Consumer Groups Petition ERC for Open Bidding of Power Supply Contracts

Consumer Groups led by the power cost reduction advocacy group, Matuwid na Singil sa Kuryente Consumer Alliance Inc. (MSK) have formally filed with the Energy Regulatory Commission (ERC) a petition for rule changes in the contracting of power supply bilateral contracts by distribution utilities.

Currently large private distribution utilities like Meralco have been negotiating their long term power supplies with their own power generating companies, essentially closing the generation market to truly independent power generators and denying consumers the benefit of true competition.

MSK said that this practice is leading to higher generation rates to consumers as shown by an analysis of the power generation purchases of Meralco. The negotiated contracts by Meralco in the past with their sister companies continue to burden the consumers with as much as 15 to 20% higher rates. First Gas companies charge about P1 per kwh higher than South Premiere Ilijan even though they both use Malampaya gas.

Monopolization of power generation by the same owners of the distribution utilities is very disadvantageous to consumers, according to MSK.

MSK’s petition is one of the various petitions for rule changes that the consumer groups will file to achieve their goal of reducing Meralco’s retail electricity rate of P12.37 per kwh by P3 per kwh.

The Energy Regulatory Commission has the power under the current Epira Law passed in 2001 to mandate the holding of competitive bidding for power supply by generation companies, especially those that will be used to supply the captive customers. Captive customers are the normal residential and commercial customers of Meralco that are using less than 750kw per hour and are not entitled to open access. In fact most Captive customers only use 40 to 100kw per hour. They buy 60% of the energy sales of Meralco and pay 70% of its revenue. They need to have the benefit of competition.

Meralco and its owners Metro Pacific should not be allowed to just negotiate among themselves the generation charge that will be passed on to the consumers. This is worse than taxation where the representatives of the people in the legislature get to vote on taxes and the rules of collection are more transparent. The typical residential and commercial customer pay more for electricity than in taxes.

MSK called on ERC Chairperson Zenaida Ducut to heed the call of the consumers and to show real concern for the delivery of least cost power by passing this rule mandating the holding of competitive bidding for generation charges to the consumers.

Meantime, ERC attempted to struck down on sight the filing of the petition saying the same lacks substance. But MSK representative Evelyn Viray-Jallorina, who filed the petition, argued she followed ERC’s rules of practice and procedure. “The petition was substantial in form and substance. We have annexes to prove the same.

Besides, it is the ministerial duty for ERC Docket and Records section to just received the Petition, and allow hearing of the case to ensue in order to hear consumers’ sentiment.”