Congress runs after Meralco

PHILIPPINE NEWS SERVICE — CONGRESS can revoke the franchise of the Manila Electric Co. for violating the “just and reasonable” or the “least cost” principles by passing its costs and bad debts to consumers through excessively high rates, Senator Miriam Defensor Santiago said yesterday.

“Meralco operates under a franchise, meaning a right conferred by the government to engage in a specific business, including the rights necessary for public utility companies to carry on their operations,” said Santiago, co-chairman of the Joint Congressional Power Commission.

Santiago also said Meralco’s top executives faced criminal charges for allegedly conspiring with the Energy Regulatory Commission and the National Power Corp. to impose higher rates detrimental to the consuming public.

At a panel hearing earlier on Monday, company president Jesus Francisco admitted that Meralco passes on some P500 million a year of its own power consumption to consumers as part of its “systems losses.”

The panel also learned of a plan to pass on bad debts incurred by Meralco and the National Power Corp. to consumers.

“The president of Meralco has admitted that the systems losses are not the fault of the consumers or not due to technicalities or pilferage but from their usage of electricity and bad debts,” invoking the pass through provisions,” Santiago said.

Santiago also blamed the Energy Regulatory Commission for being remiss in regulating Meralco and Napocor, and for failing to limit the amount Meralco could charge to systems losses.

The cap on systems losses was 9.5 percent, but this was abolished by the Electric Power Industry Reform Act that gave the commission the power to set the new limit, though the agency failed to do it, she said.

But Santiago said the commission’s laxity did not make it legal for Meralco to bloat its systems-loss claims.

The Palace yesterday urged lawmakers to plug loopholes in the law that allow power companies such as Meralco to pass their operating costs on to consumers as systems losses.

The President has complained that while the new energy law aims to reduce the cost of electricity, power rates remain high for consumers.

At the hearing Monday, Santiago ordered the commission to immediately set limits on systems losses.

She also ordered the commission to dismiss outright the Meralco petition, backed by Napocor, to pass on to consumers some P66 billion in bad debts incurred by the two companies.

“The consuming public had nothing to do with these debts,” Santiago said. “We were not consulted on acquiring those debts.”

Santiago also said the power commission did not see any problem with Meralco being broken up into two entities as proposed by Government Service Insurance System president and general manager Winston Garcia.

“There’s no problem with that, we already have a model,” she said, referring to the water utility.

The senator said on questioning during the hearing Monday that “Meralco can be faulted for management inefficiency.”

Meralco did not comply with the law, which says the consuming public must get electricity at the least cost possible, she added.

The penalties for management abuse could be legislative, corporate and criminal, she said.

“The legislative remedy provided by the Constitution is for Congress to amend or repeal the Meralco franchise, as required by the common good,” she said.

At a hearing in the House of Representatives, lawmakers yesterday said Meralco should not be charging value-added taxes on its systems losses, which are incorporated into the power bills of its four million customers.

The congressmen also attacked the Bureau of Internal Revenue for saying that it was legal for Meralco to pass on its systems losses to its customers.

Manila Rep. Amado Bagatsing said the implementing rules and regulations were “a great departure” from the intent of the new energy law.

“Since when did the [implementing rules and regulations] become more powerful than the law itself?” he said.