REDUCED PPA IN JULY – GMA: Appealing for understanding from the public, President Arroyo said Wednesday night the 40-centavo reduction in the purchased power adjustment (PPA) will be reflected in consumers’ electric bills next month. Speaking at the First Dr. Jose P. Rizal Awards Night in Pasay City, Mrs. Arroyo said the controversial PPA being collected by the Manila Electric Co. (Meralco) and the National Power Corp. (Napocor) has affected her popularity rating.
Comparing her predicament with that of former President Fidel Ramos, Mrs. Arroyo said her popularity ratings have been affected despite the fact that she has kept the price of rice down and that the Philippines is the third best economic performer in the region, next only to China and Vietnam. Ramos contracted the services of independent power producers (IPPs) to supply electricity to solve the daily nationwide blackouts when he assumed the presidency in 1992. The IPP contracts led to the collection of the now controversial PPA.
Sen. Tessie Aquino-Oreta said that Malacanang must not allow the IMF to arm twist the government into abandoning plans to scrap the PPA if it does not want the masses to further distance themselves from Mrs. Arroyo. Oreta said it was absurd for the IMF to raise the bogey of a power crisis akin to the one that hit the country during the closing days of the Aquino administration and the beginning of the Ramos presidency. Oreta said stopping collection of the PPA would not have a great impact on the government’s cash position as pictured by the IMF.
Meanwhile, the militant Bagong Alyansang Makabayan (Bayan) blamed the Arroyo administration yesterday for the present mess in the power industry. Bayan spokesman Renato Reyes told the Alternative Power Summit at the Philippine Heart Center for Asia that Congress under the Arroyo administration legalized PPA collection when it passed the EPIRA. Reyes said Mrs. Arroyo is intent on immediately turning over the debt-free National Transmission Company and other components of Napocor to big foreign and local power monopolies.
Reyes said the deregulation and privatization policies of Mrs. Arroyo and her predecessors only aim to sell out the power industry to private monopolies on orders of the IMF and the World Bank. Loans and commissions stemming from the granting of power rate hikes, power franchises and the privatization of Napocor will surely find its way to the war chest of Mrs. Arroyo and other politicians," Reyes added.
Philippine Star, 21 June 2002
IMF: NO ABRUPT POWER RATE CUTS: The International Monetary Fund (IMF), in remarks made available yesterday, has warned the Philippines against abrupt cuts in electricity charges.
IMF mission head Joshua Felman said the government "needs to pull off a delicate balancing act" in order to bring down power rates while giving investors a fair deal. He said the government must take into account the "looming power shortage" that could hit the country if it does not attract new investors to set up power plants to replace aging ones.
Under political pressure, President Arroyo last month ordered a temporary cut in electricity charges and a suspension of the controversial purchased power adjustment (PPA) which is levied as part of the contract between the state power utility and private generators. Energy officials have said the government will have to borrow as much as P15 billion to cover the losses caused by the reduction in electricity charges. Felman warned that suspending the PPA would have "an immediate financing cost" to the cash-strapped government.
Bangko Sentral ng Pilipinas Governor Rafael Buenaventura said the initial damage of the power rate reduction was minimal but conceded that "the national government cannot forever shoulder the shortfall." Mrs. Arroyo earlier said her order would be in effect until the government’s Energy Regulatory Commission reviewed electricity tariffs.
Philippine Star, 17 June 2002
40 ACTIVIST GROUPS FILE SUIT VS PPA COLLECTION: About 40 activist groups filed a class-action lawsuit yesterday against two Philippine electricity companies, asking the court to order them to stop collecting the purchased power adjustment (PPA) fee from consumers.
Named defendants of the lawsuit are Manila Electric Co. (Meralco) and the National Power Corp. (Napocor). The petition for the lawsuit was filed with the Pasig Regional Trial Court, which has jurisdiction over Pasig City where Meralco’s headquarters is located.
