Multibillion-peso fleecing of power consumers thru consultants

This is a footnote to President Duterte’s comment, to wit: “They (ERC) have been spending so much on consultants. They have used up the government’s money. It’s like a milking cow” (“Duterte: I heard of ERC corruption even before Villa’s suicide,” Inquirer.net, 11/28/16).

Much of the consultants’ fund at the disposal of the Energy Regulatory Commission (ERC) is not government money; but it is public money because it’s raised directly from the consumers as part of the power rates.

While the ERC’s total operations budget is about P98 million, the consultants’ pool  can actually run into hundreds of millions, if not billions, of pesos milked directly from captive customers.

Here are the numbers: for the 3rd  Regulatory Period, Meralco collected from its customers P1.854 billion for Regulatory Liaison and Compliance (RLC) costs and P201 million as Levy for Regulatory Reset Experts. Among the 17 privately owned distribution utilities, Meralco raises about 81 percent of the total consultants’ pot under Performance Based Regulation (PBR); the National Grid Corp. of the Philippines, as a PBR utility, is also collecting from power consumers a similar amount.

How does the ERC manage this consultants’ pool?

The ERC’s rules provide: “Art. 14.4.1. Where the Rules (for setting rates) confer on the ERC the right or obligation to retain a Regulatory Reset Expert… the ERC will inform all Regulated Entities [REs]… and instruct the REs to enter into a contract with this Regulatory Reset Expert… the form of the contract will be pre-approved by the ERC… describe the scope of work required… and the terms and conditions… including the payment terms. While the ERC will have certain rights and obligations under such a contract, it will not be a contractual party of any such contract.” (No wonder ERC says they have not engaged any expert.)

More yet: “14.4.3. Each RE must pay to the ERC, or (if so required by the ERC) to the Regulatory Reset Expert, the amount of such of the costs… within 30 days of receiving… an invoice… certified as correct by the ERC.” Further: “If RE fails to pay… it must pay interest to the ERC or the Expert at the Default Rate… the sum of 4% and the simple average of the monthly 180 day weighted average Manila Reference Rate…”

I have a long-standing request with the ERC for copies of the RLC and rate reset consultants’ contracts—whether engaged directly by the ERC, by the REs under the direction of the ERC, or by the Private Electric Power Operators Association as representative of utilities.

Commissioner Gloria Yap-Taruc wrote me: “The RLC Costs cover expenses… (that) include supervision fees, permit fees, filing fees, professional fees and administrative costs related to services engaged in the cases or petitions filed…” She added that no reset expert had been engaged and the allotted amount (P201 million) had not been utilized. As of this writing, no contract has been furnished; neither have we seen the list or schedule of fees and charges to match the RLC costs. Notably, the levy should not have been allowed if unneeded; it should now be refunded.

The fleecing of utility customers is systemic and systematic. President Duterte’s shining presidential light on the ERC’s consultants’ pool will hopefully bring transparency and accountability to this and other outlandish costs that make our electricity rates among the highest in the region and the world.

ROMEO L. JUNIA, philconsumerforum@gmail.com