Disaster in the power sector

People need electricity while the Manila Electric Co. needs money to continue distributing power to consumers. A refund of P0.0176 per kilowatt-hour may seem minuscule, but when you’re the main power distributor in Metro Manila and Luzon, serving 3.5 million customers, and the refund is computed from 1994, that’s a staggering P28 billion – massive even for Meralco, one of the top corporations in the country. It’s a safe bet that if the Supreme Court’s order for the refund is implemented, the power firm – already debt-ridden and facing rehabilitation – will eventually pass on the P28 billion to consumers.

Everybody loves a refund, especially after paying for unused electricity under the onerous Purchased Power Adjustment. But because of the unique nature of Meralco, it is in the public interest to keep the company viable. Politicians, all campaigning early for 2004, should not add to the confusion with their populist antics. They can serve the public better by conducting serious studies and coming up with workable measures to rehabilitate the power sector, which has been neglected and mismanaged by a succession of administrations.

National leaders should also put their heads together so that decisions on such matters as applications for a power rate increase can be reached with finality within a set period, as soon as possible. Part of the reason we now find ourselves in this mess is that it took an unbelievable nine years from the time Meralco filed for a power rate increase of 21.1 centavos per kwh until the Supreme Court ruled that the company has to refund its customers.

It took what was then called the Energy Regulatory Board a year just to approve Meralco’s petition for a rate increase — a provisional one for 18.4 centavos per kwh. Four years later – incidentally, three months into the 1998 presidential campaign – the ERB reduced the amount to P01.7 cents per kwh. Meralco elevated the case to the Court of Appeals in 1998; it took a year for the court to hand down a decision, which was favorable to the utility firm. As expected, the ERB raised the case to the SC, which took three years to hand down its decision. Meralco is also expected to appeal its case. Will a final SC ruling take another three years?

Now the power sector, already seriously impaired from meeting the nation’s growing electricity needs, is again caught in the maelstrom of politics. President Arroyo is surely aware of the dire situation of the power sector, but she must also worry about the effect of every power rate increase on her chances in 2004. She can’t afford rising power rates in an election year, but neither can she afford to preside over the collapse of the power sector.

Whatever the government does, the public will be stuck with this mess for a long time.