Meralco rate cut plan gets support

Administration and opposition congressmen supported yesterday the plan of Manila Electric Co. (Meralco) to cut its rate by an additional 60 centavos per kilowatt-hour (kwh).

The planned reduction is on top of the 85-centavo-per kwh cut in the purchased power adjustment (PPA) ordered by President Arroyo. Thus, Meralco customers are looking at a possible total reduction of P1.45 per kwh.

Meralco announced the plan after deciding to terminate its more expensive supply contract with the state-owned National Power Corp. (Napocor) and buy cheaper electricity from private power plants.

Rep. Juan Miguel Zubiri (Lakas, Bukidnon) said any plan by any power distribution or generating company to bring down its rate is welcome.

In Meralco’s case, he said the additional 60-centavo rate cut, plus the 85-centavo PPA reduction, will be a big relief to hundreds of thousands of customers in Metro Manila, Cavite, Laguna, Rizal, Batangas, Quezon, Bulacan and Pampanga.

Minority Leader Carlos Padilla (LDP, Nueva Vizcaya) said distribution companies should be encouraged to source their supply from electricity producers who can offer the lowest rates.

He said Congress, in enacting the Electric Power Industry Restructuring Act, wants competition among power producers and distributors so that customers will get the lowest possible rates.

Toward this end, Padilla said the opposition bloc he leads will support the proposal of a colleague, Rep. Enrique Garcia of Bataan, and Rep. Loretta Ann Rosales (party-list, Akbayan) for repealing the cross-ownership provision in the power sector restructuring law.

A power producer should not be allowed to own, even partly, a distribution company and vice versa to prevent the two from entering into "sweetheart deals" that would prejudice customers, he stressed.

Another Lakas congressman, Prospero Nograles of Davao City, said power generation and distribution companies outside the National Capital Region should follow the example set by Meralco by considering a rate reduction.

He said companies operating hydroelectric plants are particularly in a position to bring down their rates.

In testimonies before congressional committees last week, Meralco officials said they decided to terminate their contract with Napocor because its electricity is costlier than that supplied by its two sister-companies, First Gas Power Corp. and Quezon Power Corp.

They said they were buying electricity from Napocor at P4.40 per kwh, while First Gas and Quezon Power, two of the so-called independent power producers (IPPs), charged Meralco P3.80 per kwh and P3.30 per kwh, respectively.

In 2001, Meralco bought 90 percent of its supply from Napocor and only 10 percent from the two IPPs. Meralco is Napocor’s biggest customer.

Meralco treasurer Rafael Andrada said they terminated their Napocor contract since "it was ultimately a matter of what will be cheaper for consumers, what will lighten their burden."

He said unlike other distribution utilities, Meralco does not enjoy a discount from Napocor.

He said the state-owned power firm also violated the terms of the contract since it failed to return to Meralco 32 big customers Napocor is servicing but which are inside the distribution company’s service area.

"In effect, Napocor continues to compete with Meralco in its service area," he added.