Bring power rates down

The annual stockholders’ meeting of the Manila Electric Co. (Meralco) last May 26 ended in a satisfactory note without any dramatic confrontation. Unlike the previous year’s contentious Meralco stockholders’ meeting that reached all the way to the Supreme Court (SC), there were no fireworks, except for some discernible undercurrents among the principal characters now involved in the Lopez-owned power utility firm.

We could remember well that legal issues as well as extra-legal controversies that necessitated court intervention by the parties concerned marred the 2008 annual meeting of Meralco. It all started when one of its board directors, Government Service Insurance System (GSIS) president Winston Garcia, tried but failed to oust and wrest control of management from Meralco big boss Manolo Lopez.

A few days though before this year’s stockholders’ meeting, there were coffee-shop rumors of purported new plots to wrest management control of Meralco from the Lopezes. The new threat supposedly comes from the group identified with businessman Eduardo “Danding” Cojuangco Jr., chairman and chief executive officer (CEO) of San Miguel Corp. (SMC), and Ramon Ang, SMC president and chief operating officer (COO), after they bought a large chunk of stockholdings in Meralco.

The SMC buy-in of Meralco shares entitled them to four seats in the 11-man Meralco board. But it was not enough to wrest control of Meralco after the Lopezes allied with Philippine Long Distance Telephone Co. (PLDT) chairman Manny Pangilinan. Manolo Lopez was retained as chairman of Meralco.

After the Meralco stockholders’ meeting, both Ang and Pangilinan told a joint press conference that they were committed to help Lopez in his efforts to bring down power rates that will redound to the benefit of customers in Metro Manila and suburbs. As I see it, the most welcome change here was the election of former Department of Public Works and Highways (DPWH) Secretary Jose de Jesus as Meralco’s new president and COO.

Concurrently, De Jesus is a board director of the Lopez-owned First Philippine Holdings Corp. He also once headed the erstwhile Manila North Tollways Corp. (MNTC) that the Lopezes once owned but also sold to Pangilinan’s Metro Pacific Group. De Jesus also served as executive vice president of PLDT from 1993 to 1999 and chairman of the Metropolitan Waterworks and Sewerage System from 1992 to 1993. Thus, De Jesus is equipped with enough background and experience in the day-to-day operations of public utility firms that he could very well apply for the better management of Meralco.

In the immediate future, with De Jesus at the helm as new president and COO, a well-managed Meralco would hopefully provide better services to its customers. This is especially expected in terms of steady supply of power and most preferably, cheaper-priced electricity to us households and industrial users as well. De Jesus promised to do just that – to work on ways that will allow Meralco customers to be aware of the company’s undertakings and to provide better services to them.

But as new Meralco president and COO, De Jesus could only do so much within his powers. The greater part of his job is to secure support for Meralco’s aim of bringing down power rates with the help of Congress. 

For the longer term, we may count on getting a respite from high electricity rates if the 14th Congress would approve twin bills authored by Senate President Juan Ponce Enrile, namely Senate Bills (SB) 3147 and 3148. The two bills have a common goal: bring down electricity rates for the consumers and industries to stimulate economic development. Sen. Enrile believes the twin measures can even become as a “stimulus package” during this time of global financial crisis.

Once passed, Enrile’s bills are seen to help Philippine industries, especially the exporters, cope with and eventually surpass the crippling effects of the financial crisis. By bringing down the taxes/royalties on indigenous sources of energy as proposed under SB 3148, industries will have better chances of recovering from the crisis.

For the ordinary consumers, the benefit of SB 3148 is a direct reduction in their monthly electricity bills. SB 3148 seeks to remove the discrepancies on taxes/royalties between indigenous sources and imported fuels “to lower electricity rates for the consumer in a significant and sustainable manner.”

By removing the disparities, Enrile pointed out, “This will directly result in reducing the commodity prices of these energy sources as they are utilized for electricity reduction, which will translate into lower electricity rates for the Filipino consumers.”

On the other hand, SB 3147 calls for the imposition of a uniform three-percent franchise tax in lieu of all other taxes to bring down electricity rates. Meralco and other electric utilities pass on both the 12 percent VAT and income tax to us consumers as reflected in our monthly bill. “The imposition of a franchise tax, which is directly absorbed by the franchisee will free consumers from shouldering additional pass-on charges,” Enrile stated in his explanatory note on SB 3147.

Once these measures are implemented, expenses freed from higher electricity will become savings for consumers or extra money to spend for food, education, health and other basic needs. Thus, it will not be too much to ask our legislators to prioritize these proposed measures for approval into law before this Congress winds down next year.

In the meantime that Congress is still in session, President Arroyo issued Executive Order (EO) 796 last May 21, which, among other things, established an Industry Competitiveness Fund (ICF). The ICF, as created, will “support and incentivize qualified power-intensive industries which contribute significantly to the economy by granting special power rates based on criteria and guidelines that will be developed for this purpose.”

The President formed an inter-agency committee on ICF, co-chaired by the departments of finance and energy that will select the recipients of this “incentive” funding from the State. Under EO 796, this new government “incentive” scheme is given an initial amount of P1.6 billion from collections of the 12 percent EVAT.

As to how this new scheme could bring down power rates remains to be seen. Or, is the government again giving state aid to a favored few?