First, the industry players must prepare for the maintenance shutdown of the Malampaya gas facility and other sources of power to avoid disruptions in the electric supply.
Second, the Energy Regulatory Commission (ERC), which oversees the power industry, must ensure there is no collusion among industry players.
“If it was a commercial decision that was wrong, government never promised to shield them from their wrong decisions,” Coloma said quoting the President.
He said several government agencies are investigating Meralco’s huge rate increase.
The Department of Justice is also doing its own investigation, and the President at the same time wants a review of possible amendments of Epira, he said.
“The President continues to monitor the results of the investigations. We continue to ensure that the country will have a stable supply of electricity needed by industries and residences at the right prices,” he said.
Senate Majority leader Alan Peter Cayetano said the government has the power to cushion the impact of power price hikes and spare the people from burdensome power rates.
Cayetano said that because the country’s current power rate is already among the highest in the world, it discourages investors and denies people of job opportunities.
The government should be more results-oriented and start focusing on actions that would provide the public relief from the various rate hikes on electricity, fuel, and even social security premiums, Cayetano said.
The government should consider reducing value-added tax (VAT) on power and natural gas royalties to bring down the cost of power.
Citing a study by the United States Agency for International Development (USAID), the country could immediately bring down power rates by P1.4 per kwh if the government reduces VAT and natural gas royalties.
Cayetano said another study, by Dante Canlas, former head of the National Economic and Development Authority (NEDA), on the effects of reducing VAT and royalties in 2009, showed that government could lose P13.84 billion in revenues.
But because the move would also result in lower power, investors will come in, the gross domestic product (GDP) can rise by P62.35 billion, tax revenue can hit P8.72 billion and additional annual non-tax revenue by 989.4 million.
“The government must not profit from people’s misery. It must be willing to let go of some revenues to be able to gain more,” he said.
Sen. JV Ejercito said the government is not doing enough to avert the continued rise in the price of electricity.
Ejercito said such failure was clearly established during the joint Senate committee hearing Thursday when the government opportunity to intervene failed.
He mentioned the case of the state-owned Malaya power plant, which was not used by the government to somehow bring down the power rates. The plant has the capability of generating a total of 600 megawatts but since running it is so expensive the government decided to just place it under economic shutdown.
Cayetano said firing Energy Regulatory Commission (ERC) Chairman Zenaida Ducut won’t solve the power problem, although it has minor benefits.
“Even if you appoint a new ERC chair tomorrow, the same system, the same players, the same conditions will be there,’’ Cayetano said in a press conference.