Tue. May 11th, 2021

Meralco issued a Meter Reading and Billing Advisory last March 20, 2020 which I am quoting in full below:

“Due to the Enhanced Community Quarantine, Meralco is holding off on any physical meter reading and bill deliveries.

“For customer with meters scheduled to be read from March 17 to April 14, billing will be estimated based on your average consumption for the past three months, as prescribed by the Distribution Services and Open Access Rules (DSOAR) issued by the Energy Regulatory Commission (ERC).

“The difference between the estimated 3 months average and the actual meter read (after the ECQ is lifted) will be reflected on your next bill and corresponding charges will be adjusted. You are assured that when all adjustments are made, you pay only for what you consumed.”

This advisory met a violent objection from Butch Junia, one of the top watchdogs against oligarchic abuse in the power sector, who said that Meralco has again abused its consumers by misapplying the DSOAR. What does the public know about the letter of the ERC ruling anyway?

Junia quoted the applicable provision, zeroing on the last sentences, to wit:

“Estimated billing should only be allowed in case the meter fails to register the consumption of the customer for an entire billing period or a portion thereof. Otherwise, the meter reading must be done immediately after said fortuitous event ceases to exist. “

And I agree with him – THIS IS NOT A FAILURE OF THE METER TO REGISTER, THIS IS A FAILURE OF THE READER TO READ!

According to Junia, “Averaging” has been the distribution utilities and ERC’s weapon of choice for gouging captive customers. “Once the average is collected, arriving at the true cost becomes a major challenge, especially for the consumer because when over-collections occur, the consumers are never refunded,” he added.

No less than the Supreme Court (SC) has remanded to ERC the case for a determination of a reasonable and fair valuation of the regulatory asset base that will provide electricity to consumers.

This compels the ERC to reconcile (technical term is a review, reset and true-up) not just the valuation of the asset base that is the multiplicand for allowable profits but whether provisionally approved historical rates erstwhile provisional price increases for the past four onto the fifth and further regulatory periods since 2007.

The SC during its En Banc session on October 8, 2019 ((G.R. No. 226443) voided the adoption by the Energy Regulatory Commission (ERC) of the current or replacement cost in the valuation of Manila Electric Company (MERALCO)’s regulatory asset base.

The Court held that ERC’s order was in violation of its statutory mandate to approve rates because electricity is to be passed on to consumers “in the least cost manner.”

In the past, assets are appraised and rates are approved using the highest cost to the consumer and for the highest profit for the power producer. 

Consumer advocate

Uriel “Jojo” Borja, a known electric consumer advocate, estimates that the over collections enjoyed by Meralco since the start of the first regulatory period has now reached P200 billion. We are now within the fifth regulatory period (2019 to 2023).

Would you believe ERC has not performed a single review, reset and true-up or reconciliation of provisional price increases mandated every four years since 2007?

In remanding the case to the ERC, not only will the valuation of MERALCO’s regulatory asset base be determined, but the parameters that ERC used as well to verify whether expenses that are not directly and entirely related to the operation of a distribution utility shall be passed on wholly or partially to the consumers.

There have been records that Christmas and birthday parties, expensive vehicles, fringe benefits and other perks in tens of millions have been passed on as legitimate expenses in order to pad the books in favor of the power producers.

 The court also reinforced the role the Commission on Audit in this review citing Section 38 of the Government Auditing Code of the Philippines and Book V, Title I, Subtitle B, Chapter 4, Section 22 of the Administrative Code of 1987 specifically authorizes COA to examine accounts of public utilities in connection with the fixing of rates of every nature.

The SC found that the ERC failed to properly consider COA’s findings as well as to comply with its statutory mandate to approve a rate that provides electricity to consumers “in the least cost manner” as expressly provided in ERC’s charter.

The Court said that MERALCO and other electricity distribution utilities are monopolies that are regulated by the State, particularly on the rates, they charge consumers. The same rationale in regulating power acquisition costs by distribution utilities applies to the allowable depreciation of capital assets by distribution utilities in the present case.

As far back as July 2015, Borja had already exposed that Miescor, a power equipment supply company owned by Meralco has been supplying the power industry with among others, electric posts overpriced up to 942% and transformers overpriced from 400 to 500%, thus artificially raising Meralco’s asset base that serves as the multiplicand factor in determining its allowable profits.

“The power companies have been swindling the consuming public,” and ERC had always looked the other way, the Mindanao-based consumer advocate said.

He even wrote President Rodrigo Duterte, on July 11, 2016 or eleven days after the president assumed his office, to raise a number of issues including his allegation that Meralco as well as the National Grid Corp. of the Philippines had engaged in bloating the value of their assets in calculations of their Maximum Allowable Revenue, or the value of its assets and replacement costs for equipment and facilities, leading to unjustifiably high allowable rates that it can charge consumers.

The man knows his beans because he served as director of Iligan Light and Power Co. and Mindanao Energy Generating Corp., has intervened in numerous cases before the Energy Regulatory Commission (ERC) dating back to 2010, and is one of several plaintiffs who brought a case before the Ombudsman against members of the ERC for decisions made in Meralco’s favor.

This means he is an insider.

Borja said that this could lead to the entire electric power industry to refund over one trillion pesos of over collections to consumers nationwide since the Meralco formula has served as a template by other power generation companies.

For the past 13 years, the power companies have used this fortune not only to be part of their operating capital, in a sense they have been doing business without anymore raising money of their own but financed by consumer overpayments.

Worse they have used the people’s money as equity for expansion of their private businesses. For instance, Meralco announced in 2013 investments in West Africa, specifically the Federal Republic of Nigeria, and subsequently in the Republic of Ghana.

The Lopez prospectus has registered expansion onto further power generation including geothermal and diversification in broadcasting and cable; telecommunications; manufacturing; property development and once in the water utility Maynilad.

My thesis is for the government under the Duterte government to take over Meralco and other power producers, not through any extralegal means such as sequestration, but through acquisition leveraging the uncollected trillions as the consumer’s equity in the companies involved.

The timing is apt and proper, as Meralco is attempting to once again gouge the consumers as exemplified by its latest advisory, at a time when the nation is experiencing a national emergency due to a killer virus.

The Supreme Court has already laid the grounds making this take-over policy as sound as it can get favoring public interest.

While the President is at it, Digong might as well ask Congress to review the Electric Power Industry Reform Act of 2001 that has been observed for 19 years more in the breach than the observance, this time for the benefit of his constituency. (Sources: sc.judiciary.gov.ph, Opinyon, Manila Times) (ia/sovereignph.com)

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