GMA cleans up Ramos mess over PPA billings

POLITICAL SCOOP: That was a master stroke of President Gloria Macapagal Arroyo suspending the PPA (Purchased Power Adjustment) accruing to the National Power Corp. (Napocor) pending the revamp of the contracts of Independent Power Producers (IPPs) supplying overpriced electricity to the Napocor.

But President Arroyo still has a long way to go cleaning up the centennial mess left by former President Fidel V. Ramos, who gave sweetheart deals to IPPs to encourage them to put up power-generating plants.

Mr. Ramos guaranteed the IPPs, some of them owned by friends, that they would be paid fully on the basis of their rated capacity regardless of how much electricity they actually produce and regardless of how much they spend to produce it.

Sorsogon Rep. Francis Escudero said that he knows of five IPPs being paid for their claimed capacity, as mandated in the Ramos contracts, even if they are not actually generating power.

The unusual "take or pay" provision in their contracts has bloated the cost of power. This overprice is reflected in the PPA and passed on to Napocor, which passes it to the Manila Electric Co. (Meralco) and other distributors, which then pass it down to the end-consumer.

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POSTPONING THE INEVITABLE?: We hope that by her act, the President was not just delaying the inevitable. Since we cannot totally eliminate cost adjustments in an economy in constant flux, the suspended PPA could just pile up and hurt terribly when finally dropped back on us after 2004

The Energy Regulatory Board (predecessor of the Energy Regulatory Commission) had authorized Meralco to collect adjustment charges, such as PPA, to enable it to recover certain variable costs beyond its control and which cannot be absorbed into the basic distribution charge.

The PPA is not a creation of Meralco, but there is reason to review how faithful the utility firm has been in using the PPA formula imposed by the ERB/ERC. If Meralco is found to have been cheating, it must be penalized and the excess PPA charges refunded or credited in future electric bills.

The PPA is one of two cost adjustments allowed the utility firm. The other one is the CERA (Currency Exchange Rate Adjustment), which absorbs deviations in the peso-dollar exchange rate from the P27.772:$1.00 rate used in Meralco’s debt service payments and dollar-denominated expenses.

Both the PPA and the CERA are shown on separate lines in the unbundled electric bill so the consumer knows what part of his payment goes to what.

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TOO LATE FOR MAY: The PPA has grown to about half of our total electric bill. But while Meralco collects the PPA together with its basic charge, it says that not a centavo of the PPA goes to it. A full 98 percent of the PPA collection goes to Meralco’s power suppliers (mainly Napocor) and the remaining 2 percent to the government in the form of franchise taxes.

The misfortune of Meralco is that it is collecting the PPA for its power suppliers and the government. It thus bears the brunt of consumer complaints. If it is true that it does not share in the PPA collected, Meralco should welcome GMA’s order suspending its collection.

Note that the suspension order was directed at the Napocor, not at the Meralco, a private firm outside Malacanang control. Since Meralco has received Napocor’s latest PPA charges and has started the May billing cycle, many bills for the month may still carry the PPA charge despite the President’s order.

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OTHER POSSIBLE ACTION: Aside from renegotiating IPP contracts, the government should press action on other items related to power rates:

1. The Supreme Court should speed up its review of a decision of a Court of Appeals upholding a lower court’s suspension of an ERB order for the Meralco to refund excess billings based on an allegedly faulty computation of the utility firm’s RORB (return on rate base).

2. The President should certify a bill amending the BOT (Build-Operate-Transfer) Law that has become the standard excuse for the insertion of patently onerous provisions in sweetheart deals. Samples are contracts covering the IPPs, the Piatco deal, the PEA-Amari project, the MRT line on EDSA, among other controversial projects.

3. Congress should plug now-emerging loopholes of the new law providing for the cutting up and privatization of the Napocor.

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TAP CHEAPER IPPs: Meralco is pressing its urgent suggestion for the government to allow it to access cheaper power sources instead of being tied up to Napocor’s inefficiency and high charges.

Close to 70 percent of Meralco’s electricity is sourced from Napocor. It also gets lower-volume power from two IPPs – Quezon Power and First Gas – which are partly owned by the Lopezes.

Meralco says that while it buys Napocor power at P4.40/kwh, the supply from the two IPPs could be lower than P4/kwh if only Napocor would allow them to operate at their optimum capacity and improve its transmission lines.

First Gas in Sta. Rita, Batangas, is able to generate cheaper electricity (as low as P3.35/kwh) because it uses cheaper gas piped in from Malampaya in the Palawan seas. But First Gas is held back by Napocor from operating at its optimum capacity.

This is the kind of problem that the government can act on with dispatch if it wants to find ways of lowering the cost of electricity. The nation should not be held hostage by the inefficiency and corruption of |Napocor.

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INFOTECH NEWS: A new Internet service of the giant Philippine Long Distance Telephone Co. is coming in with a unique approach to the market that is expected to send shivers down the spine of established Internet Service Providers (ISPs).

Effective immediately, all PLDT subscribers with PCs equipped with 56k modems can connect directly to the worldwide web using their PLDT lines for dial-up connection. No need to apply with ISPs that are themselves just subscribing to PLDT.

The PLDT subscriber can create his own Internet connection called PLDT Vibes, using phone number 101300 for dialing up. The Internet charges, at the rate of 50 centavos per minute, are included in the regular phone bill. The credit limit is P2,000 a month.

For more details on how to set up your computer, call 171. You can try the PLDT Vives connection for free until May 15. We tried it ourselves, but got bogged down when 101300 kept giving a busy signal. Typically PLDT, you might say, but we’re sure this can be solved easily.

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WORMS ALL LOVER: We apologize to readers who may have received email ostensibly coming from us carrying worms of the Klez variety. The infected email could not have been from us since our machine is kept virus-free by several shields that scan and clean incoming and outgoing email.

We know that the infected mail did not come from us because the recipients are not on our address book. The virus worms itself into an address book and uses the names on it.

We surmise that the infected mail using our address as the alleged sender actually came from some infected PCs that have us in their address books. The Klez worm must have been mixing names and addresses in its orgy of spreading itself.

Until this date, we ourselves keep receiving deactivated Klez worms at the average of seven every day. By deactivated, we mean that they had been quarantined, deleted or otherwise rendered impotent by the time the mail items appear in our box.

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ePOSTSCRIPT: You can read Postscript in advance, even before it sees print, simply by going to our personal website http://www.manilamail.com. While at our ManilaMail.com site, you can also peruse back issues of our column and review past discussions on certain subjects. Email can be sent to us at [email protected] and [email protected].