Former Sen. Juan Ponce Enrile and Bishop Teodoro Bacani of the Catholic Church led the group of petitioners and the people who supported the filing of the lawsuit in a rally at the Pasig court. Aside from the injunction against the PPA collection, the petitioners seek an amendment to the Electric Power Industry Reform Act (the Epira Law), which allows Meralco and Napocor to increase the PPA charge. This law is due to take effect in July.
In a statement released before the rally, Enrile said imposing additional PPA fees on consumers is unconstitutional and violates substantive due process. The government, he said, "authorized Meralco and Napocor the right to pass on the burden of paying for the stranded costs under the IPP contracts" to consumers. Moreover, both companies have violated their legislative franchise by "imposing arbitrary, unreasonable and unjust" PPA charges to the customers, Enrile said.
Alain del Pascua, one of the group’s leaders, said he wanted the government to amend the provision on the universal charge in the Epira Law. The provision allows for the Energy Regulatory Commission (ERC) to determine the universal charge one year after the law takes effect. But Del Pascua argued that the charge was only meant to be the payment for the stranded debts in excess of the amount assumed by the national government, as well as the stranded contract costs of utility distribution resulting from the energy industry’s restructuring.
Among the groups that support the lawsuit are the People’s Consultative Assembly, Sulo ng Pilipino, the Philippine Movement Against Poverty, Union of the Masses and the Philippine Airlines Employees Union. They vowed to solicit at least one million signatures to support the petition, and said a similar petition will be filed against local electricity distributors nationwide. They also asked the court to prevent Meralco and Napocor from disconnecting electricity services to those who signed the petition, and who have refused to pay any more PPA charge until the case is decided.
Philippine Star, 12 June 2002
NO RENEWAL FOR 4 IPP CONTRACTS: Pres. Macapagal-Arroyo yesterday ordered Energy Secretary Vince Perez Jr. not to renew the contracts of four independent power producers (IPPs), which are to expire "soon."
At a press briefing, acting Press Secretary Silvestre Afable said the President also ordered Perez during yesterday’s Cabinet meeting to renegotiate with two other IPPs for the reduction of the controversial Purchased Power Agreement (PPA).
Meanwhile, after declaring that they and the National Power Corp. (Napocor) were both responsible for the May 2l crippling Luzon-wide blackout, a Manila Electric Co. (Meralco) official made a complete turnaround and placed the blame squarely on the National Transmission Co. (Transco). "We took no responsibility for the blackout," Meralco president and chief operating officer Jesus Francisco told a press conference. "It was l00 percent caused by the technical things on their (Transco) side."
Meralco’s turnaround came after Perez had announced that their initial investigation discovered that the blackout was due to an error in the System Preservation Scheme (SPS), a software program developed and approved by Transco experts. SPS is supposedly a fail-safe mechanism that aims to minimize the occurrence of widespread power outage whenever a technical error like "tripping," develops.
Afable identified the four IPPs with expiring contracts with the government as: Navotas, l,2,3,4 which generate a total of 3l0 megawatts (MW); Pinamucan, l05 MW; Iligan City, 98 MW; and Toledo, Cebu, 58 MW. He said these four IPPs have contracts that would expire soon "and so, if we do not renew their contracts we will save on the PPA." But he could not say exactly when the contracts would expire.
Afable added that the President likewise ordered Perez to renegotiate the two contracts of Enron (Subic and Pinamucan plants) and Chevron Texaco (San Pascual plant) for a possible reduction of the PPA fee they are asking from Napocor.
He said the renegotiation is one of the steps being taken by the President to ease the burden of consumers while an inter-agency committee is still reviewing the IPP contracts.
In Mandaluyong City, former president Ramos continued to dispute claims that he was to blame for the PPA controversy and that he "favored" certain IPPs. During the launching of the monthly Public Affairs Forum at the Edsa Plaza Shangri-La, Ramos recalled that the IPPs were contracted to help solve the crippling power crisis in l992 and l993 when he took over as president. The IPPs, he added, were in anticipation of the country’s power requirement for growth which the Asian Development Bank and the World Bank said should double that of the population growth rate.
