Viewpoint: An Open letter to the DOE Secretary on what to do about the grand theft of consumers’ money in the amount of more than 5.0 billion pesos every year that is being carried out by 15 electric cooperatives in Mindanao

David A. Tauli, President, Mindanao Coalition
19 October 2018

SIR:

This is to suggest to the Department of Energy that they should carry out legal actions against the ERC commissioners and against officials in the DOE in the past administration, in particular in the PSALM-NPC and the National Electrification Administration, who were involved in the corruption of the power supply contracting processes that were carried out by fifteen (15) electric cooperatives in Mindanao, which resulted in the legalized theft (if there is such a thing) of the money of power consumers by their electric cooperatives amounting to more than five billion (5,000,000,000) pesos every year for the 25 years during which the anomalous power supply contracts are still in effect. Which makes for a whooping 125 billion pesos that will be transferred from the pockets of power consumers to the pockets of the capitalist owners of coal generating plants to whom the electric cooperatives are giving the money that they have extorted from their own member-consumer-owners.

This afternoon, Thursday, October 18, 2018, a public forum was held, with department secretaries or their representatives in attendance, at the PIE-MO headquarters in the Mindanao International Container Terminal in Tagoloan, Misamis Oriental. In the morning, workshops were held among the participants, during which we were instructed to include in our positive recommendations to be submitted to the various cabinet secretaries of President Rodrigo R. Duterte any valid complaints that we may have about corruption or incompetence in the departments we were assigned to take up. I was tasked to make the presentation for the recommendations and complaints that our group formulated to be submitted to the Department of Energy.

The last recommendation of the DOE group was to stop corruption at the DOE and the Energy Regulatory Commission. In my oral presentation I explained briefly about the corruption that we wanted to bring to the attention of President Duterte. I mentioned that fifteen (15) electric cooperatives in Mindanao have been systematically stealing the money of their consumers, and that this theft, while involving only around 1,000 pesos per year per consumers, was resulting in the amount of more than five billion (5,000,000,000) pesos being contributed every year by the electric cooperatives to the profits (not revenues, but PROFITS, which is the amount pocketed by the capitalist owners of the coal plant after they have paid off all their obligations during the year) of the FDC Misamis Power Corporation, the owners of the 405-MW coal power plant in Villanueva, Misamis Oriental, which was contracted by the electric cooperatives to supply the power requirements of their consumers for twenty-five (25) years.

I also said that such theft of humongous amounts of money of consumers would not have been accomplished without the cooperation of past officials of the DOE and the commissioners of the Energy Regulatory Commission (some of whom are still with the ERC) at the time when the scams were committed by the electric cooperatives. And I added that the grand theft would not continue to be carried out by the electric cooperatives unless the present set of DOE officials and the new set of ERC commissioners were themselves corrupt or incompetent.

In my presentation, I did not go into the details about how the theft of consumers’ money was planned and implemented by DOE officials and ERC commissioners because I have already sent to the DOE and ERC the details about these scams (SCAMS, plural, committed not only once but twice by most of the electric cooperatives that were involved in the scams, but both times with the same FDC Misamis Power Corp as their partner in committing the scams). Letters concerning the scams were sent at least twice to government officials, the first time in 2016, and the second time last month, September 2018.

In his response to my charges of corruption in the DOE and the ERC, the representative of DOE Secretary Alfonso Cusi, in the person of Undersecretary Wimpy Fuentebella, said that the complaints about corruption in power contracting by the electric cooperatives were forwarded to President Rodrigo R. Duterte. According to USEC Fuentebella, the President issued a directive to the Energy Regulatory Commission to carry out investigations into the power supply contracts that were subjects of the complaints, and to carry out measures to reduce the rates that were being paid by consumers under these power supply contract.

My response to this information from USEC Fuenteballa was to point out the directive of PRRD to the Energy Regulatory Commission is USELESS because the people being directed to investigate the anomalous power supply contracts include commissioners who approved the patently illegal contracts. Unless they are suspended, these commissioners (Atty. Magpale-Asirit and Alfredo Non) will likely obstruct whatever investigation will be proposed, and make the investigations into another moro-moro. Apart from which, the contracts (26 in number) are patently illegal because the electric cooperatives contracted for the power supply without carrying out competitive selection process (CSP), which is required of them to do by the EPIRA. As a consequence of not doing CSP, the electric cooperatives imposed onerous rates on their consumers because they contracted for baseload power supply from the proposed coal plant of the FDC Misamis Power Corporation to be located at Villanueva, Misamis Oriental, at a price of 5.40 pesos per kilowatt-hour, at a time when the San Miguel Consolidated Power Corporation was offering the same baseload power supply from their proposed coal plant in Malita, Davao del Sur, at a price of 4.20 pesos per kWh, and the GNPOWER corporation was offering the same baseload power supply from their proposed coal plant in Kauswagan, Lanao del Norte, at a price of 4.00 pesos per kWh. If the electric cooperatives carried out CSP, they would have contracted with GNP at a price of 4.00 pesos per kWh. They violated the EPIRA requirements and “negotiated” directly with FDC Misamis to buy their baseload coal power supply at a price of 5.40 pesos per kWh for 25 years.

