Pursuant to Sections 37 and 77 of Republic Act No. Section Powers and Functions of the DOE. Implementing Rules and Regulations.
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When the MVP Group took over Meralco in May they clearly believed that the sky is the limit on the generating capacity cross ownership they can have. They proceeded to create a not so subtly named generation company, Meralco PowerGen, with an openly announced objective of 3,mw of power generating capacity. Obviously all by leveraging their control of off-taker Meralco, the distribution utility, to negotiate sweetheart contracts. Not that the MVP group is bashful about pushing the borders on the ownership and monopolization limits to get their business take over desires as in the foreign ownership limits of utilities like PLDT and Meralco.
They must have discovered, or were told in the process of negotiating the purchase of Meralco, the big monopolization loophole provided by Rule 11 of the Epira IRR and the huge profit opportunities that the MVP Group can have in self-negotiated generation contracts.
That alone could justify the premium they paid for buying control of Meralco. The MSK organization is not against capitalism and entrepreneurism. We are against monopolization and exploitation of the helpless consumers especially in the provision of public utility services.
Epira Laws Limit on Cross-Ownership. The initial drafts of the Epira Law called Omnibus Power Bill and the myriad of foreign consultants set out to unbundle the power sector with no cross ownership among them. But powerful lobbyists through the series of changes in Energy Committee Chairmen in the Senate and Congress from to prevailed.
In the final bill only cross-ownership between the Transmission company and the others was prohibited. Clearly the Epira Law recognized that there would be market power abuse between associated firms engaged in generation and distribution. Unknown to most people, in the finalization of the Epira Law in the 2 nd week of June , a pitch battle went on the issue of cross-ownership between us who were fighting for safeguards for consumers and the lobbyists of the vested interests who were putting in loopholes in the law as much as they can get away with.
How is this legally possible? As an IRR it is supposed to only turn the language of the mother law the Republic Act into implementable and clearer language.
For the most part they have done that. Except for Rule Then it delivered the coup de grace in redefining cross ownership limits under Section 4 b. This is a total redefinition of the cross-ownership limit contrary to the clear vision of the Epira law. Here is another case where we are now lost in why we are doing things.
Why the Epira Law is endeavoring to limit concentration of capacity towards the objective of assuring competition in the market place and why it is limiting cross-ownership between distribution utilities and generating companies.
It includes competing for bilateral contracts and the WESM spot market. That cannot be achieved if the DU is allowed to pick and choose its own generators, negotiate sweetheart deals, and cartelize the generation sector.
Cross-ownership between the Distribution Utility and the generator put them in positions to negotiate sweetheart prices, sweetheart terms, and sweetheart administration of the power supply contract. When faced with a decision to generate revenue for its generating company or to protect the public from unnecessary and avoidable pass on charges, which do you think the conflicted cross-owners will choose?
What are the betrayals and treason of Rule 11? How can related generators honestly compete with each other? What chance do the consumers have against coordinated action and collusion and price manipulation among them? Whoever perpetuated the mangling of Rule 11 betrayed the Filipino consumers and committed nothing less than treason against the people and the Philippines as a country. What right do you have to deprive our people of their right to competitive power, to protection against manipulation, to be treated fairly.
To deprive them, on a monthly basis, of their hard earned income with overpriced electricity? To make a mockery of the Epira Law that took the country more than five 5 years to deliberate and pass? In the pursuit of competitive power, the government privatized Napocors generating assets and contracts at firesale prices, leaving the people with P billion in stranded loss and liabilities that will again be passed on to us.
Because of this Rule 11, all these severe costs to the country and the people is coming to naught. But they are exploiting the loopholes to the limit and actually openly monopolizing, negotiating, and cartelizing the sector. We also know their control of the mw Redondo Peninsula coal project in Subic. They got bolder and more voracious in the recent months.
MPIC already owns Two of the seven 7 midnight power supply contracts of Meralco totaling mw were signed with Global Business Power. The 70mw is for a coal plant as far away as Iloilo that will go through kilometers of power transmission and several submarine cable systems. That is clearly self-dealing to the detriment of the Metro-Manila consumers.
Raphael Power Generation Corp. The Atimonan Energy One to which Meralco assigned mw of power is majority owned by Meralco but it is not yet announced who will be its partner with Aboitiz and Ayala as rumored possibilities.
Before these new joint ventures and alliances, the other Meralco owner with EGAT had bought And we are only considering generating capacity. Congress can annually conduct an investigation into suspicious simultaneous downtime of power plants, periodic spikes in power rates and the spot market prices.
The ERC can issue show cause orders. They can do table evaluations of power rates negotiated between and among sister distributors and generators. If we as a people, as a nation, as a government, are incapable of stopping this market domination and conspiratorial cross-ownerships, the above actions will be nothing but exercises in futility and incapability in the face of the giants that the country allowed to grow beyond controllable.
That would be oligarchy and oligopoly. Rule 11 is a abhorrent betrayal of the Filipino consumers, nothing less than treason to the country and its industrial competitiveness.
Cross-ownership, monopolization, and cartelization of the generation sector only deal with domination of Capacity. Sweetheart negotiations of pass on charges to consumers is another and it would have been partially corrected by the CSP policy. We just need to follow the trail of sweetheart financial benefits from the seven 7 midnight contracts totaling 3,mw that the CSP extension would allow to evade the competition policy. Independent Power Producers Assn. A CPA by education, he has been in the power industry for 35 years and evolved into utility economics.
Was active as volunteer in finalizing the Epira Law to some key Senators. Through his blog matuwid. He assures the consumers and participants in the movement that he has no vested interest other than as a consumer and will not benefit financially from any of the advocacies and certainly will not participate directly or indirectly with any potential bidders in a true CSP.
Your email address will not be published. Leave this field empty. Epira Laws Limit on Cross-Ownership The initial drafts of the Epira Law called Omnibus Power Bill and the myriad of foreign consultants set out to unbundle the power sector with no cross ownership among them. Leave a Reply Cancel reply Your email address will not be published.
Righting what’s wrong with the Epira
Everyone is washing his hands of the Electric Power Industry Reform Act Epira of , now that it has reared its ugly head. Remember the reviled purchased power adjustment PPA of early ? It should have been a national wake-up call then. Today, the feared PPA, which required consumers to pay for electricity that power plants did not generate, is back but renamed Agra, or automatic generation rate adjustment. What we got is not just a shock but a price convulsion from a percent increase in generation cost in Manila Electric Co. The increase of P4.
The Betrayal and Treason of Rule 11 of the Epira IRR On Limits of Cross-Ownership
Power panel passes amendments to EPIRA IRR