Think-Tank to ERC: Protect Consumers, Not Meralco Profits

Independent think-tank IBON Foundation calls on the Energy Regulatory Commission (ERC) to spare consumers from yet another round of energy rate hikes by denying the Manila Electric Company (Meralco) its petition for tariff increases.

BY IBON FOUNDATION
Posted by Bulatlat
Vol. VII, No. 26, August 5-11, 2007

Independent think-tank IBON Foundation calls on the Energy Regulatory Commission (ERC) to spare consumers from yet another round of energy rate hikes by denying the Manila Electric Company (Meralco) its petition for tariff increases.

Meralco said such increases were necessary in light of so-called under-recoveries or uncollected revenues that had allegedly reached P22.8 billion ($497,382,198 at an exchange rate of $1=P45.84) as of May 2007, of which P13 billion ($283,595,113) were related to generation charges. It attributed the under-recoveries of generation charges to the ERC’s suspension of the Automatic Generation Rate Adjustment (AGRA) starting September last year. The remainder was due to under-recoveries from transmission charges, systems loss charges and collection of certain subsidies. The ERC lifted its suspension last June.

But note that despite the suspension of the AGRA, Meralco reported a five-fold increase in profit– P2.34 billion ($51,047,120) for the first half of the year from P367 million ($8,006,108) in the same period last year. It should also be noted that although the generation charge component is a pass-through charge, Meralco sources over 45 percent of its power from its own independent power producers: Duracom Power, First Gas and Quezon Power Phils., which means that at the very least it cannot pass on the AGRA completely.
IBON urges the ERC to consider the welfare of the consumers before the profitability of the private sector-run power distributor. The Philippines already has the highest electricity rates in Asia, according to the research group. Any further rate hike would adversely affect consumers already reeling from high electricity bills, particularly those from the marginalized sectors. For a minimum wage earner in Metro Manila, for example, whose gross salary of P350 ($7.63) barely meets half of the daily cost of living, any further rate increases would represent an undue burden.

The numerous cases of profiteering by Meralco should provide enough justification for government to initiate drastic actions. In line with this, government should not sell its stake in the Lopez-owned company but instead take over the operations of Meralco and other private power distributors.Posted byBulatlat.com

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