WHY MERALCO CAN DEFY GMA

By Bernie Lopez

Meralco is bigger than meets the eye, having allies that Malacanang cannot just ignore. These allies are big time energy multinationals which have connections in high places, namely the same diplomatic and lending institutions that have been pressuring our government for decades now.

Both Meralco and First Philippine Holdings are controlled by the Lopezes. First Philippine Holdings owns 60% of two Independent Power Producers (IPPs) which sell power to Meralco, namely San Lorenzo and Sta. Rita. The 'ally' is a big powerful energy multinational, British Gas, which owns 40% of both San Lorenzo and Sta. Rita.

 

The other multinational is an American giant, the former Ogden Corp., which owns a big portion of Quezon Power. The Lopezes, as far as documents show, do not have equity in Quezon. But Meralco also buys power from Quezon. These three IPPs form a sinister 'energy triumvirate' which is the cause of all the rate increases Meralco has been illegally passing on to customers. Meralco can defy pressures from Malacanang and the public to lower illegal rate increases because it hides behind the skirts of these powerful energy multinationals.

 

Since circa 2001, the aggregate payments for power purchases of Meralco to the energy triumvirate is a staggering P200 billion based on broad estimates culled from Meralco reports. Meralco in turn passes on these payments to you and I as electricity consumers. In other words, our money goes not to Meralco, the mere conduit, but to the Lopezes and their multinational allies, which will move heaven and earth to protect this huge windfall.

 

Just for the record, the estimated P200 billion is based on payments on power purchases of Meralco to Sta. Rita and San Lorenzo of P15 billion in 2001-2002. If we multiply this by seven years (2001 to the present), the total is P105 billion, even if we wrongly assume no subsequent increases in power purchases. If we include purchases from Quezon Power based on the same average as San Lorenzo and Sta. Rita, we add another P53 billion for a grand total of P158 billion. If we allow conservatively for increases in power purchases after 2001, we have the broad estimate of P200 billion that flows into the pockets of the energy triumvirate and First Philippine Holdings through Meralco.

 

Here is the problem. Even if we ask Meralco for a refund, they are no longer holding the money. We have to run after the energy triumvirate and the First Philippine Holdings. It will not be easy for GMA or the general public to run after these giants, whether through diplomacy or court decisions.

 

To show how the energy triumvirate has been maneuvering to protect its windfall profits, members of both American and European Chambers of Commerce have been giving statements that the EPIRA should not be amended. Why? Because they know the EPIRA is a flawed law that protects Meralco monopoly in spite of EPIRA's articulated intent to break monopoly. EPIRA became a law for rather than against monopoly through the manipulation of its Implementing Rules and Regulation (IRR) by a powerful lobby group with friends in the legislature and even in Malacanang. Enrile is behind the effort to amend the EPIRA.

 

In other words, amending EPIRA will destroy Meralco monopoly and cut off the money pipeline to the IPPs and to the multinationals. It must be noted that the World Bank, in good fate, financed the authoring of the EPIRA and pressured the government to enact it. It did not realize the many loopholes that the powerful lobby group quietly inserted into the EPIRA’s IRR. But even the World Bank is ultimately financed by multinationals, so we have to ask what is its true stand.

 

This is why Meralco is so brave in insisting in its rate increases even if they are illegal. They are illegal because the EPIRA provides that Meralco cannot buy power from IPPs at rates higher than that of Napocor’s. In its website, Meralco admits it bought power ‘from itself ‘ (meaning Lopez to Lopez through Santa Rita and San Lorenzo, a conflict of interest) at generation rate of P4.54 per kilowatt hour in April, which is higher than the current Napocor rate of P4.01. The 53 centavos difference translates to an increase in revenue for Meralco of about P270 million per centavo or a total of a whopping P13.5 billion in a single month, all charged to the beleaguered consumer already being strangled by global prices of oil and food. The rate increases are not only blatantly against the law but are also unilateral and arbitrary.

 

It is unilateral because Meralco says the Energy Regulatory Commission (ERC) was informed, but informing does not mean approval. It is arbitrary because Meralco gave a lame excuse that it increased generation rates because WESM rates were extremely high. This is true but Meralco purchases at WESM are a meagre 9% whereas they are a huge 55% from its affiliated IPPs.

 

Let us take a quick look at solons as friends and foes of Meralco. Joker Arroyo and Peter Cayetano were asked by a militant group, Kasangga, to stop defending Meralco and prove they are pro-poor as they say they are. They also cited Pia Cayetano, Teddy Casino and Teofisto Guingona without giving details. Enrile wants EPIRA amended. Miriam is asking for IPP records of sales to Meralco, which may spill a can of worms.

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