Manila Times, 29 May 2002
2 SOLONS CALL FOR GOV’T TAKEOVER OF MERALCO: Fed up with Manila Electric Co.’s unauthorized charges and high electricity rates, two members of the House of Representatives want the government to take over the publicly listed company controlled by the Lopez family.
Iloilo Representative Rolex Suplico is set to file Wednesday a bill seeking to authorize the government to take over Meralco's operations "after payment of just compensation" to the Lopez family. Asked to comment on Suplico’s proposal, Meralco president Jesus Francisco said he could not because he had not been apprised of the bill.
Malacanang Tuesday ruled out taking Meralco over. "We are still trying to strengthen the privatization of the power industry and that is the direction that we will continue to take," acting Press Secretary Silvestre Afable told reporters. "By policy, it is still better to move for their privatization, because then they will become more efficient and more stable."
Jacinto Paras, chairperson of the House transportation and communications committee, broached the idea of a government takeover at a hearing of the House energy committee Tuesday. "I raised the constitutional grounds that at any time, the public can take over public utilities if public interest requires," he said. Paras later said he would move for a recall of the House's approval in March of a bill extending Meralco's franchise by 25 years from 2003 to 2028.
House Bill No. 4451 renewed Meralco’s 25-year franchise starting next year to supply electricity to Metro Manila and the provinces of Bulacan, Cavite, Rizal, Batangas, Laguna, Quezon and Pampanga.
Suplico and Paras voiced their proposals after Fe Barin, chairperson of the Energy Regulatory Commission, confirmed at the hearing that Meralco had collected from its customers 12.3 billion pesos in purchased power adjustment (PPA) charges without authority from the ERC. Barin said the ERC had issued a "cease-and-desist order" for Meralco to stop the unauthorized PPA collection effective June.
Suplico's proposal is for the government to permanently take over the operations of all companies engaged in power generation and distribution through its power of eminent domain. Suplico said expropriation of the properties or rights of independent power producers (IPPs) and private firms engaged in power generation, transmission and distribution was the "remedy to the rising cost of electricity." Suplico said it was up to the government to determine just compensation for Meralco. But he said just compensation should be the value of Meralco’s assets minus the billions of pesos in PPA that the utility company had collected from consumers. Bukidnon Representative Juan Miguel Zubiri, chairperson of the House committee on legislative franchises, opposed taking Meralco over. "If the government takes over a private entity it might send a wrong signal to the business community," he said. "What the government should do is to strengthen the regulatory powers of the ERC and penalize the erring distribution companies rather than ‘hostaging’ the power firms."
Las Pinas Representative Cynthia Villar and Bayan Muna Party Representative Liza Maza joined the call for the recall of the bill renewing Meralco’s franchise. House Minority Leader Carlos Padilla said he would support the recall of the bill and a government takeover of Meralco.
Philippines Daily Inquirer, 29 May 2002
GMA BENT ON CUTTING PPA DESPITE RAMOS’ WARNING: President Arroyo is bent on reducing the controversial purchased power adjustment charges despite a warning from former President Fidel Ramos that reducing the PPA would not serve the "long-term" interests of the nation.
"As far as the matter is concerned, the President has already taken a position on the reduction of the PPA," acting Press Secretary Silvestre Afable told Malacanang reporters yesterday. Mrs. Arroyo is working on ways to reconcile "relief to the public and long-term needs of investor confidence" to reach an acceptable solution to the rising cost of electricity, Afable said.
Mrs. Arroyo wants to consult with the Department of Energy and the Senate to come up with the best solution that would serve the people and not give the wrong signal to foreign investors that their investments are subject to political pressures, he said.
