Meralco’s Gump at DOE/ERC Hearing on CSP

07 October 2015

What we found amazing in the public hearing yesterday at the Intercon Hotel in Makati by the DOE and ERC is the continuing gump of Meralco to claim with a straight face that their negotiated contracts with sister companies result to least cost to consumers. This, despite clear evidence from their own data that the rate difference between their affiliated and non-affiliated generation rates run into billions in higher charges to consumers. A study by the Matuwid na Singil sa Kuryente Consumer Alliance of Meralco’s pass on generation charges to consumers showed that in 2013 the difference was P6.1 billion. In 2014 it went up to 10B. This year 2015 so far up to September, the difference has been P4.9 billion.

It is equally amazing on the positive side that the country’s top power cost policy making authorities, the Department of Energy and the Energy Regulatory Commission, are jointly holding the hearing, clearly on the same page, and hopefully will make a concerted effort to bring the 15-year delayed true competition into the generation charges of captive consumers. The good news for consumers so far is the two agencies seem to be committed to making the CSP rules, mandatory.

Meralco, and their consumer group, academe, and media drumbeaters, are either pushing for voluntary implementation and/or delay in its implementation. MSK suggested a standstill provision in case of delay to protect against mid-night contracts of Meralco to beat the applicability of the CSP rule and to once again outsmart the new rules.

MSK is advising against forced Aggregation because it is complex and can form an argument against the CSP itself. The DOE and ERC also needs to quickly clarify the role of the independent Third Party which should not be a superbody but one that should assure a better assessed capacity addition, transparent and objective bidding, and judicious evaluation and award. MSK estimates the involvement of A Third Party will cost only P0.01 to 0.02 per kwh which is something consumers would love to pay in exchange for the P0.38 to P1.05 per kwh premium between affiliated and non-affiliated generators.

We reiterate our call for a minimum bidding of at least 50% of the base-load requirements and for the rest of the power supply through an internationally accepted competitive selection process called RFP or request for proposals.

MSK raised concerns on the vague language of Section 9 “Repealing” that could be a built in loophole in the law in the same way the tricky-dick language of Rule 11 of the EPIRA IRR is allowing for monopolization.

We are posting in this website our full comments on the draft implementing rules for the CSP.

Please attend the public hearings. Today it will be in Davao.

Matuwid na Singil sa Kuryente Consumer Alliance Inc. 

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