Stars Aligning for the ERC Approval Soon of Meralco’s1,200MW Atimonan One Coal Project!
David Celestra Tan, MSK
26 September 2018
We earthlings can now just watch the heavens align the stars for the ERC approval of Meralco’s 1,200mw Atimonan One coal project. We had known from the body language and signals of the ERC that this project, the biggest among the seven (7) controversial midnight contracts that consumer groups and the Office of the Ombudsman are complaining to be highly irregular and a circumvention of the CSP rule, is on way to approval. We had been sensing that the approval is not a question of IF but WHEN AND HOW?
Despite the controversy surrounding Meralco’s seven power supply contracts totaling 3,551mw that it negotiated with sister company Meralco PowerGen, despite the Office of the Ombudsman suspending the offending Commissioners as a result, and despite a case still pending in the Supreme Court, the ERC continued plodding along the hearings on the Atimonan One project. Attempts of consumer groups to either intervene or oppose the application were essentially set aside. The Department of Energy itself suggested that the seven (7) Meralco PSA should be subjected to a competitive selection process.
Atimonan’s star lobbyist is Congressman Danilo Suarez in whose district the plant will be located. He wasn’t bashful about pressuring the ERC to approve the $2 billion project. Consequently, as early as July 4, 2017, the ERC Commissioners had assured that they will accordingly act on the project approval. It was just a matter of time.
Not a feware seeing the acceleration of Stars aligning one by one for an eventual ERC approval in the next 10 days?
On July 27, 2018 Congressman Suarez became even more influential when he was appointed minority floor leader by newly elected Speaker of the House Gloria Macapagal-Arroyo the previous July 23 where Suarez himself was the first on the signature list electing Arroyo to be the new Speaker.
On August 23, 2018 Lawyer Alexis Lumbatan was appointed as ERC Commissioner to replace the retiring Commissioner Gloria Victoria Taruc.
On September 11, 2018 the Office of the President appointed the second new Commissioner, a reported Renewable Energy advocate Catherine Paredes Maceda. She will replace the similarly retiring Commissioner Alfredo Non.
On the same day September 11, 2018 the Department of Energy moved one of the key Stars and approved the declaration of the Atimonan One project as “a project of national significance” opening the door for the fast trackingof its approval under the Executive Order 30.
Here is the big give away. On September 18, 2018 the Office of the President appointed two ERC Officials to act as Interim ERC Commissioners from September 18, 2018 up to October 9, 2018, an interim period of only 21 days. This raised many eyebrows because the Office of the President had already appointed two new regular commissioners. Lawyer Alexis Lumbatan on August 23 and Ms Catherine Maceda on September 11, only a week before the September 18 appointment of the two interim Commissioners.
Many are asking Why did it become necessary for the Office of the President to appoint two interim Commissioners only for 21 days up to October 9? The reading is that the approval of the Atimonan One project needed to be done very fast but too soon for the two new regular ERC Commissioners Lumbatan and Maceda to learn the regulatory rules and the complexities of the Meralco’s seven (7) midnight contracts before they become comfortable to vote for approval of Atimonan One.
Others bet that the two new commissioners did not want to take the risk of being sued for approving the project considering all the issues and the pending Supreme Court Case. They found two ERC career lawyers who apparently felt confident of their knowledge of the legal issues and were willing to step-up and take the risks. Since the interim appointment of ERC lawyers Maria Corazon Gines and FloresindaBaldo-Digal were only up to October 9, 2018, it can be expected that Mandate No. 1 on the interim appointment, which is the approval of pending power supply contracts, will be done.
This magical alignment of the stars,in a determined effort to approve Atimonan One, is unusual and have not been done before. But the Meralco 3,551mw caper was unusual and unusual in deal magnitude, the MVP Group is an unusual player, and we live in unusual times.
Your MSK organizations hope however is that the scenario will not play out as sinister and conspiratorial as feared. It is possible that the two interim Commissioners are only intended to start processing the backlogs in their 21 day appointments? And there is a lot. On the Meralco PSA’s, specially the Atimonan One, maybe the two interims will only participate in the Commissions enbank deliberations on the various complex issues while the two new regular appointees, Lawyers Lumbatan and Maceda, immerse themselves in briefings and learning the ERC ropes.
We can share with you that lawyer FloresindaBaldo-Digal had actually acknowledged in writing your organizations expression of concern that the ERC must deeply analyze the consumer impact of Atimonan One’s pricing methodology, indices, downtime allowances, non-performance, and guaranteed payments. In our letter, we had pointed out that the published rate of P3.60 per kwh by Atimonan was misleading because it was based on a low coal price and low dollar rate in about the 2nd quarter of 2016. If adjusted, the rate of the 1,200mw Atimonan contract will be the same as Meralco’s current PSA’s of about 5.35 per kwh. That means for all the publicized economies of scale in this very large project, its supposed fuel and operating efficiency, will not result to an improvement in the charge to consumers. That is a direct result of the rate just being allowed to be negotiated as opposed to subjecting them to open competitive bidding as required by law.
Atty. Digal, an ERC career professional and signing as OIC, Office of the Chairperson and CEO in her 28th August letter, assured us that they will look into these concerns. We are hopeful that the ERC will. Afterall under the Interim Appointment issued by the Office of the President, the interim commissioners are tasked to No. III “Act on all consumer complaints including the issuance of provisional remedies thereon”, No. IV “conduct hearings and consultations with stakeholders and consumers”.
In the ending, Atty. Digal said “rest assured that we are one with you in ensuring that consumer interest is protected”.
MSK is hoping to be called to hearings where we, and other knowledgeable consumer reps, can assist in looking at some key aspects of the negotiated contracts between sister companies Meralco and Meralco PowerGen who is the proponent and minimum 51% owner of Atimonan One. (many expect that it is actually the Aboitiz group that is the significant minority partner).
Weshould not be surprised though if the Atimonan One is approved in the next 10 days as a lot of people fear. After all, the stars have aligned towards that possibility. It could be that the WHEN is now and this is the HOW. Some stars are bigger and brighter than others and they can make things happen.
Life is not perfect and we Meralco consumers can only look at the bright side in that at least we will have an additional supply of 1,200mw from Atimonan by 2021 and perhaps another 600mw from Redondo In Subic by the end of 2020.
Let us just hope that if they do, the ERC will moderate the greed of the numbers negotiated and somehow the consumers are given a modicum of protection and fairness.
MatuwidnaSingilsaKuryente Consumer Alliance Inc.
matuwid.org
david.mskorg@yahoo.com.ph