The House energy committee, chaired by Rep. Alipio Bedelles (NPC, Lanao del Norte) has already approved a committee report on its version of the PPA bill despite accusations of "railroading." The Senate committee on energy, chaired by Sen. Renato Cayetano, is still debating how much it would cut from the PPA and how to finance the cuts in the charges. The Senate majority is proposing a 42-centavo per kilowatt-hour reduction in the PPA from the present 1.87 per kwh which would be financed by state-guaranteed bond floats by the Power Sector Assets and Liabilities Management Corp. (PSALM). The opposition has suggested a 23-centavo kwh reduction in PPA charges, a stringent review of all the IPP contracts, and a shift in rate setting from the present return-on-rate-basis to a proposed performance and efficiency basis.
However, House appropriations committee chairman Rep. Rolando Andaya Jr. (Lakas, Camarines Sur) opposed an "Enron-style" solution to the financing problems government would be facing with the suspension of the PPA. He said using taxpayers’ money or loans to finance the PPA is equivalent to an "Enron-style window-dressing" that will not really bring relief to consumers. He said using loans to finance the suspension of the PPA would translate to loan payments that would have to be incorporated in the national government budget that the President submits to Congress each year. In the Senate, the opposition also objected to provisions in the House version that the President be empowered to borrow money in excess of the ceiling on foreign borrowings for the energy problem.
Philippine Star, 27 May 2002
NO BUDGET FOR PPA SUSPENSION: There is no money allocated this year to shoulder the cost of suspending the collection of the controversial purchased power adjustment (PPA), but no new taxes are being considered by Malacanang to finance the shortfall, the Department of Budget and Management (DBM) said yesterday.
Budget Secretary Emilia Boncodin suggested that the state-owned National Power Corp. (Napocor) could make up for the revenue shortfall from PPA suspension by shrinking its corporate expenditures.
Meanwhile, Sen. Edgardo Angara said yesterday the Ramos administration continued to enter into contracts with independent power producers (IPP) despite warnings from the World Bank of a power oversupply. Angara said that even after the December 1994 warning, the Ramos administration signed 11 IPP contracts, including two signed in June 1998, a few days before Ramos stepped down as president.
In a radio interview, Boncodin said the 2001 General Appropriations Act does not contain any appropriation to support the proposed suspension of the PPA for the first year, which is being worked out separately in the Senate and the House of Representatives.
The two chambers are deliberating measures that seek to suspend PPA collection for three years for residential users and one year for commercial entities. Under House Bill No. 4741 that seeks to amend Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001), Congress is working to legislate a 40-centavo per kilowatt-hour (kwh) PPA charge by Napocor. The House bill also seeks a period of 15 to 25 years to refinance the stranded costs of Napocor. At the same time, she urged Congress to ensure a successful "restructuring process" for the Napocor under the proposed measures seeking to amend R.A. 9136. Boncodin said it is the Department of Finance and Department of Energy, which are working with Congress on the PPA issue.
The DBM, which is a member of the Power Sector Asset and Liabilities Management created by R.A. 9136, helps Napocor in studying the "final impact" of the proposals in Congress, she said. Boncodin said the initial impact of the PPA suspension would be an immediate cash flow problem for Napocor due to reduced income from PPA collections. On Wednesday, Boncodin said taxpayers will have to eventually shoulder the cost of the proposed measures to suspend the collection of the PPA. She also warned legislators against meddling with Napocor’s capability to raise revenues from power generation.
Napocor receives subsidy from the national government and its loans, both foreign and local, are guaranteed by the national government. Boncodin urged lawmakers to take a second look on the proposal to suspend the PPA. "What might happen is that we may be merely delaying the payment after three years, but it might hurt us more," she said. She did not elaborate how much it would cost the national government to implement an order of President Arroyo to the Napocor to reduce by 40 centavos its PPA charges to Meralco while measures are pending in Congress.
Earlier, the President gave the go-signal for Napocor to secure $100 million in new loans to bankroll the planned PPA reduction in a bid to appease consumers on the escalating cost of their monthly electric bills due to PPA.
