SC asked to permanently strike down Meralco’s ‘manipulated rate hike’

The unprecedented hike was revealed as mostly due to Meralco’s contract with Thermo Mobile, which had bid 25 times higher than the usual rate, or the average recorded by WESM (P62 from P6 to 8 per kilowatt-hour). It was also disclosed that Meralco actually dictates and has full control over the pricing decisions of Thermo Mobile.


MANILA – Against what they described as an “unprecedented, manipulated power rate hike” by Meralco, hundreds of members of peoples’ organizations rallied in front of the Supreme Court this Tuesday, Jan. 21, as the high court began hearing arguments about the hike. Critics asked the Supreme Court to respond favourably to petitions seeking to permanently block Meralco’s pending rate hike, and expand its coverage to restrain price hikes also of power producers. The Supreme Court has issued a 60-day Temporary Restraining Order (TRO) on the rate hike last Dec 23.

Meralco, the Philippines’ biggest electricity distributor servicing mega-Manila and nearby provinces, is seeking to hike power rates by P3.44 to P4.15 ($0.09) per kilowatt-hour, citing the high price of its contracted electricity supply. The rate hike has been already approved by the Energy Regulatory Commission, and Meralco has billed its customers based on part of the increased rate before the SC issued the TRO last month.

Talking of Meralco’s rate hike, “This is the largest electricity rate increase ever approved in history,” said lawyer Edre Olalia, secretary-general of National Union of Public Lawyers (NUPL). If implemented, it would double the electricity bill of consumers in Metro Manila and nearby provinces. Opponents such as the NUPL said the hike will also further push upward the rate of inflation all over the country. Olalia is part of the main petitioners’ legal team.

The petition submitted by the Makabayan bloc of lawmakers has three main arguments, ACT Teachers Party Rep. Antonio Tinio said during the rally. In sum, these arguments are:

(1) The Energy Regulatory Commission (ERC) didn’t observe due process in agreeing to Meralco’s proposed hike. “It simply approved the proposal as requested in writing by Meralco; it didn’t conduct any public consultation as it was supposed to do,” Tinio told in Filipino;

(2) The proposed power rate hike should be scrapped altogether given that the ERC did not do its job. “In a situation that even power generation is privatized, the job of the ERC is important as it’s supposed to protect the people against huge power companies but in this case it just approved the unprecedented hike,” Tinio explained.

(3) The pending rate hike is “extraordinarily high,” and the basis cited for it rests on what the petitioners call as highly irregular and unprecedented acts in procuring electricity.

Rep. Tinio was part of the Makabayan bloc of lawmakers who petitioned the Supreme Court to restrain Meralco’s proposed rate hike, to which the high court issued a TRO last Dec. 23. With him in the Jan. 21 rally were fellow Makabayan lawmakers, Gabriela Rep. Emmi de Jesus, and Anakpawis Party Rep. Fernando Hicap. Bayan Muna Reps. Neri Colmenares and Carlos Zarate argued for the permanent scrapping of Meralco’s rate hike at the hearing in Supreme Court.

Strong case vs unprecedented, irregular hike

January 21 was also dubbed by various progressive peoples’ organizations as “a day of protest against Meralco’s abuses and the Aquino government’s inaction.”

Contrary to claims aired by Meralco that it did what it could to avert the power rate hike, the legal team who filed petitions against it, composed of lawyers from NUPL, asserted that “the rate increase came about not because there was a substantial increase in production cost nor was there a lack of supply, but only because some opportunistic generation companies exploited the highly suspect, simultaneous unscheduled and scheduled shutdowns, and made staggeringly high bids in the spot market called WESM [Wholesale Electricity Spot Market].”

Meralco had claimed the proposed rate hike was due to the increased cost of power they bought from producers. That increase of P62 ($1.37), a leap that is 25 times higher than WESM record of P6 to P8 ($0.13 to $0.18) per kilowatt-hour, is what the Meralco is now seeking to pass on to the consumers.

But in the protesters’ program in front of the Supreme Court, and during the oral arguments, petitioners and mass leaders including ACT Rep. Tinio said there are evidences Meralco itself was one of those who connived with the power producers to increase rates.

