Power rates may go up by P6/ kwh, lawmaker warns

Contrary to the promise of the Energy Regulatory Commission (ERC) not to increase power rates before the Christmas holidays, a Mindanao congressman warned the public yesterday that the cost of electricity may soon go up by P6 per kilowatt-hour.

Opposition Rep. Teofisto Guingona III of Bukidnon said ERC had actually allowed the increase last Aug. 14 but withheld its implementation due to protests from consumer groups, lawmakers and agencies involved in the industry.

He added his own voice to the mounting protests last week by filing a motion asking ERC to consider its August decision.

The adjustment that ERC had allowed but frozen represents the “manipulated” or padded price of electricity traded in the wholesale electricity spot market (WESM) in September and October 2006.

The Philippine Electricity Market Corp. (PEMC), an agency created by the Electric Power Industry Reform Act (Epira) of 2001 to oversee the spot market, found the Power Sector Assets and Liabilities Management Corp. (PSALM) involved in the manipulation.

PSALM, also created by Epira, is trading electricity in WESM for the National Power Corp. (Napocor). WESM works like the stock exchange, where prices are dictated by supply and demand.

Electricity prices in the open market jumped from P2.88-per-kwh before September 2006 to P6.88 in September and October that year because of manipulation.

It was estimated that the price-fixing would pad PSALM coffers by about P9 billion if ERC would finally allow collection of the padded amount from millions of electricity users.

The price fixing was first exposed by then Albay congressman, now Gov. Joey Salceda.

In his motion for reconsideration, Guingona said there is no justification for ERC to pass on the padded amount totaling P9 billion to consumers.

Its motive should be suspect if it insists on its Aug. 14 decision, he said.

“It contradicts the primary objective of Epira, which is to bring down the cost of power, and to promote transparency in the pricing of electricity and free and fair competition among industry players. More importantly, it contravenes ERC’s primary duty to protect the interest of the public,” he said.

“It is the consumers who will suffer the consequences of the onerous ERC decision because it is they who will absorb the impending unjustified increase in power rates,” he stressed.

He pointed out that as calculated by PEMC, the impact on the public would be an additional P6 per kilowatt-hour, including the 12 percent value-added tax.

In a recent briefing, officials of First Gen Corp., a member of the Lopez-Meralco group of companies, revealed that based on an analysis they made, state agencies in the power industry manipulated electricity prices in September and October last year by shutting down some plants to create an artificial shortage.

“This is similar to what Enron (the bankrupt huge American power company) did in California some years back. They created a crisis and made tons of money,” First Gen president Fernando Lopez said. He lamented that despite proof of manipulation, ERC has allowed some P9 billion generated from the rigging of rates to be passed on to consumers. – Jess Diaz