ERC must do rate audit now

Facts and figures make it easy to understand the complex issue of the unprecedented generation rate surge of P4.15/kWh, which outraged Meralco customers in December 2013. David Celestra Tan explained this P4.15/kWh increase in his article titled, “Is Meralco telling the whole story?” (Talk of the Town, 5/11/14).

The article also posed some very disturbing  questions.

The increase was the product of the “automatic adjustment mechanism” adopted by the Energy Regulatory Commission (ERC). Thanks to a group of objectors to the increase, the  Supreme Court issued a temporary restraining order on its implementation.

The allegations and conclusion, supported by facts and figures, are very alarming; these ought to be seriously looked into by the ERC using its “motu proprio power” (which is granted by law), if it is to  comply with its mandate to protect electricity consumers from unjust and unreasonable costs of electricity and from possible abuse of market power.

While the decision by the ERC in March this year, declaring market failure in the Wholesale Electricity Spot Market prices for the November-December 2013 trading during the Malampaya shutdown, has somehow appeased the growing unrest of the electricity consumers, it failed to address David’s credible analysis that, on the whole, it was Meralco’s inability to manage its ERC-approved  power purchase agreements (PPAs)/power supply contracts (PSCs) with its independent power producers and other power producers that led to the highly questionable and monstrous rate increase in the generation charge of Meralco. On this, we agree completely.

However, the inability to manage the PPAs/PSCs may just be deliberate so as to justify automatic rate increases as the true cost of generation charge.

In light of the unbridled increases in the cost of electricity, which the ERC has miserably failed to arrest since the passage of the Electric Power Industry Reform Act and which has become the greatest obstacle to the free flow of investments in the country, it is our prayer that the ERC would wake up from its stupor and do its mandate of auditing all the PPAs/PSCs of Meralco to find out

possible violations that need to be immediately corrected, so that consumers may be given much-needed relief. This rate audit the ERC ought to do to protect consumers.

Should the ERC remain nonresponsive, this will only confirm what consumers have taken to mean total regulatory capture.

—PETE L. ILAGAN, president,

National Association of Electricity Consumers for Reforms, ptilagan@nasecore.com