In a privileged speech, Angara said that in December 1994, the World Bank warned of an impending electricity oversupply because the installed capacity was already 43 percent more than the actual demand. Angara said that the standard excess, called "insurance capacity," was 30 percent. The power oversupply is blamed as the culprit for the controversial PPA, which is passed on by Napocor and Meralco to consumers.
Angara said that instead of passing the blame, the opposition has presented proposals to lighten the burden of consumers. The proposals were an alternative to the measure reported out by the Senate committee on energy headed by Sen. Renato Cayetano.
The bill prepared by opposition senators led by Angara provides for cost-sharing between Napocor and end-users, with the latter’s share limited to only 23 centavos. Angara said their bill requires a stringent review of all IPP contracts and prohibits cross-ownership and bilateral contracts between power generating companies, distribution utilities, and hastens up retail competition and open access on distribution. The opposition senators also criticized the committee report’s omission of the PPA charges of distribution utilities.
Former President Fidel Ramos stepped up his offensive against deposed leader Joseph Estrada as he made rounds of radio stations for interviews yesterday. Ramos was interviewed by stations dzBB and dzRH one day after he motored to Malacanang Palace to hold a press conference at the Malacanang Employees Cooperative canteen to attack Estrada for linking him to alleged "midnight deals" involving IPP contracts with Napocor. Ramos said he did not sign the alleged contracts and called Estrada a "liar."
Philippine Star, 24 May 2002
HOUSE RAILROADS PPA BILL; SENATE SUSPENDS PPA FOR 3 YEARS: The House energy committee "railroaded" yesterday the passage of the bill that seeks to resolve the controversial purchased power adjustment (PPA).
The committee voted to approve Bill 4741 after only a few hearings and even before some of its members could fully understand the implications of the measure. Sensing that most members of the committee, led by Chairman Rep. Alipio Badelles (NPC, Lanao del Norte), were pushing to speed up passage of the bill, opposition and administration congressmen who argued against the bill walked out on their colleagues. "This bill is being railroaded, we cannot be part of this charade," said Rep. Loretta Ann Rosales (party-list, Akbayan).
Meanwhile, the Senate committee on energy, headed by Sen. Renato Cayetano, approved yesterday a report proposing a three-year moratorium on the imposition of the controversial PPA of the National Power Corp. (Napocor) on households. The report, signed by 17 senators, also seeks to impose a one-year moratorium on the imposition of Napocor’s PPA on commercial and industrial users. Shortly after the House opposition filed out of the hearing room, Badelles announced that 15 panel members voted for the measure and the bill was therefore approved. No one voted against it, he said.
The energy committee approved Bill 4741 one day after President Arroyo called House leaders from Tokyo, Japan and prodded them to act expeditiously on the measure. The President has certified the measure as urgent. It seeks to resolve the PPA problem by stretching the period for its payment. Under the bill, the PPA would be replaced by the universal levy. Napocor will seek loans to finance the alleged losses resulting from Mrs. Arroyo’s recent order to suspend PPA collections. The loans will be guaranteed by the government. It would waive the universal levy on households that use kilowatt-hours (kwh) of electricity or lower in a month. Power plant owners will also be exempt from value added tax (VAT) payment.
The vote was prompted by a motion from Rep. Prospero Nograles (Lakas, Davao City), who said the President, in certifying Bill 4741, sought speedy approval of the measure, following an "emergency" occasioned by consumers’ complaints against the PPA. Rep. Joey Salceda (Lakas, Albay) and other committee members supported the motion of Nograles. Their support helped Nograles to defeat a motion presented by Rep. Eduardo Veloso (NPC, Leyte), which called for the hearing to adjourn. Veloso and Rep. Rolex Suplico (LDP, Iloilo) argued that the meeting was illegal, given that the House session started after 4 p.m. But they could not stop their colleagues from voting hastily on the bill. Those who walked out included Veloso, Rosales, Suplico and Rep. Prospero Pichay Jr. of Surigao del Sur, Cynthia Villar of Las Pinas and Abraham Mitra of Palawan.
