An Open Letter to Meralco and Metro Pacific

23 August 2014

Dear Sirs:

The Issue for Electric Consumers is whether monopolization of power supply and negotiated self-dealing projects will result to lower power rates. Why don’t you answer this issue and not whether David Celestra Tan is a saint and had a perfect career.

Don’t waste your time because I am not. I am just a duck-raisers son from Binangonan, Rizal. I pay my Meralco bill monthly. Now it is P12.44 per kwh which at $0.29 per kwh is among the highest in the world.  Last December you tried to increase it to P16.59! This is a serious problem and you should recognize it.  I am retired from power and just want to share the expertise that God happen to bless me with in the national search for solutions to high power cost.

Kindly understand that MSK and David Tan’s Advocacy is Pro-Consumers and, believe it or not, is not Anti-Meralco Per Se.

Meralco as the public utility institution is imbued with public interest and must view itself, not as the target, but as the natural arena for this public interest debate, the crucible for balancing private and public interest.

Our consumer advocacy group, Matuwid na Singil sa Kuryente Consumer Alliance Inc, is working for the lowering of electricity rates which is one of the highest in Asia.  This it hopes to achieve by promoting true competition in the power generation sector and rectifying distribution and transmission rate making methodologies that are not fair and reasonable to consumers.  We will also push for more overall  safeguards for consumers including at the WESM.

We are asking Meralco to be faithful to its mandate as a public service utility to truly deliver least cost power to its customers. This it can deliver only if it conducts business on “arms-length” basis and devoid of conflict of interest.

We assure Meralco and their media operators that we have no other agenda than these.  We will not financially or politically benefit from these advocacies other than as electric consumers.  Neither are we working with parties who are players in the industry. Our advocacy rides in the spirit and genuine concern of Filipinos who want to work for lowering of power costs that have been undermining the competitiveness of our country and overburdening our people. MSK’s strength is not in the money this non-profit organization has but in the burning advocacy in our hearts.

It is sad that our country has grown cynical of the motives of people who speak for the public and the consumers.  But yes Virginia there are still truly caring Filipinos.

In this debate we ask Meralco to address the issue of whether monopolization and self-negotiated power supply contracts that will be passed on to the consumers would be fair to the public and would result to lower rates than openly bidded bilateral power supply contracts. Later we will be tackling the unfairness and legality of the Performance Based Rate Making Methodology (PBR) and other regulated charges.

We realize that when the Metro Pacific group took over Meralco, they may have a misconception on the nature of the business and its public service obligation and the limits of the return on investment.  Meralco is a monopoly in the national capital region and serves 74% of the energy needs of the country.

No one should begrudge Metro Pacific for making gargantuan profits in the telephone business in the same manner no one begrudges the SM Group for being the largest mall operator.  That goes for the moneys being made in the real estate sector.  All because there are competition in these sectors. The consumers have choices on whether to use Smart Celfons (we miss you Sun!) or to go to the SM Malls or which condo unit to buy.

That is not the case in power sector where most of us are called Captive customers even by the Epira Law. Meralco as the public service utility has a simple mandate. Provide reliable power at least cost to the consumers.  It can deliver that only if it procures power supply and its equipment and services in a competitive, transparent, and arms length manner.

The Epira law and the ERC allow Meralco stockholders to have a regulated fair and reasonable returns on the investments you incur.  But this is not the place to squeeze every ounce of profit because all of those come from captive consumers who are hapless and have no chance to choose.  Meralco is a public utility monopoly already in distribution. There is no competition. It will work against the interest of consumers if Metro Pacific also monopolizes the generation supply on top of what already have been negotiated with  the Lopez group, its previous controlling owners.

If you wish to argue that Meralco is actually using its hulk and buying power to the advantage of its consumers and that by negotiating with itself and monopolizing power procurement the consumers will be charged less, then present your case to the public. If you disagree with our recommendations to the DOE Task Force for lowering electricity rates present your own and let’s debate. Instead you are mobilizing your massive media machinery to malign those who are raising the issues and trying to protect the consumers.  If you are trying to crush us and not bothering to address the issues , it only means you want monopoly and want the privilege of self negotiating the rates and terms that you want to pass on to the consumers.

These are the messages of consumers crying for reprieve and fairness. Internalize them a little. Most of you are also Filipinos and electricity consumers. Don’t shoot the messengers.

MSK and the David Tan’s among us should not even be raising these issues and risk getting your immense wrath.  You should be doing these in the first place if you are true to your public service mandate. It would also not be necessary if those who are mandated by law to protect the consumers, the Energy Regulatory Commission, the PEMC, and the JCPC are doing enough to protect the electricity consumers.

MSK can only be perceived to be Anti-Meralco if Pro-Consumerism is. Are these two mutually exclusive? Meralco as a franchised public service distribution utility must look after the consumers. If this idea is inconsistent with its investors profit goals, then it may have to choose between being a distributor or generator, but not really both because there is inherent conflict of interest that is inimical to the interest of electric consumers and the national competitiveness.

These notwithstanding, in a national win-win compromise, if you are able to continue with your 400mw Mauban expansion, your 600mw Redondo coal project in Subic, and your 500mw Pagbilao expansion as negotiated contracts, would you insure that the pass on rates to the consumers are in the P3.80 to P4.30 per kwh range? And would you demonstrate a true commitment to least cost power by opening Meralco’s future requirements to competitive bidding and cooperate to put the country on the road towards a more competitive generation sector?

The issues of monopolization, self-negotiated power supply contracts, conflict of interest from cross ownership, and lack of open bidding for generation cost that will be passed on to the captive consumers are serious matters for the consumers. Meralco’s posture to dismiss this as a mere media propaganda by a consumer group that can be extinguished with a vicious smear counter-campaign is an indication that you don’t really get it,  regard your captive consumers are people you can charge however and how much you want, and do not really take seriously your obligation to supply power in the least cost manner.

I am doing my duty as a Filipino and concerned electricity consumer. I hope Meralco will do its own duty as a public service utility that is faithful to its obligation to provide least cost power to its customers.

We hope Meralco can experience a public service epiphany.

God Bless.
David Celestra Tan
Matuwid na Singil sa Kuryente Consumer Alliance, Inc.


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