The Inconvenient Truth in Meralco’s Numbers (Part 3)

Part 3

David Celestra Tan, MSK
15 July 2020

In the Parts 1 and 2 of this Article, we pointed out our finding that Meralco’s numbers in  purchases and sales of power, a supposed pass-on charge to consumers, are actually conflicting. In their monthly regulatory filing on “generation costs”, their total kwh energy purchased for 2019 was 33.565 billion kwh worth P174.859 billion.

On the other hand in fact checking Meralco’s actual sales and purchases as cross referenced to their Annual Report to their own stockholders, their sales was 46.871 billion kwh and the costs called “purchased power cost” was P241.032 billion kwh for 2019.

The disparity is 13.3 billion kwh for 2019 alone and the cost disparity is P66.173 Billion.

As a consumer, power generation is a pass on charge under our regulatory rules.  This means a distribution utility should pass on to us only the actual cost and quantity (kwh) of the generation supply they purchased. It is reasonable for us therefore to expect that these costs and quantity figures should be the same in Meralco’s generation report to ERC and its purchased power costs to its stockholders.

But the fact is they are NOT based on these two documents that are both Meralco produced and declared.  Why is there a disparity? MSK is also surprised and honestly we are at a loss on why there is a disparity.

Actually maybe both figures are true. Meralco’s report to the ERC and consumers are true numbers on how much power generation supply quantity and costs for regulatory compliance. Meralco’s report to it stockholders on how much is their sales and quantities as measures of how much money they actually made should also be true. The question is together, would they be permissible and legal for Meralco as a regulated entity?

Our inclination is actually to ask the ERC for enlightenment on this disparity more than Meralco. Because first this is a regulatory matter. Should not the two figures and reports jibe with each other from a regulatory standpoint? Does the ERC have an obligation to go beyond what is being submitted to them by Meralco and counter check the figures with other official documents.

Does the ERC under the current procedures have a way to know if the figures being submitted to them  by Meralco are accurate? Is it enough to know that the cost and quantity of the generation purchase is officially in compliance?

Is it possible that Meralco has energy sales and purchases that are beyond the purview of the regulators? This will be unusual because Meralco’s revenue and per kwh rate are based on its total volume. If there is unincluded volume then the Meralco distribution rate per kwh is overstated, an effective overcharging of the consumers.

The reality is the ERC appears not to have a way of validating the actual kwh and sales Meralco is billing all its customers. Only Meralco knows the total from its computers. The ERC’s methodology for assuring the numbers that are the basis of charges to consuming public that it has a legal obligation to protect, is the periodic audit of Meralco’s books by COA. However, for some reason there has not been any audit done on Meralco for many years.  If we recall the last time it was proposed by consumer group Nasecore, Meralco refused an audit and the ERC at that time commiserated.

Are our findings fake news? Truth may be inconvenient, but it doesn’t mean it is fake. It will be only if the Meralco reports and data are fake. 

If we can draw a parallel, this is similar to a government official whose increase in assets based on a lifestyle check cannot be explained by his official income from the government and SALN declarations.  In Meralco’s case, there is even no need for a lifestyle check. Their own financial reports to stockholders as a corporation and public listed company contradict the quantity and costs of power purchased they have disclosed to the Regulators and the public.

Are these figures allowed to be different? We are hoping the ERC will explain to the consumers.

Current ERC Commissioners not at Fault

Actually it is not the fault of the current ERC Commissioners. All these ERC rules and methodologies were put in place and progressively got worse from 2004 to 2018 before Chair Devanadera’s time. And even before the time of Commissioner Asirit who is now the most senior and reportedly retiring this month of July.

The question is what should the ERC do now? First it will good if the consumers are made to understand if these disparities are legal under the current regulatory rules? Can Meralco really declare one thing to the regulators and consumers and another to its stockholders?

In our opinion the key to the mystery is the true total amount of electricity that Meralco is billing its customers that is coming out of its computers. Only Meralco knows these numbers. And if we have to bet, the total of the actual billings sent to customers match those kwh quantities that they are reporting to their stockholders.

As my favorite private investigator Columbo said, lets follow the money trail. 

Let’s hope to hear from the ERC.

MatuwidnaSingilsaKuryente Consumer Alliance Inc.
matuwid.org
david.mskorg@yahoo.com.ph