At the Senate, Cayetano said that, under the committee report, distribution utilities like Meralco must immediately reduce their PPA equal to the reduction of Napocor’s PPA.
Households that consume 300 kwh or less will also get some relief. Under the measure, the first 50 kwh of the 300 will be exempt from the universal charge corresponding to the stranded contract costs of eligible contracts of Napocor.
Philippine Star, 22 May 2002
PALACE SAYS FVR NEEDED TO CLARIFY IPP CONTRACT MESS: Former president Fidel Ramos’ appearance in the Senate energy probe could clear up the controversy over the National Power Corp.’s (Napocor) contracts with independent power producers (IPPs), Malacanang acknowledged yesterday.
However, acting Press Secretary Silvestre Afable said the administration would not pressure the former president into defending what the opposition and some administration lawmakers have called "onerous" contracts.
The Senate will vote today on whether to transfer the resolution seeking Ramos’ appearance, from the committee on energy, headed by Sen. Renato Cayetano, to the committee on government corporations and public enterprises, chaired by Sen. John Osmena. Cayetano earlier said his committee would resolve other motions before entertaining Osmena’s resolution. The opposition solon then accused Cayetano of protecting Ramos, a charge denied by the administration senator.
Meanwhile, the House of Representatives committee on energy vowed to pass tomorrow the bill amending the Electric Power Industry Reform Act, despite opposition from some lawmakers. The source claimed even opposition lawmakers have promised not to obstruct the bill, which President Macapagal-Arroyo has certified as urgent. A committee insider said House Hill 4731 would address the controversial purchased power adjustment charges and the privatization of the debt-strapped Napocor.
Manila Times, 20 May 2002
PPA: ‘VICTORY FOR CONSUMERS’ MEANS P15-BILLION LOSS FOR NAPOCOR: A gain for consumers, a loss for National Power Corp. (Napocor).
President Gloria Macapagal-Arroyo’s decision to cut Napocor’s electricity charges might force the government to borrow about 300 million dollars to cover a projected 15 billion pesos in losses by the state-owned company. Various groups, however, hailed the President’s move to slash Napocor’s purchased power adjustment (PPA) charge from an average of 1.25 pesos per kilowatt-hour to a uniform 40 centavos per kwh, saying it was "a victory for consumers".
Still, most of the groups insisted on their demand for the scrapping of the entire PPA charge. The Kongreso ng Pagkakaisa ng Maralitang Tagalunsod said "no amount of reduction would diminish the PPA’s unjust nature." Other groups warned that the relief to consumers would be negated by an impending increase in basic rates of power distributors, like Manila Electric Co. (Meralco).
The widespread clamor for the abolition of the PPA was triggered by the hefty increase in electric bills of many consumers, mostly in Metro Manila. Consumers complained that the PPA charge imposed by both Napocor and Meralco jacked up by about 100 percent their electric bills, the other major component of which is the so-called basic rate charged by Meralco.
In a news briefing on Thursday, Energy Secretary Vince Perez said that as a result of the President’s directive, Napocor was pegging at 40 centavos per kwh its PPA charge to power distribution utilities. Napocor imposed a PPA charge to distribution utilities as a result of changes in the cost of electricity it buys from independent power producers. Meralco and other distribution utilities that buy power from Napocor, in turn, pass on this PPA charge to their customers.
Perez said Napocor would reduce its PPA charge by 1.13 pesos in Luzon, 67 centavos in Cebu-Negros-Panay, 10 centavos in Leyte-Samar, and 19 centavos in Mindanao. Perez, who is also the Napocor vice chairperson, added that end-users and other customers could expect the benefits of the PPA reduction in July. He said the actual reduction for end-users would vary depending on their location and on how much power their distributors buy from Napocor.