Bayan Muna Rep. Neri Colmenares accused Meralco of manipulating the price of electricity. He said it bought the highest-priced electricity at the spot market (WESM) during the scheduled shutdown of Malampaya plants. In this spot market, the highest price usually becomes the market price, Colmenares said, concluding that Meralco has thus caused the spike in prices.

The unprecedented hike was revealed as mostly due to Meralco’s contract with Thermo Mobile, which had bid 25 times higher than the usual rate, or the average recorded by WESM ($1.37 from ($0.13 to $0.18 per kilowatt-hour). It was also disclosed that Meralco actually dictates and has full control over the pricing decisions of Thermo Mobile.

Justice Antonio Carpio said the highest contract price with Thermo Mobile should have been only P8.65.

The multisectoral alliance Bagong Alyansang Makabayan (BAYAN) traces the problem of high electricity rates to the issue of automatic pass-on of supposed costs and deregulation of the generation sector.

No cap to prices, rates of profit

“Right now, there is no cap on the automatic pass-on of generation companies,” said Renato Reyes, secretary general of Bayan. The group blames this automatic pass-on policy as the reason distributors (such as Meralco) can get the most expensive power.

“They can bid P62/kWh ($1.37) in the spot market but everyone knows that is not the actual or real cost of the electricity they produce. Yet they do it since the consumers will be the ones paying for the high costs,” Reyes said. He added that this is the problem with a deregulated and privatized power industry – everything is driven by profits.

Worse, even the government through the Energy Regulatory Commission is seen as colluding with Meralco. Saying the ERC committed grave abuse of discretion, petitioners blasted the ERC for “hastily and arbitrarily approving Meralco’s proposed hike.”

The questionable circumstances behind the prices in the spot market should have prompted the ERC to at least defer approval of Meralco’s proposed hike, the protesters said. Short of accusing the ERC of being in the payroll of power companies, Bayan asked the “mindboggling” question about how a small number of generators can dictate prices of electricity. Around 70 percent of Meralco’s planned rate hike was said to be due to the actions of just a few generating plants supplying less than 12 percent of Meralco’s requirements.

Protesters and petitioners urged the Supreme Court not just to declare as permanent the injunction against Meralco’s rate hike, but also to resolve the automatic pass-on policy; and to declare certain portions of the Electric Power Industry Reform Act or EPIRA as unconstitutional, particularly the part that allows for the privatization of power generation.

“Power firms should be considered a public utility because they supply a basic and essential service to the public,” Olalia of NUPL said. The petitioners described as absurd the piecemeal “regulation” of the power industry, where the distribution and transmission companies are supposed to be regulated, but they can freely cite as basis for hiking rate prices the exorbitant fees and profits of power producers. The arrangement has “spawned private monopolies and oligopolies in the power industry,” and brought it immense profits but at public expense.

For junking EPIRA

For the labor center Kilusang Mayo Uno, the EPIRA has only allowed the collusion among capitalists in the power sector as they invent excuses to hike power rates and further boost their profits. “The Electric Power Industry Reform Act, in handing over the country’s power sector to big capitalists and allowing the latter to rake in huge profits through automatic recovery and other such provisions, should be junked,” said Roger Soluta, secretary general of KMU.

The labor center said the Aquino government will not likely prevent the power rate hike from happening even if it means immense suffering for Filipinos. That’s because it stands to gain from the implementation of the rate hike through higher tax collections with the Value-Added Tax, Soluta said.

If implemented, the big-time power rate hike would amount to an P830 reduction in workers’ monthly take-home pay on the average, according to KMU estimates. It warned that it could only mean further widening of the gap between the minimum wage and the Family Living Wage.

The minimum wage in Metro Manila, the highest in the country, is P466 ($10.31) while the Family Living Wage, already reached P1,056 ($23.35) last August 2013, said the independent think-tank Ibon Foundation. To get back some of the peoples’ money, Bayan called on the public to support protests against “the power mafia.” It also urged the consumers to ask Meralco to account for its collections last month when it billed consumers with the increased rate.

“We are revolted that capitalists in the power sector want to hike the most expensive power rate in all of Asia and one of the most expensive power rates in the world,” Soluta of KMU said at the protest rally. He condemned the hike as even more revolting especially since Meralco is the most profitable corporation in the country.


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