SC asked to junk Meralco power deals to save consumers from power hikes

By Rey Panaligan and Ellson Quismorio – updated March 21, 2019
from Manila Bulletin

The Supreme Court (SC) has been asked to stop the Energy Regulatory Commission (ERC) from approving the 20-year power supply agreements (PSAs) between the Manila Electric Company (Meralco) and several companies involving 3,551 megawatts which would allegedly result in high electricity costs.

Bayan Muna Party-List Rep. Carlos Zarate said the seven Meralco-linked power supply agreements (PSAs) must be thrashed in order to save consumers from hefty power rate hikes.

“Yes, it is absolutely necessary (to junk these deals) because it will be another burden to consumers already reeling from TRAIN,” Zarate said, referring to the Tax Reform for Acceleration and Inclusion Act which added excise taxes on coal and petroleum products.

Joining Zarate in his “Petition-in-intervention with an application for urgent relief by way of Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction” was Bayan Bayan Muna chairman and senatorial candidate Neri Colmenares.

“For the benefit of the already struggling consumers, we demand no less than the junking of the said sweetheart agreements and submit Meralco’s power supply needs to the competitive selection process or bidding,” said the Davao-based congressman.

Named as respondents in the petition, aside from the ERC and Meralco, were the Department of Energy (DOE), Meralco’s sister generation companies Central Luzon Premiere Power Corporation, St. Raphael Power Generation Corporation (400 MW), Panay Energy Development Corporation (70 MW), Mariveles Power Generation Corporation (528 MW), Global Luzon Energy Development Corporation (600 MW), Atimonan One Energy, Inc. (1,200 MW), Redondo Peninsula Energy Inc. (225- MW), and the Philippine Competition Commission (PCC).

The power generation companies are Meralco’s own sister firms, subsidiaries, and affiliates, according to Zarate.

Bayan Muna joined the petition filed in 2017 by the Alyansa para sa Bagong Pilipinas (ABP).

Similar to ABP’s petition, Bayan Muna sought the issuance of a temporary restraining order (TRO) against the implementation of the PSAs.

The ABP petition asked the SC to declare null and void ERC Resolution No. 1, Series of 2016. which extended from October 2015 to April 2016 the effectivity of ERC Resolution No. 13, Series of 2015, that directs all distribution utilities to conduct competitive selection process (CSP) in the procurement of their supply to the captive market.

It said ERC’s issuance of Resolution No. 1 was a grave abuse of discretion on the part of the regulatory agency which is mandated under the Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA) to promote competition, encourage market development, ensure customer choice and penalize abuse of market power.

With the extension, ABP said Meralco was able to enter into negotiated PSAs with its affiliated generation companies without conducting the required CSP.

Under the CSP, ABP said that that power distributors are required to get at least two offers for the supply of electricity before awarding a PSA to assure the least cost for electricity consumers.

It pointed out that seven contracts between Meralco and its affiliated generation companies were signed only four days before the new deadline, denying the consumers the benefit of competition and subjecting them anew to overpriced negotiated prices.

“The resulting irreparable damage to the consumers arising from the 20-year contracts would easily translate to P12.44 billion a year that would be mercilessly hung on the necks of consumers like an albatross if these midnight power supply agreements are allowed to evade the law,” it said.

“It will also sabotage the promotion of free and open market competition, and preclude the competition operation of the spot market,” it added.