And if that happens, consumerists threaten to sue for plunder.
The issue concerns Meralco’s P20-billion obligation to state-owned National Power Corp. The cash claim arose from Meralco’s reneging on a contract to buy NPC’s electricity. Deep in debt, NPC wants to collect fast; Meralco, for its part, wants to clear books. So together, the power producer and private distributor are asking the Energy Regulatory Commission for permission to collect the P20 billion from Meralco clients.
Not so fast, cries the opposing Nasecore (National Association of Electricity Consumers for Reforms). It’s not the fault of customers that Meralco is P20 billion in debt. Meralco had signed up in 1994 to buy cheap electricity from NPC, but unilaterally broke off when its two independent power producers, First Gas and Quezon Power, came into operation in 2002. The private IPPs, one of which has interlocking owners with Meralco, supplied higher-priced electricity. Customers had to pay for the difference. So why punish them again by making them pay for Meralco’s P20-billion penalty from NPC?
There’s more. To begin with, the penalty should not be only P20 billion, but P44 billion. Meralco had committed to buy 60,092 gigawatt-hours of electricity from NPC in 2002-2004, the last three years of the contract that it breached. Meralco bought only part of the contracted power, causing NPC to lose P27.5 billion. Meralco countered that NPC was also in breach for delayed shift of directly connected factory clients to Meralco, for which the latter in turn lost P7.5 billion. That would have put Meralco in arrears of P20 billion. Still, for breach of contract, Meralco was under penalty to pay NPC another P24 billion. In long negotiations for a settlement, NPC agreed to forget the extra P24 billion and collect only the first P20 billion. Taxpayers are now paying for that forfeited P24 billion, which NPC had borrowed in the ’90s. And those taxpayers are the very customers of Meralco, as well as of other electric utilities outside Meralco’s franchise area. Thrice cheated?
NPC over the past two decades has lost P700 billion and racked up another P600 billion in debts. It accounts for a third of the government’s P3.7-trillion deficit. The national government has assumed P200 billion of the P600-billion hock. Meaning, taxpayers will have to pay for NPC’s debts that were frittered away by bad facilities and even worse, possibly corrupt, management.
That is where the plunder comes in.
Nasecore and other consumerists are questioning the way past and present NPC officers have run the state firm to the ground. Believing that behind every great wealth is a great crime, they demand explanations for losses that could have been prevented. For one, the retrenchment of NPC managers and supervisors, only to be rehired after payment of multibillion-peso early-retirement benefits. For another, the write-off of the P24-billion Meralco penalty for unilateral rescinding the NPC supply contract. The succession of NPC bosses, all presidential appointees, has not come up with credible alibis. All they have to show for it are hefty perks of public office.
Consumerists are also questioning Meralco’s violations of the Electric Power Industry Reform Act (EPIRA), particularly on the botched NPC deal. Meralco and NPC at first filed separate petitions with the ERC for approval of the P20-billion settlement. Meralco argued that Sec. 25 of the EPIRA allows "full recovery of prudent and reasonable economic costs incurred," Phooey, the detractors remark. Citing Sec. 23, they reiterate the obligation of distribution utilities like Meralco "to supply electricity in the least-cost manner to its captive market." Buying costly power from Meralco-associated IPPs, when NPC rates were much lower, was a breach of this provision. Too, of another section that prohibits distributors from buying more than 50 percent of their electricity from IPPs that they own.
Nasecore and the other watchdogs acknowledge that Meralco is a publicly listed company whose shareholders naturally desire dividends. Still, they say the controlling directors and officers broke their fiduciary trust to shareholders by reneging on the NPC contract and thus incurring the P20-billion penalty. They add that buying high from suppliers other than NPC also reduced Meralco’s potential earnings. Both instances could make for interesting court cases. "The only ones to gain from the settlement are shareholders of Meralco’s IPPs," Nasecore says.
The consumerists warn ERC commissioners against approving the Meralco rate petition to recover the P20 billion. Nasecore says that, from records and witnesses testimonies in hearings, ERC knows already that the IPPs’ power rates are higher than NPC’s. To assent to the rate increase is in effect to accept Meralco’s claim of priority purchase from its IPPs. Nasecore warns it would treat this as a crime.
Oct. 29 is a Saturday; Oct. 30, a Sunday. Oct. 31, Monday, is sandwiched by two nonworking days, and is thus automatically a holiday. Nov. 1 is All Saints’ Day; Nov. 2, All Souls’ Day. Nov. 3, Thursday, is Eidul Fitr, the last day of the Muslims’ Ramadan, now a public holiday. Nov. 4, Friday, is sandwiched again between two nonworking days. Nov. 5 is a Saturday; Nov. 6, a Sunday.
Count them all: nine days of no work. Hey, enjoy it first, instead of leafing this early through the December calendar.