Meralco’s Continued Payment of 50% Premium to Partner Quezon Power Alarming.
David Celestra Tan, MSK
2 March 2021
Five months ago in October 2020 your organization MSK complained to the Energy Regulatory Commission about the 58% higher price that Meralco has been paying Quezon Power starting in 2020.
We updated the report in December 2020. Meralco had paid QPL in November P6.2045 per kwh compared to its average generation rate of P4.2018 per kwh or 47.6%. In December they paid and charged to us the consumers P6.5607 per kwh compared to their average of P4.1516 or 58% higher. For the whole of 2020 Meralco paid QPL an average rate of P6.5336 per kwh compared to the average of all the other coal power suppliers to Meralco for the same period of P4.1136 per kwh or a premium of P2.42 per kwh or 58.83%.
To give you an idea of the magnitude, the 58.83% premium that had been passed on to us the consumers for 2020 was P5.2778 billion pesos only for the power they bought from Quezon Power. That is enough money to vaccinate 5.25 million Filipinos with the Pfizer Covid19 vaccine. And 10 million Filipinos if we use Johnson & Johnson and 13 million Pinoys with Astrazeneca.
One would think that this scandalous price disparity for QPL’s power having been pointed out, would make Meralco show sensitivity for consumers by taking a pause and investigating its own supplier or make them explain. Meralco is not known ever to go after one of its power suppliers to protect the public. It is even less now it appears since the new owners of QPL, EGAT of Thailand, is now its partner in the 460mw San Buenaventura Power company. Such is the evil of cross ownership.
Instead QPL and Meralco continued their merry ways. QPL’s rate went up further to P6.7125 per kwh in January, 40% higher the average all other coal suppliers at P4.72865. In February in what appears to be an “in your face, no one can stop us” boldness QPL charged and Meralco paid and passed on to us, an astronomical P7.2987 per kwh, fully 70% higher than Meralco’s other coal suppliers at P4.291967. And there is no report of Meralco even attempting to make its partner-supplier “moderate” it and even asking for an explanation so the public may know the reason for the pain.
It is alarming why Meralco and QPL seemed very confident that the ERC will not look into these practices.
It is true that spot coal prices of New Castle Australia had risen from a low of $50.14 per ton in August to $64.40 per ton in November 2020 and that now it was $86.83 per ton in January.
However, all the other coal power suppliers of Meralco who also buy from the same world market, showed an increase in rate of only 2.59% from November 2020 to February 2021 compared to the increase of 17.6% for QPL from same period of November 2020 to its rate in February of P7.2987 per kwh.
For February 2021 alone, Meralco bought 156.566 million kwh from QPL at a price premium of P3.00 per kwh. That’s a total of P469.698 million added burden to the Meralco consumers for the month of February.
Is it possible that all the other coal power suppliers of Meralco do much better jobs of managing their fuel supply contracting and hedging? Should not the coal supply procurement practices of QPL be investigated by the authorities or by Meralco who has responsibility to the public under its franchise to protect the consumers and assure least cost power?
Other than fuel just like Malampaya, fully paid maintenance downtime is what causes the per kwh rate of Meralco’s generation suppliers to rise significantly from month to month. Is it possible that QPL went on one of its paid maintenance downtime and hence saw its per kwh rate rise to P7.2987? It does not look that way. QPL’S share of Meralco’s monthly energy purchases stayed at a consistent range of 6.6% in November, 6.4% in January and 6.5% in February.
Quezon Power Mauban has been historically Meralco’s most expensive supplier with a 10 to 20% premium since it started in 2002. This premium amounting to billions per year, curiously doubled and tripled to 45 to 58% in 2020 at the same time the operation of the Meralco PowerGen and EGAT of Thailand partnership project San Buenaventura, started in 2020. Has there been a correlation to the operations and rates of these two plants? What would cause the QPL rate to rise, unashamedly?
Let us watch this March further since historically QPL apparently goes on its guaranteed maintenance downtime this month and see if it’s per kwh rate for the month rises to P28.44 per kwh like in March 2020!
Meralco appears to be content in fatalistically claiming that the QPL tariff rate was approved by the ERC in 2000. Granting. The regulatory responsibility of the ERC to protect the public interest and the obligation of Meralco under its franchise to assure fair and reasonable rates to the public are continuing. In this case of QPL, the rate had gone wayward, not like a runaway train that will eventually crash, but an out of control rocket soaring to the stratosphere of privilege where it may orbit forever thumbing its nose on us earthlings.
Just as all hope of being treated with respect seemed dim, consumers are afforded a ray of hope when the ERC Consumer Affairs division and Commissioner Alexis Lumbatan start its hearings on your organizations complaints against Meralco, including this QPL anomaly. Let us hope the ERC really takes this Meralco virus seriously, recognize the havoc that it is causing us consumers and the ravage on our pockets month in and month out. Let us hope they provide the consumers the needed vaccine to moderate all these billions and billions of Meralco over charges.
Meralco’s Continued Payment of 50% Premium to Partner Quezon Power has been Alarming. And now it is 70%!
MatuwidnaSingilsaKuryente Consumer Alliance Inc.
david.mskorg@yahoo.com.ph
matuwid.org
