Napocor accused of price manipulation

MANILA, Philippines – Consumer and militant organizations have accused the National Power Corp. (Napocor) before the Ombudsman of engaging in price manipulation at the Wholesale Electricity Spot Market (WESM) and leaving consumers vulnerable to unjustified hikes in electricity rates.

The People Opposed to Warrantless Electricity Rates (POWER), AGHAM, Gabriela and Bagong Alyansang Makabayan (Bayan) said the Ombudsman should make Napocor explain its alleged role in WESM price manipulation between August and November 2006. They also asked the Ombudsman to prosecute concerned individuals, including Napocor president Cyril del Callar.

The group alleged that the state power firm exercised abuse of market power when three of its plants colluded to offer electricity at much higher rates, ranging from P10 to P20 per kilowatthour (kWh), by artificially creating supply shortages so that they could recover their stranded costs. 

The group said Napocor was allowed to recover around P9 billion in generation charges from the questionable transactions.

The group maintained that the price manipulation at the WESM pushed generation rates even higher.

“There have been credible findings by government authorities that there was price manipulation during the period August to November 2006,” POWER convenor Ramon Ramirez said.

“The trading strategies employed by the Napocor plants appeared to have stemmed from a memorandum from del Callar asking his subordinates to recover losses incurred by Napocor during the first two months of trading at the WESM,” he said.

“The complainants have never been convinced by the government’s pronouncement that the WESM structure can bring about transparent electricity pricing or more competitive power rates,” Ramirez said.

 What is appalling in the instant case is that a state-owned corporation like Napocor had the audacity to take advantage of its position to dictate market prices to the detriment of consumers, and that the authority supposedly exercising regulatory powers over the Napocor allowed the latter to get away with acts which were explicitly found to be ‘highly inappropriate and irregular’,” the group said in its complaint.

“Moreover, the Napocor has even taken direct and concrete steps to be paid the full amount representing the value of the subject transactions that have been explicitly and officially described as ‘highly inappropriate and irregular,’” they added.

“Clearly, it appears that it is only the Office of the Ombudsman that can act with dispatch to investigate the foregoing matters, stop further steps being taken to complete the questioned transactions, and penalize and/or prosecute the persons and parties responsible, particularly Napocor president Cyril C. Del Callar.” 

Gabriela deputy secretary general Lana Linaban, for her part, lamented that consumers always bear the brunt of Napocor’s erroneous or questionable policy decisions.

“Higher generation rates are always automatically being passed on to consumers. That is the great tragedy here,” Linaban said. 

AGHAM chair Gani Tapang said that WESM or a deregulated power industry may not be in the best interest of consumers given the recent track record of Napocor and the Power Sector Assets and Liabilities Management Corp. or PSALM.