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Refund on Meralco pass-on charges sought

By Charlie V. Manalo and Sherwin C. Olaes

05/22/2008

Members of the House of Representatives are set to file a petition before the Energy Regulatory Commission (ERC) Friday seeking a refund for the cost of electricity passed on by the Manila Electric Co. (Meralco) to its consumers amounting to billions of pesos.

At the same time, Meralco and the Government Service Insurance System traded barbs with Meralco accusing GSIS of engaging in lies and dirty tricks while GSIS yesterday said it had unearthed a possible case of forgery and dirty trick where names of Meralco employees were forged in an advertisement.

In the House, between hearings of the House committee on energy, Representatives Teddy Casiño and Luis Villafuerte said Meralco’s own electric consumption passed on to consumers as systems loss has no legal basis as the implementing rules and regulations which were used as the basis for the additional electric bill charge was not provided for in Republic Act (RA) 7832, which in turn, was the basis for the IRR.

“RA 7832 is an anti-pilferage law which seeks to provide recovery

for distribution utilities for power lost in transmission and pilferages and as such, does not include recovery for the electric consumption of distribution utilities including Meralco,” said Villafuerte. “Thus, it is illegal for Meralco to pass on to electric consumers the cost of its own electric consumption.”

In an interview between hearings of the House Committee on Energy, Reps. Teddy Casiño and Luis Villafuerte said that Meralco’s own electric consumption passed on to consumers as systems loss, has no legal basis as the implementing rules and regulations (IRR) which was used as the basis for the additional electric bill charge was not provided for in Republic Act (RA) 7832, which in turn, was the basis for the IRR.

Casiño said he will be filing a petition on Friday which seeks to refund cost of electricity passed on by Meralco to its consumers over the years.

In the committee hearing, Casiño questioned representatives from Meralco and the ERC on the legal and moral basis for the take or pay provisions in energy supply contracts which assure independent power producers (IPPs) of payment for its total generation capacity even without actual delivery of power.

However, Manila Electric Company president Jesus Francisco said the provision was introduced in the IPP supply contracts during the time of former President Fidel Ramos at a time when the country was experiencing a crisis in power to encourage investors to put up power plants.

The take or pay provision however, according to Francisco, would not have posed a problem if the government made a near accurate projection of the country’s power requirement.

“With a wrong projection of the country’s power requirement made by the National Economic Development Authority (Neda) , we now have an over supply of electricity which we, in accordance with the provision of the supply contracts, have to pay whether there is actual consumption or not,” said Francisco.

Casiño then proposed a review of the IPP supply contracts and study whether the practice of passing the cost of unused electricity to consumers could be repealed.

Romulo Neri, former Neda chief, who is part of the economic committee formed the other day by Mrs. Arroyo to look into the Meralco-GSIS charges and countercharges, disclosed, in a phone interview that it would be better if a management audit on the investigation of their books is donem while admitting that the Lopez family is influential.

“Oligarchs are powerful, they control the media. In fact they are already destroying me…they will do everything they can but the President is watching closely this Meralco issue. The Lopez group has been denying they turned Meralco into their milking cow but the fact is that they own the independent power producers and other corporate subsidiaries. This is disadvantageous to their consumers, that’s self dealing and all intended to compensate Meralco, which explains their (Lopez-Meralco) behavior,” he added.

Neri said since Meralco gets its power from their own IPPs it is time that contracts it entered with IPPs should be renegotiated. Asked to react on Garcia’s call for a change of Meralco leadership, Neri agreed. “Yes, that good they (Meralco) must remember that they have accountability. If the Lopezes refuse to open their books of accounts, Garcia can go to court. He can sue them in court. The Lopez family is accountable to the people,” Neri insisted.

In a phone patch interview, Executive Secretary Eduardo Ermita said he already called DoF Secretary Gary Teves yesterday morning, informing him that he is to lead the body.

Tribune sources who requested not to be identified said Teves should inhibit himself from the body. It was Teves, as Landbank president,who approved questio-nable IPP contracts entered into by the Lopez family with its own power plants.

The word war between GSIS and Meralco continued yesterday with Meralco vice president for corporate communications Elpi Cuna yesterday charging that GSIS president Winston Garcia made a false and irresponsible statement that the Lopez family is engaging in dirty tricks in running the power giant. “It was and will never be the policy of Meralco management to engage in dirty tricks. I don’t know if that holds true with Mr. Garcia. In fact, if observers will note that we never engaged Garcia in a word war ever since he started peddling his unsubstantiated claims.

“But it seems he has made it his resolve to continue his tirades that are devoid of facts. I would like to categorically state that Meralco’s management never solicited proxies after the deadline lapsed last Saturday. Mr. Garcia’s claim is false, untrue and devoid of any factual basis,” Cuna said.

He added Garcia and “his favorite spokesperson,” lawyer Estrella Elamparo, have “made it a habit to spew false information and unsubstantiated claims.” He also reiterated that no effort was spent on the part of the Meralco management to solicit proxies. “We have always upheld what is legal and right,” he said.

But Elamparo, in a phone interview, told the Tribune it is Meralco that has been engaging in dirty tricks, especially in the matter of the secrecy of the list of Meralco proxies.

“If what they (Lopezes) say is true, then why are they hiding from us the list of proxies? We have been requesting the list of proxies submitted last May 17, then made a request again on Monday, then again today, but they refused to give us that list. How do we know now whether, on validation of proxy votes, these were not solicited after the deadline of submission? It is the Lopez board that keeps on refusing our valid and legitimate request.”

Cuna also said he takes particular exception to the statement of Elamparo that Meralco’s management is cheating the public. “That statement is so irresponsible. I challenge her to substantiate her claim in the proper venue which are the courts and the regulator,” he said.

But Elamparo in a statement charged that Meralco officers had forged the signatures of its employees in a paid advertisement published in various newspapers denouncing Winston Garcia for his expose on the Lopez family’s mismanagement of the power firm.

“They cut the signatures of their employees from their timecards and paste them in the advertisement,” she said.

“And if they were doing this, it is not unimaginable that they were also faking the signatures of the shareholders.” With Riza Reccio