Second of a Series of Three
As I am writing this, an erstwhile oligarchic powerhouse that ABS-CBN was, will now be thrown to the dustbins of history.
In an overwhelming 70-11 vote, the House Committee on Legislative Franchises adopted the report of its technical working group not to grant ABS-CBN a new franchise. Three other lawmakers inhibited.
ABS-CBN is owned by the Lopez clan, the same people who used to control the majority of the stocks of Meralco, the country’s largest power company. Its new owners now are Manny Pangilinan of First Pacific (49%), Ramon Ang of San Miguel Corporation (32%) and Gabby Lopez (18%).
In my previous post, I cited two grounds when our Constitution allows the State to take over any privately owned public utility or business affected with public interest, under two conditions:
First, in times of national emergency such as what we have now.
Second, when the public interest so requires.
I forwarded the thesis that since Meralco gouged tens of thousands of consumers during the height of the Covid-19 pandemic under the scam they called “averaging,” determined unilaterally and onerously without the sanction of the Energy Regulatory Board, that it be taken over by the government.
This blatant abuse of their franchise actually becomes the “immediate” cause of such exercise of sovereignty by the people defending public interest.
Taken for a ride
What I enumerated serving as “underlying” if not aggravating cause is that for the past 16 years, we have been taken for a ride by this utility company that have been evading for the past four regulatory periods to refund the consumers of over-collections.
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) and the company is still scot-free from its obligation.
Would you believe the Energy Regulatory Commission has been in cahoots with Meralco, because for reasons explicit in Republic Act 3019, or the Anti-Graft and Corrupt Practices Act, the regulatory body has not performed a single review, reset and true-up or reconciliation of provisional price increases mandated from the effectivity of the Electric Power Industry Reform Act.
The EPIRA law mandates the ERC not only to promote competition, encourage market development and ensure consumer choice, but also penalize abuse of market power in the restructured electricity industry.
Worse, no less than the Supreme Court, 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.
Statutory mandate violation
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” and remanded the case to the ERC, not only to determine the valuation of MERALCO’s regulatory asset base be determined, but verify expenses related to the operation of a distribution utility that ought to be refunded to the consumers.
Borja has presented incontrovertible evidence year in and year out, that 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., and 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 (over and above Meralco) 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.
Mr. President, take over Meralco
My recommendation 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.
Again, the timing is apt and proper, as Meralco once again gouge the consumers as exemplified by its latest advisory and effective billings, 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, who constitute as the absolute sovereigns of this God-forsaken republic because of the rampant corruption of public officials conspiring with vested oligarchic interests in the energy sector.
This comes even as symbolic because it happens at the wake and impending internment of the powerhouse that we mentioned at the start of this article, the ABS-CBN network of the Lopez oligarchy.
Mr. President, do your patriotic duty, now!
(Sources: sc.judiciary.gov.ph, Opinyon, Manila Times)