ERC Hearings on MSK PBR Petition Start March 17
David Celestra Tan
3 February 2017
On December 22, 2015 your consumer organization Matuwid na Singil sa Kuryente Consumer Alliance Inc. filed a petition with the Energy Regulatory Commission for the review and modification of the new rate setting methodology called Performance Based Rate Setting that replaced the old return on rate base or RORB.
We had left the petition for dead after not hearing from the ERC despite written follow-ups for a year. ERC seemed preoccupied with MeralcoPowerGen’s 4,005mw coal power projects starting with the daring extension of the CSP implementation to April 30, 2016 that enabled Meralco to fast track these midnight contracts on April 26, 2016 and beat the deadline for filing the ERC application at 7am on April 29, 2016. The ERC appeared to have been putting high priority on Meralco’s petitions holding hearings with urgency. Plus their own preoccupation with internal upheavals.
Then just before Christmas of 2016, Santa Claus delivered a surprise present to the consumers in the person of ERC OIC Chairman Geronimo D. Sta. Ana who signed an order scheduling the MSK Petition for hearing last 23 January 2017. We were caught off guard. It was totally unexpected. On January 16, 2017 we asked for additional time to comply with the order since we got it only a few days earlier at our new address at Tektite, two blocks from the ERC offices. Last January 23, 2017 the ERC granted our request in an order signed by Chairman Jose Vicente B. Salazar, Chairman & CEO. Now the hearings on the PBR Review will start on March 17.
Performance Based Rate Making
One of the major reasons for the increase in Meralco electric rates since the implementation of the Epira Law is the adoption by the Energy Regulatory Commission of an alternative rate setting methodology it called Performance Based Rate making or PBR to replace the old return on rate base or RORB. PBR allows Meralco to charge consumers for projected or promised investments on top of their returns on installed assets used for providing the service as in the old RORB methodology or return on rate base.
Supposedly in exchange Meralco will meet higher standard of service performance. And IF they fail they get penalized!!! For a while, Meralco made a point of publicizing the hundreds of millions of pesos that they had to pay for their failure to meet performance standards. Many people believed that the PBR concepts sounded fair and reasonable. Until you see the reality of the numbers.In its first year of PBR implementation in 2005, Meralcos revenue increased by P6 billion and incurred “penalties” for non-performance of P300 million!
MSK also believes that allowing Meralco to charge consumers for investments they have not yet incurred is illegal for being in violation of the specific provision of the Epira Law Section 25 that unequivocally mandates that retail rates must be based on investments incurred.
The Energy Regulatory Commission scheduled hearings on our consumer groups petition to review and modify the Performance Base Rate making rules and methodology (PBR) that we believe had been contributing to high distribution and total electricity rates in the Meralco area. It starts on March 17, 2017 in Pasig City, March 22 in Cebu, and March 24 in Davao City.
We welcome this opportunity to point out the unfairness of the PBR and hopefully the ERC and Meralco will listen to reason and treat the consumers who are their lifeblood fairly and reasonably.
We believe this is the first time that the ERC is open enough to listen to suggestions of consumer groups for changes in rules. Mostly the changes were made at the lobbying of Meralco. Let us hope this is a new era of regulatory enlightenment.
Mark the dates March 17 at 10am at the 15th floor ERC offices in Pasig City, March 22 at 10am at the ERC Visayas Field office, Mary’s Drive, Banilad, Cebu City, and March 24 Friday in Davao City, 10am ERC Mindanao Field Office, Mintrade Bldg. Monteverde Ave cor. Sales St. Davao City.
There are expenses related to the publication of the notice to the public and the travelling to Cebu and Davao. If you are able to contribute please contact Ms. Aya Jallorina, our Executive Director at aya.msk14@gmail.com. If you also have questions please email it to us.
David Celestra Tan
Co-convenor, Matuwid na Singil sa Kuryente Consumer Alliance Inc.
david.mskorg@yahoo.com
