Zarate hits DOE for sitting on questionable directive

Published September 10, 2019, 2:22 PM

by Dr. Eduardo Gonzales

By Ellson Quismorio

Bayan Muna Party-List Rep. Carlos Zarate has slammed the Department of Energy (DOE) for practically allowing an agency directive to defeat the May 2019 Supreme Court (SC) decision that ordered all proposed power contacts of distribution utilities (DUs) to undergo bidding or a competitive selection process (CSP).

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

“As the policy-making body, it’s the primary role of the DOE to ensure – hindi lang napaka-passive yung role niya as observer (it shouldn’t be just a passive observer) – to ensure that our consumers would be protected from sweetheart deals for example, [or] self-dealing contracts,” Zarate told DOE officials during the agency’s recent budget hearing before the House Appropriations Committee.

Zarate was referring to Department Circular (DC) 2018-02-0003, a new circular repealing an old one that granted DOE and an independent third party the power to supervise the DU’s bidding process to ensure fairness and reasonable power rates for consumers. It was issued back in February 2018.

The SC, following a special En Banc session last May 3, ruled that all power supply agreements (PSAs) submitted by DUs before the Energy Regulatory Commission (ERC) on or after June 30, 2015, must undergo a CSP.

Central to the SC ruling was its junking of seven PSAs by DUs connected to power distribution giant Meralco. These contracts, which were for the construction of seven coal-fired power plants with an accumulated capacity of 3,551 megawatts (MW), did not undergo bidding and have terms that are disadvantageous to consumers, Zarate has claimed.

“The new circular not only disempowered DOE but also allows Meralco to control the bidding process so that only expensive electricity supply contracts with its favored companies will win the bidding. Why the DOE, which had the power to monitor Meralco’s bidding process and protect consumer interest in Meralco dealings, [would] purposely defang itself is still a mystery,” the militant lawmaker said.

During the budget hearing, DOE Undersecretary Wimpy Fuentebella, a former House member, said that the DC was being revised to make it more strict.

“This circular was issued more than a year ago and up to now, you’re saying ginagawa pa natin yung stricter guidelines? (you’re saying that you’re still working on making the guidelines stricter?)” Zarate asked.

Third party questioned 

The Senior Deputy Minority Leader also highlighted a glaring detail in the circular that gave the Meralco-linked DUs control in the SC-ordered bidding process.

“In that circular you issued, you changed the composition of the supposed third party bids and awards committee (TBAC). In fact in this change, I observed, and, if I may say so, it now opens the process to manipulation since this so-called TBAC is controlled by DUs,” he said.

He said that three out of the five members of the TBAC are required to come from the DUs, with the remaining two seats reserved for consumer-representatives.

“Kahit sabihin mong may dalawang representatives yung consumers dyan, ang sabi sa guidelines, tatlo ang manggagaling sa DU. So doon palang, three versus two, talo na agad (Even if you say that there are two representatives from consumers, the guidelines say that three will come from the DU. It’s three versus two, the consumers are defeated from the outset),” noted Zarate.

Zarate and Bayan Muna Chairman Neri Colmenares, over the weekend, asked the SC to stop the bidding under DC 2018-02-0003 via temporary restraining order (TRO) out of fears of excessive electricity rate increases if it is allowed to continue.

They also charged Meralco with alleged manipulation of bidding in order to favor its sister power firms. “The Supreme Court must stop this,” Zarate said, referring to the bidding.

“While Meralco is now obligated under the old circular to purchase its energy needs from electricity suppliers through a bidding supervised by the DOE and a third party, under the new circular the DOE has allowed Meralco to control the entire bidding process,” he stressed.

For his part, DOE Secretary Alfonso Cusi bared that the agency has moved to fulfill its oversight function as far as the CSP is concerned.

“The DOE has also organized an oversight committee, a CSP oversight committee to see to it that the CSP is done properly and to recommend further improvement in the rules,” Cusi told Zarate.