Consumer groups seek gov’t power takeover

Exasperated over ever rising electricity bills, consumer protection groups yesterday sought the government takeover of the power industry to shield the public from further unwarranted hikes in local electricity rates which they said has become the world’s highest.

Kilusang Makabansang Ekonomiya chairman Jimmy Regalario and National Association of Electricity Consumers for Reform (Nasecore) president Pete Ilagan called for the government action, noting that privatizing the industry failed to generate the competitive power rates earlier expected from players concerned.

“There was no value in privatization,” Regalario said last Saturday on the side of the weekly Kapihan sa Sulo forum in Quezon City.

Ilagan also raised urgency for government’s takeover as he noted that the Energy Regulatory Commission (ERC) failed to prevent unwarranted power rate hikes.

“Department of Energy and the joint congressional power commission tasked with overseeing implementation of the law also failed so government might as well take over the industry again to ensure electricity cost will be affordable,” he said on the forum’s side.

Both advocates made the call as power distributor Manila Electric Co. (Meralco) is seeking another round of rate increase, this time for the third regulatory period from 2011 to 2015.

Once ERC approves a new rate increase, Meralco would hike its distribution, supply and metering charges to P1.9036 per kilowatt-hour (kwh) by 2015 from the average P1.49 per kwh at present, Nasecore said.

Regalario said the government must consider calls for the takeover since producing and supplying electricity is part of public service.

“Government mustn’t fail to deliver public service,” he said. “The power industry can’t be in the private sector’s hands especially in a country where the bulk of revenues collected emanates from people themselves. Only 2.6 percent of taxpayers pay taxes. That means the bulk of revenues come from people who government is putting into a situation of suffering because they have to pay more for electricity.”

He said the Philippines’ power rate was higher than those in Japan, Malaysia’s Kuala Lumpur, Singapore, France’s Paris and Shanghai in China.

Decades earlier, calls surged for privatizing the country’s power industry.

Pro-privatization advocates pushed this move as they claimed there’s corruption in the bureaucracy while government lacked funds and management capability for power generation, transmission and distribution, Regalario said.

He was unconvinced privatization lived up to expectation, however.

“Over-charging that happened is corruption in the private sector — it’s plunder,” he said.

Private sector capitalization in power is also lamentable since “those who are taking hold of the industry aren’t actually investing,” he said.

“They don’t improve facilities despite being given so much privileges,” he said.

Regalario and Ilagan said consumers were actually mainly funding the power industry’s operations, through the excessive fees they paid.

“Privatization was meant to ensure that investors come in to construct new plants but we’re not seeing that,” he said.

Another consumer protection advocate said Meralco must be transformed into a cooperative.

“The bulk of its investments come from consumers so they might as well be the owners through a cooperative,” Federation of Las Piñas Villagers Association president Siegfredo Veloso said on the forum’s side.

Nasecore seeks the dismissal of Meralco’s latest rate increase application, saying this failed to comply with ERC rules.

These rules are on prescribing the form and requiring submission of detailed documents that will facilitate evaluation of the reasonableness, necessity and consumer benefit of Meralco’s claimed expenses and assets.

“We’re also asking ERC to scrap the performance-based regulation (PRB) method — it’s the monster that’s gobbling us up,” Ilagan said.

Meralco is using PBR, which is based on forecast costs, Nasecore said.

With PBR, Nasecore said, rates were increased annually through re-setting by ERC but such hike was based on the annual revenue requirement’s determination once in four years.

Meralco is seeking approval of this requirement for the 2011-2015 period.

Ilagan said power rates must be set using the return on rate base method instead because this uses historical value as basis for cost and recovery.

This method also includes Commission on Audit (CoA) investigation to check if proposed rates are justified, he said.

Nasecore reported CoA’s audit led to Meralco’s first major refund order amounting to almost P30 billion.

A Supreme Court-ordered CoA audit for 2004 and 2007 revealed Meralco also over-charged its customers by nearly P13 billion, Nasecor said.

The group said ERC had not yet made its final move on the matter, however. PNA