The only investigation to be carried out is to summon the electric cooperative officials concerned and ask them to answer under oath: Did you enter into power supply contract with the FDC Misamis Power Corporation for power supply from the Mt. Apo geothermal power plant (or from the 405-MW Villanueva coal plant) without carrying out legitimate competitive selection process?

And the only question to be asked of the ERC commissioners under oath is: Did you approve the rate for power supply contracts between the electric cooperatives and the FDC Misamis Power Corporation in which the electric cooperatives did not carry out legitimate CSP and did not conduct public bidding for their power supply?

USEC Fuentebella and other apologists for the DOE and the ERC are saying that the CSP requirement do not apply to the electric cooperatives who contracted from FDC because it was only recently that the DOE and the ERC issued rules governing the CSP that should be carried out by the distribution utility companies. These people are feigning ignorance of the fact that the CSP has been required by all DU’s to do since the enactment of the EPIRA in 2001, and that since 2001 all DU’s have been complying with the CSP requirements in carrying out power supply contracting, except only the electric cooperatives who contracted for power supply from the FDC Misamis coal plant and from the Mt. Apo geothermal power plant whose power supply contracting was sold by the PSALM-NPC to the FDC Misamis Power Corporation (illegally, it should be said, because the PSALM-NPC also violated EPIRA requirements in the IPPA process for the Mt. Apo geothermal power plant). There are twenty-six (26) of these anomalous power supply contracts that were approved by the ERC, in violation of their mandate under the EPIRA to ensure that all distribution utility companies should carry out public bidding for their purchases of materials, equipment and services.

So it is pointless on the part of President Duterte to direct the ERC to review these anomalous power supply contracts and have them revised if verified to have been contracted in violation of the EPIRA. What the President should do is to direct the DOE or the Ombudsman to verify if the power supply contracts have been contracted by the electric cooperatives in violation of the provisions of the EPIRA, and upon verification that the power supply contracts were contracted in violation of the EPIRA, file criminal charges against the ERC commissioners for having approved illegal power supply contracts (26 of them!) in violation of their mandate to ensure that consumers are protected against illegal acts of participants in the electric power industry.

The Mindanao Coalition of Power Consumers is now campaigning among consumer groups and NGO’s in the territories of the thieving electric cooperatives to file legal charges at the RTC against the officials of the electric cooperatives for crimes committed against the EPIRA. So we believe that we can take care of having the anomalous power supply contracts (26 of them) declared as “null and void ab initio” by the RTC’s. Such a finding by the RTC’s will result in stopping the theft of billions of pesos of consumers’ money every year, and in the refund of the billions of pesos that already have been stolen by the officers of the electric cooperatives and turned over to their masters at the FDC Misamis Power Corporation. But we are hoping that officials of the government, or even LGU officials, could take care of the prosecution of the national government officials who were involved in the scams.

During the public forum, my friend Ben Contreras informed the audience that he will try to have the complaints reach President Duterte so that the President could run after the culprits. Good work, Ben. But what the President should do is to get rid of all the government officials to whom the corrupt activities have been reported, and who have not done anything to run after the crooks who are stealing the money of power consumers, and replace them with new officials who are honest and competent and will not hesitate to go after crooks in high places in the national government.

But I digress. The main purpose of this letter is to advise the DOE to verify all our allegations about corruption in the DOE and in the ERC during the past administration (some of whom are still holding the same office, though most have been separated from government service), and upon verification of the facts to have the perpetrators prosecuted. The facts concerning corruption in high places in government will not go away, Honorable Secretary; every act of commission and omission that have been done by the electric cooperatives and by the ERC commissioners and by the officials of the PSALM-NPC and the NEA are all matters of public record. And the theft of consumers money amounting to more than five billion pesos (PhP 5,000,000,000.00) every year is actually happening every month when the miscreant electric cooperatives bill their consumers.

This is written to remind you, Sir, that these complaints have been with your office for two years now, and you have not done anything about them, and to advise you to disregard whatever USEC Fuentebella has been telling you about these high crimes. Just go ahead and do what a Department Secretary should do to protect power consumers in Mindanao.

Truly yours,

David A. Tauli
President, Mindanao Coalition of Power Consumers
davetauli@gmail.com

Disclaimer: The views expressed in this article are those of the author and are published in the MSK website as a forum of national debate in the public interest on the issue of power, its contracting, government stewardship and regulation, and high cost to consumers. The author’s views do not necessarily reflect the views and approval of the owners of the MSK website.  MSK welcomes Counterpoints on the views expressed.