Bayan calls for audit of Meralco

MANILA, Philippines — As Congress continued to scrutinize Manila Electric Co.’s alleged excessive charges, the leftwing group Bagong Alyansang Makabayan (New Patriotic Alliance, Bayan) said on Tuesday that government intervention and regulation were needed to bring power rates down.

The group outlined several recommendations which it said could bring relief to consumers reeling from high power costs. Among the proposals were a government audit of Meralco, the removal of the value added tax on power rates and the scrapping of the systems losses charge of distribution utilities.

In a statement, Bayan secretary-general Renato Reyes Jr. said that from the joint congressional power commission hearing, one could see that Meralco, Napocor and the Energy Regulatory Commission had their share of the blame for why power rates were high.

“At the end of the day, it is still government’s responsibility to protect consumers. This can only be done through government intervention in and regulation of the power sector,” Reyes said in a statement.

Bayan said the abolition of the value added tax on electricity and the removal of the systems loss charges should apply not just to Meralco but to all distribution utilities.

“The removal of the VAT on electricity and the systems loss charge will save consumers a combined P1.42/kWh. Those consuming 200 kWh a month can easily save P284 a month. We would like to see government address these issues immediately.”

The group also wanted Meralco subjected to an audit by the Commission on Audit based on a 2006 order issued by the Supreme Court in connection with a case filed by Bayan against Meralco regarding the itemization of its charges.

While upholding the unbundling of charges and rate adjustment of Meralco in 2003, the Supreme Court also ordered the ERC to seek the help of the COA in auditing Meralco to determine if its rates were reasonable. Reyes noted that the ERC and COA have yet to release results of any such audit.

“The COA audit of Meralco may help us better understand how companies with interlocking interests from generation and distribution really work. This can shed light on the corporate practices of Meralco and its affiliates that are now being questioned by lawmakers. Consumers are entitled to know more on how rates are fixed and what contributes to rising prices,” Reyes said.

Bayan also proposed the rejection of the P14 billion Napocor-Meralco settlement that aims to pass on bad debts to consumers. The petition, according to the group, has been pending before the ERC for four years now.

Bayan also asked for the rejection of the Napocor-PSALM petition to allow the recovery of P9 billion in generation charges that resulted from “market power abuse” in the WESM from August to November 2006. This petition is currently pending before the ERC.
There should also be stricter regulation and monitoring of Napocor fuel procurement to prevent overpriced emergency coal purchases which raise generation rates, Bayan said, adding that the possibility of long-term contracts should be considered to protect consumers from rising coal prices.

There should also be a review of all Independent Power Producer contracts of Napocor and other distribution utilities, with take-or-pay provisions disallowed because they are usually disadvantageous to consumers.

Finally, Bayan proposed the scrapping of the Electric Power Industry Reform Act and an immediate stop to the deregulation and privatization of the power sector in favor of a more regulated environment where rates can be thoroughly scrutinized.


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