ERC’s approval of P0.66/kWh Meralco rate hike anti people, favors corps’ market manipulation


March 14, 2017


Scientist activist group AGHAM - Advocates of Science and Technology for the People joined a protest outside the Energy Regulatory Commission (ERC) today, March 14, to denounce the approval of the P0.66 per kWh hike in Meralco’s power rate spread in 3 tranches from March to May supposedly due to an increase in generation charges following the simultaneous shutdown of the Malampaya natural gas facility and several power generation plants. The protest was held on the same day as the ERC hearing on a petition seeking inquiry on the power rate hike.

“We condemn ERC’s approval of the staggered P0.66/kWh Meralco power rate hike on the grounds that it is an additional burden to Filipino consumers and a concrete manifestation of the market manipulation scheme of simultaneous shutdown by private companies across the entire energy industry from generation to distribution,” said Finesa Cosico, secretary-general of AGHAM.

The Malampaya natural gas facility maintenance shutdown affected the operation of three power generation plants 1,000-megawatt (MW) Santa Rita, the 500-MW San Lorenzo, and the 1,200-MW Ilijan — causing said plants to use alternative fuel like diesel which costs P2 to P4 per kWh more than natural gas.

It coincided with the maintenance shutdown of several power plants 200 MW from Calaca 1 power plant, 456 MW from Quezon Power Philippines Ltd., 600 MW from block one of Ilijan, 414 MW from San Gabriel and 180 MW out of the 600 MW of the second block of Ilijan plant totalling 1,850 MW of power supply to be unavailable.

“The simultaneous shutdowns of gas facilities and power plants is a common ploy used by generating companies to manipulate the pricing of electricity. We are now seeing the repeat of a scenario in December 2013 when Meralco’s proposed rate hike peaked at P4.15 per kWh also allegedly due to the Malampaya shutdown,” said Cosico.

The P4.15 per kWh hike was later voided by the ERC upon deciding that the price increase caused by the Malampaya shutdown did not qualify as ‘reasonable, rational and competitive’. It also ruled that the failure of competition on the electricity spot market “necessitates government intervention” to protect consumers from excessively high market prices.

“The power rate hike is an unjust additional cost stemming from the connivance of private companies across the entire energy industry, aggravated by anti-people provisions under the Electric Power Industry Reform Act (EPIRA) such as the pass-on provision which carries over the burden of additional costs in power production to consumers,” said Cosico.

Under EPIRA, the entire energy industry was privatized and deregulated, effectively removing the ownership, management, and control of the State in the energy sector. This makes it possible for private companies to conspire in different schemes to increase electricity rates. As EPIRA’s regulatory body, it is ERC’s mandate to ensure that private entities do not violate the public’s right to an affordable electricity.

“We urge the ERC to consider the petition against the P0.66 rate hike and make a judgement that complies with the state policy of ensuring the protection of public interest from unreasonably high power rates. It is also high time that EPIRA be replaced with a new policy that espouses a nationalized energy industry and provides an affordable and stable supply of electricity to all Filipino consumers geared towards national development of the country,” ended Cosico.

Finesa Cosico
Secretary-General, AGHAM - Advocates of Science and Technology for the People
(02) 282-4129