Give circular fostering competition in generation industry a chance

I AGREE with Bernie Lopez: “[T]he largest power distribution firm nationwide, Meralco, with its affiliate generation firms, will naturally oppose the circular so they can earn their blood electricity in the billions (pesos) in a move to maneuver against the law setting a 12-percent cap on profit margin” (“Stop power vampires from feeding on ‘blood electricity,’” Opinion, 10/19/15).

Not surprisingly, on Oct. 21, or two days after the publication of Lopez’s letter, a columnist from another paper severely criticized former secretary Jericho Petilla for issuing the Department of Energy circular mandating the competitive selection process for all distribution utilities/electric cooperatives during his time, because, according to her, it will unduly jack electricity prices up. The columnist in effect prioritized the interest of the largest distribution utility over that of the 120 electric cooperatives (ECs) around the country; the ECs do not have affiliate generation companies and reportedly support the circular.

Meralco is so large. The combined annual kWh sales of all 120 ECs and 19 private distribution utilities would only be one-third of Meralco’s annual kWh sales.

Thus, it is but natural that Meralco opposes the competitive selection process. The circular is a threat to the excessive profits its affiliates are enjoying now—and will be enjoying more once their other plants start to operate.

In addition, Meralco will start to lose control of the generation charge which they are currently able to raise and lower arbitrarily, as the situation demands, to make themselves appear as the benevolent private utility.

The 120 ECs favor the aggregation of their respective demand and subject the same to the competitive selection process, highly expecting that their consolidated demand will receive and get lower bids from generation companies. This time, thanking the ECs is in order.

As generally known, the Electric Power Industry Reform Act (Epira) was passed primarily to introduce competition that would allow market forces to bring down power rates. Thus, to oppose the competitive selection process circular is tantamount to circumventing the spirit of the Epira itself, though reportedly it was passed with the blessing of Meralco after it allowed crossownership between a distribution utility and a generation company.

No doubt, Petilla, by championing consumer interest and ensuring true and genuine competition at the risk of courting giant Meralco’s wrath, has made his stint at the DOE something to remember.

I thus join Bernie Lopez in commending Petilla for a very bold move.

Lastly, we appeal to Meralco to give the competitive selection process a chance so that the needed investments in the power industry may come.

—PETE L. ILAGAN, president, National Association of Electricity Consumers for Reforms Inc.,