Meralco warns anew of blackouts

MANILA, Philippines - The Manila Electric Co. (Meralco)renewed yesterday its appeal to the Supreme Court for the lifting of a temporary restraining order (TRO) on the power rate hike, saying further delay in the rate adjustment would trigger massive rotating blackouts and drive away investors.

Meralco, through lawyers Victor Lazatin and retired SC Justice Florentino Feliciano of the Angara Abello Concepcion Regala & Cruz (ACCRA) law offices, said its not being able to collect P4.15 per kilowatt-hour from consumers would have serious repercussions on its services. The 60-day TRO is expected to lapse on Feb. 23.

“A TRO or injunction will stop delivery of fuel to gencos (generation companies) and the unpaid gencos will likely stop delivering power,” Lazatin said, adding that generation charge had stayed at P5.57 per kwh because of the TRO.

Come summer months, “the impact of the shortage of supply on every consumer on the grid is going to be extensive, unquantifiable and irreparable,” he said.

“Dire consequences to the economy will be brought about by rotating blackouts, not to mention the likely loss of investors’ confidence due to perceived instability of our laws and regulatory rules,” he warned.

He said the militant groups and the consumers’ organization that petitioned for the TRO had failed to

establish “clear and unmistakable rights” alleged to have been violated by Meralco’s decision to adjust rates.

The petitioners want the SC to rule first on the case contesting the legality of the rate hike before lifting the TRO.

Lazatin stressed that Meralco – the country’s biggest distribution utility – would not gain a single centavo from the pass-on charges sparked by the simultaneous shutdown of Malampaya and other generation plants. The shutdowns had forced power generators to source their supplies from the more expensive wholesale electricity spot market.

“Meralco is not responsible and has no control over the shutdowns of generation plants. Meralco merely applied existing valid law and regulations in billing and collecting these pass-through charges,” he argued.

Lazatin told the high court the power distributor had even taken measures to mitigate the impact of the increase on consumers.

“Meralco’s proposal to stagger the increase was to cushion the rate impact to its customers, with no benefit to itself. The petitioners have focused only on the aspect of affordability of price; this must be balanced with quality, reliability and security of electric power and permit the supply chain to work,” he pointed out.

He said he was surprised to find Meralco in the “vortex of the controversy” even if petitioners did not question its distribution charge, which has not changed.

Feliciano, for his part, chastised the petitioners for including Meralco in the case even if they had not established violation of the Constitution committed by the firm.

Meralco also rebutted the prayer of petitioners to refund the rate adjustments, calling it “baseless, legally infirm and contrary to the doctrine of operative fact.”

The firm said it merely collected the generation charge and other pass through charges for the relevant power firms as well as for the national and local government concerned.

During the hearing, Senior Associate Justice Antonio Carpio questioned Meralco’s purchase of P62 per kwh from WESM.

But Lazatin explained that “as a buyer of power, you just say the quantity that you want. You are just a price-taker. Whatever the price is, you take it.”

Meralco said petitioners also failed to prove their allegation that it had colluded with the power firms to raise electricity rates.

The first oral argument was held last Jan. 21 with petitioners militant Bayan Muna party-list and consumer group National Association of Electricity Consumers for Reforms (Nasecore) presenting their case.

Oral arguments resume on Feb. 11 with the Department of Energy and the Energy Regulatory Commission set to take their turn in explaining government’s side.

Lower generation charge

With stabilizing power supply, Meralco has cut generation charge for this month by 13 centavos to P5.53 per kwh from P5.67 per kwh in January, Larry Fernandez, head of Meralco’s utility economics, said.

He said this month’s generation charge is P4.6920 less than the actual January charge of P10.2279 per kwh.

Meralco’s generation charge rose to P9.10 per kwh in December 2013 and P10.23 per kwh in January 2014 due largely to the month-long maintenance shutdown of the Malampaya gas field in Palawan and the unplanned deactivation of several other power plants during the period.

Although the generation charge surged in December 2013 and January 2014, the power distributor had to peg the rates at P5.67 per kwh for both months in deference to a Supreme Court TRO on raising of rates.

Fernandez said Meralco’s purchases from WESM fell by P30.7 per kwh to P5.41 per kwh.

“Prices from power supply agreements and independent power producers (IPPs) also went down by P0.28 per kwh and P0.48 per kwh, respectively,” Fernandez said.

Militant party-list groups, meanwhile, vowed yesterday to wage more protests against the impending power rate increases.

“Protests will continue. Even as Meralco defends its power rate hikes at the Supreme Court, we will not rest. Clearly, there is still no assurance of low electric charges in the near future,” Gabriela Women’s Party said.

Members of the group joined other colleagues yesterday afternoon in protesting the adjustments outside the SC.

Gabriela said collusion among power producers and distributors remains a possibility unless the EPIRA is revised and enough safeguards against overpricing, price manipulation and market abuse are written in the law.

“EPIRA is in fact the culprit of the recent power rate hike. It has only benefited private power-related businesses like Meralco, which the law allows to manipulate the price of electricity in the market,” it said. “Under the law, the government cannot own and operate its own power generation plants and transmission facilities. Only few individuals from big corporations benefit from this law at the expense of the consumers.” With Jess Diaz, Iris Gonzales