The recent massive P4.15 per kilowatt-hour power rates hike that the power company Meralco earlier announced made many consumers see red this Christmas season. Meralco explained that the increase is due to higher electricity generation rates because of the Malampaya gas line maintenance shutdown. Their generation plants had to source costlier fuel and add electricity from the Wholesale Electricity Spot Market (WESM).
The WESM is like a stock trading platform for electricity supply. Created by the Electric Power Industry Reform Act or Epira), the WESM was supposedly designed to keep electricity supply flowing at affordable rates.
Triggered by the simultaneous shutdowns of several plants, Congress is now going to hold hearings on possible collusion between the power suppliers and other players in the market.
In a more realistic note, the Makabayan bloc in Congress earlier obtained a temporary restraining order from the Supreme Court to stop the said power increase. This was granted by the High Court a few days before Christmas. The Makabayan coalition is composed by Bayan Muna, Anakpawis, Gabriela Women’s Party, ACT and Kabataan partylists.
This temporary relief was hailed by many as a welcome gift for consumers but was taken by Meralco with less aplomb. In fact, there was a veiled warning in the distribution utility’s response in which they said that power might go out if they were unable to pay the power suppliers in time. This was in reference to the PEMC which manages the WESM.
Worse, the Energy Regulatory Commission has already surrendered its regulatory powers to distribution and generating companies by allowing automatic adjustments through mechanisms such as the generation rate adjustment mechanism (GRAM) and later the automatic generation rate adjustment (AGRA). This allows distribution utilities such as Meralco to automatically increase or decrease its rates without any public hearing.
The WESM at its heart will not keep rates low. In fact, as it is priced according to demand, power rates will rise whenever problems on supply are encountered. Worse, special sweetheart contracts between distribution utilities and generating plants such as that of Meralco and First Gas are more of the norm.
Given its record in responding to electricity issues, it is not surprising that Malacañang saw nothing wrong about Meralco’s increase.
Presidential spokesman Coloma saw the rate hike as reasonable.
Department of Energy (DOE) Secretary Petilla only suggested that Meralco stagger their price increase instead of trying to stop it. It is a reprise of President Aquino’s handling of the Mindanao power crisis where his answer was that “power rates will go up in Mindanao because the choice is a higher power rate or no power.”
The Senate and the majority of Congress’ short-term view is no different. Despite many hearings on the Epira and despite one senator’s promise to make us happy, the law remains to allow the burden of pass-on costs to consumers and makes power industry players—Meralco and other distribution companies, NGCP, and power generators—happy.
With the unbundling of rates and the break up of the National Power Corp. into three segments under the Epira, it seems that Meralco (and other distribution companies and cooperatives like it) can always pass the buck to the generators whenever fuel or supply costs run up.
Government is held hostage and made inutile because it left the supply side entirely up to private hands.
As we pointed out several months ago, this systemic and long-running short-sightedness in providing electric power is a result of the privatization and liberalization of the whole power industry embodied in the Epira. Instead of government being able to plan and provide stable and affordable electric supply for all, it will wait for private (usually foreign or foreign-backed) investors to do it for us.
Usually they wait until the last minute when supply is already precarious and high prices (read: profits) are unavoidable. Government has abandoned the state’s role in providing accessible electricity for all.
We cannot also take the view that only the distribution side of electric power is the public utility. The nature of electricity distribution is such that generation and transmission is integral to it. It cannot be taken as separate entities entirely independent of one another. Without power generation, there is nothing to distribute.
Without transmission, power will never get to consumers. Without distribution, power cannot be easily accessed in households and in commercial establishments.
Electric power is a vital and strategic utility that has to be guarded and managed as any vital state resource. It should not be haphazardly given out to investors who do not come when there will be no profits nor to distribution utilities that are only looking at their margins.
Government will always be powerless to determine the country’s future if we will always be held hostage to the gains of a few because of laws like Epira and a mindset of privatization and deregulation that has failed us for so long. The administration and Congress must either reverse these policies and scrap the law or be prepared for the power of the people, who must have had enough of ever increasing prices at this point.