TMO’s faulty memory

Ben D. Kritz

Ben D. Kritz

MOST of the public probably missed the news, but consumers were handed a minor moral victory at the end of last month when the Philippine Electricity Market Corp. (PEMC) slapped Therma Mobile Inc. (TMO) with a P234.9-million fine for withholding electricity from its power barge complex in Navotas during November and December 2013.

TMO is a unit of Aboitiz Power, and PEMC is the operator of the Wholesale Electricity Spot Market (WESM).

What TMO was accused of – as far as I know, this column was the first and perhaps the only one to break the news at the time (“Meralco: Ang liwanag ng conspiracy,” January 21, 2014) – was intentionally withholding more than half of the 242-MW capacity of the Navotas facility, delivering just 100 MW to Meralco instead of the 234 MW specified in TMO’s power supply agreement with the nation’s biggest electricity distributor. PEMC determined that TMO violated the electricity market’s “must offer” and “must run” rules, and imposed the penalty.

TMO and the Aboitiz Group have, of course, taken exception to the ruling. In a disclosure to the Philippine Stock Exchange, a media statement posted on the Aboitiz Power website, and in at least one interview with reporters, TMO denied intentionally withholding power from Meralco. Through TMO president and COO Jovy P. Batiquin, the company claimed to have acquired the Navotas complex only in November 2013, and that the delivery of only 100 MW was the most it could provide because the plant was still undergoing rehabilitation at the time.

TMO’s contention raises a troubling question: Do they think the rest of us are completely stupid?

The Aboitiz Group took over the four power barges, which used to be owned by Duracom, on May 27, 2011, and completed the rehabilitation sometime before July 19, 2013 – not in November 2013. We know this because there is a statement (dated July 19, 2013) in the media archive of the Aboitiz Power website which says, “AboitizPower Corporation’s subsidiary Therma Mobile Inc. has recently inaugurated its four Navotas power barges, having a combined capacity of 242 megawatts (MW), and switchyard. This signifies that the facility has completed its rehabilitation and is now ready to supply power,” and further explains that, “Therma Mobile, Inc. acquired four units of the barge-mounted floating power plants moored at the Fish Port Complex in Navotas City (Navotas Barges) last May 27, 2011.”

Furthermore, records from the Energy Regulatory Commission (ERC) indicate that in July 2012, TMO applied for a permit to build a connection facility linking the plant to Meralco’s distribution system through the 115kV Malabon-Grace Park transmission line; the ERC granted TMO provisional authority to proceed in October that same year (ERC case no. 2012-042MC). In March 2013, Meralco filed an application for ERC approval of a Power Supply Agreement (PSA) with TMO covering the testing phase of the Navotas plant, which was nearing the completion of its rehabilitation (ERC case no. 2013-043RC). And then on September 30, 2013, another application (ERC case no. 2013-196RC) for a regular PSA was filed, just three days after the authorization of the TMO-Meralco connection was made permanent; the PSA was provisionally approved by the ERC on November 4, 2013.

One has to wonder what the point of TMO’s wounded-feelings defense really is. It is probably not going to spark an outcry of support for the erring company among the business community or the general public, and one would think statements to the press, no matter how many times they are dutifully and uncritically repeated by the papers, are not admissible in an appeal hearing.

I’ll leave it to the reader to decide which of the following conclusions should be drawn from TMO’s recent, embarrassingly erroneous statements on the issue:

· The company is suffering a bizarre case of institutional amnesia, or

· The power plant actually did have a technical problem in November and December 2013, and stupidly forgot to inform regulatory and WESM authorities, even though one would think that in the more than a year it took for the case to reach a resolution, somebody would have mentioned that at some point, or

· TMO is hoping that the Philippines’ laughable internet connection quality prevents people like me from looking up (and downloading files or making screenshots of web pages, in case somebody belatedly tries to cover their tracks) information that comprehensively refutes the company’s arguments.

Whatever the conclusion, TMO and Aboitiz, at this point, ought to accept the glaring reality that saying or doing anything other than quietly taking their lumps and signing a very large check payable to the WESM will only make their situation worse. Of course, in order to do that, the power concern would have to internalize the lesson that playing fast and loose with government regulations and market rules at the expense of consumers is extremely costly; but based on their recent statements, there is no indication that has happened yet.

(My thanks to Manila Times business reporter Ritchie A. Horario for his assistance in preparing this article.)


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