Zarate moves to junk Meralco’s power deals with subsidiaries

Published March 21, 2019, 2:55 PM

by Patrick Garcia

By Ellson Quismorio

The seven Manila Electric Company (Meralco)-linked power supply agreements (PSAs) pending before the Energy Regulatory Commission (ERC) must be thrashed in order to save consumers from hefty power rate hikes.

Rep. Carlos Isagani Zarate (Bayan Muna Party list Facebook page / MANILA BULLETIN)
Rep. Carlos Isagani Zarate
(Bayan Muna Party list Facebook page / MANILA BULLETIN)

Bayan Muna Party-List Rep. Carlos Zarate had this to say as he justified his filing Thursday of an intervention before the Supreme Court (SC) to declare null and void the PSAs that the power utility giant negotiated with its own generating companies in 2016.

“Yes, it is absolutely necessary [to junk these deals] because it will be another burden to consumers already reeling from TRAIN,” Zarate said, referring to the Tax Reform for Acceleration and Inclusion Act which added excise taxes on coal and petroleum products.

Joining Zarate in his “Petition-in-intervention with an application for urgent relief by way of Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction” was Bayan Muna chairman and senatorial candidate Neri Colmenares.

“For the benefit of the already struggling consumers, we demand no less than the junking of the said sweetheart agreements and submit Meralco’s power supply needs to the competitive selection process or bidding,” said the Davao-based congressman.

The PSAs, which include deals on the construction of coal-fired power plants, are connected to the following generation companies: Redondo Peninsula Energy Incorporated (for a 225-megawatt [MW] ); Atimonan One Energy Incorporated (1,200 MW); St. Raphael power Generation Corporation (400 MW); Central Luzon Premiere Power Corporation (528 MW); Mariveles Power Generation Corporation (528 MW); Panay Energy Development Corporation (70 MW); and Global Luzon Energy Development Corporation (600 MW).

These are Meralco’s own sister companies, subsidiaries and affiliates, according to Zarate.

The petitioners warned that historically, Meralco’s negotiated contracts with its subsidiary companies are overpriced by as much as 20 percent compared to those of non-related generating companies.

During the course of the House probe last year on the questioned deals, Zarate said that the average generation charge under the seven PSAs would cost Meralco customers P5.22 per kilowatt hour.

“The P5.22 rate is onerous and unconscionable considering that some non-Meralco-affiliated power generation companies now offer electricity way below P5 per kWh. Some even offer electricity at P2 per kWh,” he noted.

Because of this, the Makabayan lawmaker said the pending deals which have duration of 20 to 21 years would be “gravely disadvantageous to consumers” in case they are green-lit by the ERC.

It was also learned during the House inquiry that the ERC extended the deadline for the filing of the PSAs from November 6, 2015 to April 30, 2016–a move that favored Meralco as it allowed for the belated filing of the power deals.

Meanwhile, Zarate’s Makabayan Bloc colleague, Anakpawis Party-List Rep. Ariel Casilao criticized the regulatory body for supposedly taking its sweet time in deciding on the fate of the assailed PSAs.

“Nakakaduda talaga yung delay eh. Pwede naman sana na i-calendar na nila for public bidding (The delay is very suspicious. They could hopefully calendar it for public bidding),” he said.

Pointing to the intervention, Casilao said, “We are hopeful that we have a strong case that will eventually become material in preventing possible increases due to Meralco’s monopoly.”