Meralco, ganid!

Posted: October 12, 2017 in Uncategorized

The onerous Meralco power supply agreements

Meralco is rushing the ERC approval of supply contracts with generating companies that it owns. These 7 contracts, expcected to generate 3,551MW annually, have been described as sweetehart deals. The contracts will tie us with these generators for the next 20-25 years. What made the contracts questionable is that these were done in violation of the ERC’s own guidelines on competetive selection. Garapalan at ipinilit talagang maipasok ng Meralco ang mga kontrata. Pinayagan naman ng ERC.

Now if Meralco gets power from its own generation companies, it can no longer claim that high power rates are just being “passed on” and that “hindi kumikita ang Meralco”. The additional charges that will be passed on to consumers will go to Meralco sister companies. Kaya kitang-kita ang kita ng Meralco. To stress, the contracts amounting to more than P2 trillion, possibly even P3 trillion depending of fluctuations in fuel cost, will be for a duration of 20-25 years.

How did we come to this?

Ever since the power industry was privatized under the EPIRA, it was the big corporations that have gotten the upperhand and controlled the industrty. Private control was made worse by cross-ownership between distribution utilities and generating companies. Meralco, the country’s biggest DU, is allowed to operate its own generators. It no longer seeks to get electricity from the cheapest and most stable source since it is more profitable to get electricity from its sister companies. Even if more expensive compared to others. Even if there are oneous provisions. Even if consumers will be at the losing end.

Such is the pitfall in allowing cross-ownership in a privatized regime. The ‘temptation” to get power from your sister company is too great. It is a disincentive to get power from other cheaper sources. Time will come when Meralco will be so powerful even in the generation sector that it can dictate terms on other companies. You want to secure a supply agreement with Meralco the distributor, you give Meralco equity in your generating plant.

What is the solution?

Ultimately, we need to reverse the privatization of the power industry and nationalize it. In the meantime, allow government to build and run power plants again to meet the demands of the population. This will also counter the monopoly control of private firms.

There should also be a total ban in cross-ownership in the power sector to prevent powerful DU’s like Meralco from exercising monopoly control over the industry, to the detriment of consumers. Stop Meralco from dictating terms when entering into contracts with power generators. So long as cross-ownership exists in a privatized regime, power companies like Meralco will always find ways to go around ERC rules on competetive selection.

Power should serve people’s needs and national development, not the private monopoly profits of Meralco and its affiliate companies.

Right now, we are justified in exclaiming “Meralco, ganid!”

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