House to call ERC chief; Palace slams Meralco for passing the buck

The House energy committee will summon Energy Regulatory Commission (ERC) chairman Rodolfo Albano Sr. to its second hearing on the high cost of electricity next week.

“We want him to explain why he and other regulators of power rates allowed unconscionable charges to be passed on to consumers,” committee member Manila Rep. Amado Bagatsing said yesterday.

“Chairman Albano and other ERC members have a lot of explaining to do,” he said.

Albano is reportedly in southern France, where he accompanied a cancer-stricken daughter to the miraculous Shrine of Our Lady of Lourdes. 

Bagatsing said the 12 percent value added tax (VAT) on the so-called systems losses is one of the “illegal and unreasonable” fees that ERC has allowed the Manila Electric Co. and other power distributors to pass on to consumers.

During the first hearing conducted by the energy committee last Monday, a minor ERC functionary said the legal basis for these charges is the Anti-Electricity Pilferage Act, which was enacted during the Ramos administration.

On the other hand, a Bureau of Internal Revenue officer said the Expanded Value Added Tax Law allows the imposition of VAT on systems losses.

The term “systems loss” means either pilfered electricity or electricity that drops from transmission lines and wires.

Meralco officials have argued that all their charges have been approved by ERC.

But Bagatsing said the Anti-Electricity Pilferage Law allows only the cost of pilfered electricity to be absorbed by customers.

“The bigger part of systems losses, about 80 percent, is electricity that escapes from the transmission system. There is nothing in the law that authorizes ERC to allow distributors to collect the cost of this electricity from consumers,” he said.

He said based on Meralco’s disclosure that systems loss charges amount to P1.3 billion a month or P15.6 billion a year, ERC has made the public pay billions in illegal systems loss fees.

“The regulators have exceeded their authority. Their implementing rules and regulations should not have gone beyond the law,” he stressed.

He pointed out that another “illegal cost” that ERC has made consumers pay for is the cost of Meralco’s own electricity consumption. 

‘Squid tactic’

President Arroyo’s chief lawyer has accused Meralco of buck passing by tying electricity rate cuts to the scrapping of the royalties on natural gas and of VAT on systems loss. 

“That’s squid tactic. That’s the style of Mr. Lopez to pass on to the masses their mistakes,” Chief Presidential Legal Counsel Sergio Apostol told reporters on Thursday. “Removing the VAT and royalty tax is not a solution because there are 101 ways to reduce electricity charges without VAT being removed.”

The Lopez family, through First Philippine Holdings Corp., controls the country’s largest power distributor. 

Earlier, First Holdings president Oscar Lopez said Mrs. Arroyo should scrap the VAT and the royalties on natural gas if she wanted the power rates to go down.

Last Wednesday, Executive Secretary Eduardo Ermita said the government was reviewing the proposals. – With Perseus Echeminada, Katherine Andraneda and Paolo Romero