Consumer group wants Meralco stripped of AGRA

MANILA, Philippines - A group of electricity consumers called the EmPower asked Thursday the Energy Regulatory Commission (ERC) to scrap the pricing scheme to prevent the Manila Electric Company (Meralco) from allegedly implementing non-transparent electricity rates increase. In a statement, EmPower wanted the automatic generation rate adjustment mechanism or AGRA junked. The group also asked ERC to prohibit Meralco from enjoying cross ownership besides barring the firm from participating in the wholesale electricity spot market (WESM). The group, which is an alliance of electricity consumers in the country, warned that Meralco might again reflect in its charges within the month almost a 20-centavo per kilowatt-hour increase in generation charge. “This will mean a total increase of about P45/kwh to P67/kwh for those consuming 200 to 300 kilowatt-hours a month," EmPower said. EmPower said that the AGRA mechanisms being implemented by the ERC has treated electricity consumers as mere recipients of notices and announcements of increases in the generation charges without conducting public hearing and consultation with consumer leaders. “It is very seldom that ERC finds over-charging in the generation charge and that the refund to be implemented after discovery of over charges, if there were any, does not truly return the true cost of money paid by people based on the experiences in past refunds by Meralco," EmPower said. The group disputed Meralco’s claim that generation charge is a pass through charge and that nothing goes to Meralco. “Such may be true for distribution utilities that do not buy electricity from their sister generation company. But because the Electric Power Industry Reform Act (EPIRA), which governs the power industry in the country allows for cross ownership between generation and distribution companies, the Lopezes who control Meralco are able to benefit from the transactions between Meralco and its electricity supplies that area also Lopez-owned," the EmPower said. The group said that cross ownership between generation and distribution and all other subsectors in the power industry must be prohibited to prevent price collusion, manipulation and market abuses. “Surprisingly, even when Meralco only gets 10 percent of its electricity requirement from WESM, the overall generation charge to be collected from the consumers has still increased. Meralco can actually get cheaper electricity if the interest it truly protects is that of its consumers and not of its owners who have also stakes in the generation sector," EmPower said. EmPower said that the Lopezes through the First Pacific Holdings Corporation have about 18 percent ownership in Meralco while the government only has a little more than 20 percent through the government financial institution that have investments in the utility. EmPower said the Lopezes may now already have about 34 percent ownership of the country’s biggest distribution utility if the buyout of its partner in First Philippine Union Fenosa that have a 9.1 percent share in Meralco and buyout of 6.6 percent of the issued shares of Meralco from the Meralco pension fund had pushed through. They added that the Lopezes also get some 40 percent of its electricity from sister companies First Gas Sta. Rita, First Gas San Lorenzo and Duracom. EmPower said the ERC has not also resolved the price manipulation in WESM that happened in 2006. “Because of price manipulations, the prices of electricity have shot up in 2006 from less than P3/kwh to about P5/kwh. How sure are we this time that such abusive behavior in WESM does not exist anymore and that the prices of electricity price have P3.40/kwh to about P6/kwh like in the past," the EmPower said.- GMANews.TV