The Power Sector Assets and Liabilities Management Corp. (PSALM), which is disposing of Napocor assets and managing its liabilities, said the reduction would translate to a savings of about 95 pesos for Meralco customers consuming 200 kwh a month. PSALM president Edgardo del Fonso said the figure was based on Meralco’s decision to source only 43 percent of its power supply from Napocor. Groups belonging to the Power Opposed to Warrantless Electricity Rates (POWER) Thursday welcomed the President’s decision as well the ERC’s order stopping Meralco from collecting its deferred PPA charges to its customers.
"This is a victory for consumers. Mounting public pressure and widespread protests finally compelled Malacanang and the ERC to take notice of the issue of the PPA and the power rate increase," POWER convenor and Bagong Alyansang Makabayan spokesperson Renato Reyes Jr. said at a press conference in Quezon City.
Reyes warned the public, however, that "the fight is not over yet" in view of Meralco’s petition for a power rate increase. Meralco also earlier said it would be difficult to implement ERC’s order since it had started its new billing cycle for May and that it would hurt the company’s finances. Reyes explained that under the scheme, the PPA would no longer appear as such but will be inserted in the distribution and transmission charges.
As such, the Meralco’s petition for an average rate increase of 1.12 pesos per kwh, if approved by the ERC, would negate the benefits of the PPA reduction. But Power convenor Pete Ilagan, president of the National Association of Electricity Consumers for Reform (Nacecore), said the PPA charge imposed by Napocor should be completely suspended until the contracts it entered into with the independent power producers have been fully reviewed.
Philippines Daily Inquirer, 10 May 2002
PPA COLLECTION STOPPED: In a move that would likely be hailed by homeowners and other electricity consumers, the Energy Regulatory Commission (ERC) ordered the Manila Electric Co. (Meralco) yesterday to stop collecting the controversial purchased power adjustment (PPA).
However, Meralco immediately filed a motion for reconsideration even as it blamed the state-run National Power Corp. (Napocor) for alleged inability to fully transmit and dispatch power from Meralco’s independent power suppliers (IPPs), significantly increasing Meralco’s cost of purchased power. In a statement, Meralco said its contracts with the IPPs were approved by the ERC’s predecessor, the Energy Regulatory Board, after due notice and hearing, giving Meralco the authority to integrate the "attendant costs" in its monthly billings.
The ERC’s cease and desist order, dated April 30, enjoined Meralco from automatically including the "over(under) recoveries in the PPA computation and to submit in writing the basis of the computations of its under-recoveries amounting to P12.34 billion as of end-2001." According to the ERC, the Lopez-owned Meralco unilaterally and without prior approval by the ERB significantly modified the formula by automatically passing on to its customers through the PPA the under-recoveries based on an amortization schedule covering a period of time of its own choice, which period changes every month.
The ERC also directed Meralco to submit, within 15 days from the receipt of the order, an explanation why the company should not be penalized and sued for criminal action for violating such act. ERC chairwoman Fe Barin said they would wait for Meralco’s compliance with the requirement before taking any move. She said for the time being, Meralco should comply with the order deferring collection of the PPA amounting to P12.34 billion representing under-recoveries. The ERC chief said they have discovered such violation while examining the monthly filing of the power firm.
Meanwhile, Sorsogon Rep. Francis Escudero said the PPA, which constitutes nearly half of the users’ monthly bills, can be cut by as much as 40 percent. Malacanang gave assurances that two Palace-certified bills seeking PPA reduction through government intervention would not worsen the budget deficit. The two measures are House Bill 4741 sponsored by Lanao del Norte Rep. Alipio Badelles and Senate Bill 2109 sponsored by Sen. Renato Cayetano. If approved, the two laws could bring down the cost of power generated by Napocor by as much as 85 centavos per kilowatt hour. Acting Press Secretary
Philippine Star, 8 May 2002