Groups urge ERC to thrash Meralco’s ‘shady’ PSA deals

By Lenie Lectura – June 28, 2017

from Business Mirror

Members of civil society and representatives of communities and consumers affected by the operations of coal-fired power plants filed on Wednesday before the Energy Regulatory Commission (ERC) separate petitions for intervention regarding Manila Electric Co.’s (Meralco) applications for power-supply agreements (PSAs).

Meralco’s PSA applications filed in April last year are pending before the ERC. These PSAs with seven power generation companies cover a total of 3,551 megawatts (MW).

Sought for comment, Meralco said, “The PSAs they [the petitioners] are questioning have been filed more than a year ago. Meralco and these suppliers have complied with all requirements of the regulator. Negotiations prior to the submission of said PSA applications had been rigorous with the end in mind of securing supply for our customers at the most reasonable cost possible. We remain committed in providing efficient, reliable and steady supply without harming the environment. It is also very important to note the importance of energy security to ensure the continued growth and progress of the country.”

The seven PSAs are the following:

  • Meralco with Redondo Peninsula Energy Inc., which  covers the supply of 225 MW;
  • Meralco with St. Raphael Power Generation Corp. (SRPGC), which involves 400 MW;
  • Meralco with Atimonan One Energy Inc. for the full output of the latter’s 2×600-MW supercritical coal-fired power plant;
  • Meralco with Panay Energy Development Corp. (PEDC), which involves 70 MW;
  • Meralco with Global Luzon Energy Development Corp., which covers 600 MW;
  • Meralco with two San Miguel power plants, Central Luzon Premiere Power Corp.
  • Mariveles Power Generation Corp. (MPGC), for the purchase of up to 528 MW of capacity

The Center for Energy, Ecology, and Development (CEED), along with Sanlakas, Philippine Movement for Climate Justice, Freedom from Debt Coalition (FDC), Koalisyong Pabahay ng Pilipinas  and other member organizations of the Power for People  organization filed their respective petitions questioning various irregularities concerning the process of applications, as well as negative consequences, which would arise if Meralco’s applications are granted.

Lawyer Aaron Pedrosa of Sanlakas lambasted Meralco for its alleged “shady” dealings, saying its purchase of power from the generation companies are “incestuous”, given that it has vast shares from all seven of the companies.

“With its investments ranging from owning 14 percent in PEDC, to 49 percent of MPGC, and even 50 percent of SRPGC, Meralco would have even greater influence in setting the price of electricity and ensuring maximum profit for its investors,” Pedrosa said.

“This is not only reflective of the failure of the Epira [Electric Power Industry Reform Act] to prevent market influence by big electricity oligarchs, but also contradicts the promise of decreasing the price of electricity for citizens,” Pedrosa added.

“We now challenge the ERC to consider…[our] interests…who would shoulder the burden of these shady dealings and throw out Meralco’s midnight contracts,” Pedrosa stressed.

Further, the approval of Meralco’s PSAs would lead to 3,551 MW of coal entering the pipeline, which would pose great harm to the people’s health and livelihood, as well as the environment and the climate, CEED Convener Gerry Arances said. “But on top of this, Filipinos will end up paying more for electricity if Meralco would have their way.”

Arances explained that if the ERC approves Meralco’s applications the country would still be dependent on coal for the next 20 years, which means that regardless of the trend of decreasing costs for renewable-energy (RE) technology, the Philippines will be stuck with operating and paying for costlier energy from coal.

“Despite the passage of the Renewable Energy Act of 2008, RE share in the power mix has not increased from 34 percent  in that year. In fact, it has even decreased to 29 percent as of 2016,” Arances added.

“About 70 percent of power projects to go online in 2019 will be from coal. This means that by 2021, coal will supply at least 50 percemt of our energy needs,” Arances said.

Butch Junia of the FDC, who personally filed an earlier petition of intervention regarding the PSAs on June 13, said Meralco’s midnight contracts should be subjected to the competitive selection process (CSP) in order to ascertain if “it is the best and least cost supply for consumers”.

“Conveniently for Meralco, the ERC had previously reset the CSP’s effectivity date last year from November 6, 2015, to April 30, 2016. This would exempt the PSAs from undergoing the transparent and public bidding ordained in the CSP,” Junia said. “Even with this, Meralco’s PSAs were still late, as it was filed after office hours of April 29, 2016, which was a Friday and last business day of April. Thus, the ERC must follow its own rules and throw out the midnight contracts so that such a transparent and public bidding may take place,” he added.