The power industry: a satellite view

If we are to understand the big and small fish in the energy pond, we have to look at the big picture. Behind the powerful players of the power industry is an even more powerful monster called the World Bank-IMF-USAid consortium. The consortium, the godfather of the Philippine economy, the Vito Corleone who always gets his way by force, wants utilities privatized for two simple reasons.

The first reason is: Consumers are the key behind sure profit because they are the captive market, helpless to protest under threat of electricity cutoff. The tenet of the consortium is to let consumers bear the brunt of consumption. They actually have good economic logic. It gives the industry stability. But good logic crumbles when privatization results in power producers and distributors who are street-smart and greedy.

Does the consortium members know this? Yes. They were not born yesterday. But they do not care, as long as they get their pound of flesh. They do not care if people suffer. And so, they crafted the Epira (Electric Power Industry Reform Act) with such eloquence and economic logic, that nobody could see the wolf disguised as sheep. They used lawmakers and prestigious USAid-funded study groups with their Western-trained doctors to articulate the Epira as they hid behind the curtain, unseen. We cannot blame the consortium alone. The Filipino collaborators, senators, congressmen, intellectuals from the academe are just as vicious, just as guilty.

The second reason for privatization is: The consortium knows that there is corruption in government and that the energy profits will be intercepted from the private-sector players. So the battle cry is: Privatize! The private-sector players are the power producers and distributors—a partnership of big and small fish, multinationals and local businesses. The World Bank, IMF and USAid, who control and craft Third World government policies, can pressure governments to adopt their policies and service the interests of the multinationals, who ultimately fund them. Thus, at the top of the food chain are the multinationals who service the Western economies, to whom the World Bank, IMF, and USAid are ultimately beholden.

The consortium also knows privatization will make power rates higher because of the greed of its clients, the private-sector players. Again, the consortium members do not care. Once government utilities are privatized, consumer rates soar to the stratosphere. The money thus goes to the multinationals, the big players, and their local partners, the small players. If one conducts a survey on who owns the power plants, one will see this partnership as clear as crystal. For the consortium, the private sector milking consumers dry is a lesser evil than a corrupt government intercepting the juice, even if it means lower rates for consumers.

Thus, the godfather succeeded in having the National Power Corp., which had mounting debts due to mismanagement and corruption, privatized, ensuring the pie to be controlled by private-sector players.  The Wholesale Electricity Spot Market (WESM) was instituted, to give an impression of a free market. But, alas, the market is not free. Yet again, the consortium does not care. The Philippine Electricity Market Corp., which manages the WESM and sets market prices, is controlled by power-industry people, producers and distributors, with consumers not having even observer status.

Below the power producers are the power distributors who are just as greedy. They employ creative ways to up the consumer rate. It was reported that the Philippines had the highest electricity rate in the world as of December 2013, when the Manila Electric Co. imposed the most recent increase. This was, of course, stopped by the temporary restraining order issued by the Supreme Court on the charge that automatic increases (no consultation) approved by the Energy Regulatory Commission (ERC) are illegal. ERC Commissioner Zenaida Ducut, implicated in the pork barrel scam, has refused to resign.

By simply browsing through the Meralco website, one can be informed of its power purchases, from whom, at what date, and at what volume, to be able to see if it is lying through its teeth in its media pronouncements. It said the generation rate had shot up to P33 per kilowatt hour from P13—a staggering 180-percent increase—at the WESM, which was why it was forced to increase its rates. But if one studies its website, one will see that it bought at a measly 11 percent, which it forgot to state. Yet, it increased the generation rate charged to consumers from P5.56 per kWh to P9.71—an 80-percent increase.

People in the provinces of Albay and Pangasinan are protesting against similar rate increases imposed by electric cooperatives (ECs) with the approval of the National Electrification Administration (NEA). Meralco is to the EC as the ERC is to the NEA.

The Meralco disease is going viral. Greed is spreading like wildfire. And so are the protests.

Bernie V. Lopez ([email protected]) has been writing political commentary for the last 20 years. He is also a radio-TV broadcaster and a documentary producer-director.