MERALCO: Emerging Power Monopoly
BY PETE
L. ILAGAN
THE NATIONAL ASSOCIATION OF ELECTRICITY CONSUMERS FOR REFORMS, INC. (NASECORE)
This is to support
and echo Socio-Economic Planning Sec. Romulo Neri's warning of an emerging
monopoly in power generation, which immediately drew sharp criticism from
MERALCO. After the adoption of a watered-down cross-ownership limit in
the present Electric Power Industry Reform Act (EPIRA), MERALCO mounted a
relentless campaign to attain dominance in the generation sector by
leveraging its market power in the electricity distribution. Having full
and virtually unchallenged dominance of electricity distribution (70% of
the entire Luzon market; 64% nationwide), it has used this market power to
scare away any future investor/player (it can squeeze any player without a
firm supply contract by denying it access to the market, much like
squeezing oxygen out of the atmosphere).
At the same time, with the captive customers not having any say at all on
MERALCO’s power procurement programs, it has awarded the juiciest deals to
its sister company, the Lopez-owned generation companies (in a real sense,
MERALCO owners, where the Lopezes are actually a minority, are subordinate
to the Lopezes in the First Generation companies, which are dominated by
them). Proof of this devious generation plot: known allies and friends of
the Lopez generation interests first cried dire warnings of a looming
power crisis, made sure no credible new player could come in by closing
the lid on its dominant captive market (thus scuttling Napocor
privatization), then turned around and filed an application for a new 550
megawatts (MW) natural gas plant (in addition to its present 1,500 MW
natural gas) supposedly to address the looming power shortage or crisis.
Having virtually unlimited powers over its captive market, First Gen is
the only group with a high level of confidence in its future in the
generation market. After all, it can quite literally write its own market
ticket with MERALCO. Again reference is made to the ERC petition of
MERALCO and the First Generation companies to extend by amendment their
power supply agreements, with a number of cost items like the capacity
fees under challenge by consumers.
Clearly, as shown by
our experience with EPIRA over the last five years, there is a need to
revisit, raise and reinforce the cross-ownership limits on all generation
capacity, including those existing prior to EPIRA. Dilution of generation
ownership will become a disincentive to market power abuse by distribution
monopolies.
On a related matter,
events today have validated our earlier concern over the true intentions
behind MERALCO’s offer to President Arroyo in March this year to open up
its one-megawatt market to competition in generation. At that time, we
questioned MERALCO’s tender to Pres. Arroyo, challenging them to bring
their generosity to the ERC, which has jurisdiction over power rates and
market play. Concededly a potential advantage to MERALCO customers, the
appropriate petition has not been filed by MERALCO at ERC up to this late
date.
Posted by Bulatlat
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