SAGIP Party-list Reps. Rodante Marcoleta (left), Caroline Tanchay (Facebook)

SAGIP Party-list Reps. Rodante Marcoleta and Caroline Tanchay are prodding the House of Representatives to take up their proposed measure to tighten the prohibition on conflict of interest in the power industry. 

Jointly penned and filed by Marcoleta and Tanchay was House Bill (HB) No.174, or an Act Prohibiting Cross Ownership Among Distribution Utilities and Generation Companies. 

The measure seeks to amend Republic Act (RA) No.9136, also known as the Electric Power Industry Reform Act (EPIRA) of 2001. 

Section 45 of the EPIRA--a much-maligned law--had allowed cross-ownership of distribution and generation facilities in the local power sector. The provision, in its current version, allows distribution utilities to source a maximum of 50 percent of its electric supply from an “associated firm". 

“Simply put, if both the distribution utility and the generation company are controlled by one entity, they are to be considered as associated firms,” said the Marcoleta-Tanchay bill. 

But the implementing rules and regulations (IRR) of EPIRA expanded the definition of associated firms, and allowed “private power firms to circumvent the already generous cross-ownership limitation in EPIRA". 

“The prohibition on any form of cross-ownership will remove the conflict of interest among distribution utilities and generation companies, allowing a level playing field for all stakeholders,” the authors stressed. 

The bill--filed during the first part of the current 19th Congress--remains pending with House Committee on Energy.

The bill cited the case of Manila Electric Company (Meralco), which controls power distribution in Metro Manila and nearby provinces. This reportedly represents 75 percent of the entire economy. 

Meralco, the bill said, owns a company, Powergen Corporation (MGen), which has ownership shares in power generating plants that included: 

—The 455-megawatt (MW) San Buenaventura Power Plant in Mauban, Quezon province

—The 237-MW coal-fired plant in Sarangani province

—A 120-MW plant in Zamboanga province 

On top of these ownership shares, Meralco also entered into a joint venture agreement (JVA) with San Miguel Corp for a 1,200-MW coal plant in Mariveles, Bataan province. 

“Totaling the amount of the contracted power vis-à-vis the demand of Meralco would translate to almost 95 percent of the demand of Meralco, as part of the MVP Group, sourced from associated firms,” said HB No.174.

Recently, Meralco acquired majority ownership of the Ilijan Power Plant from SMC’s South Premiere Power Corp. and subsequently awarded the PSA to SPPC to supply 1,200 MW to Meralco.

Subsequently, a $3.3 billion deal was forged by Meralco Power Gen, San Miguel Global Power Holdings and Aboitiz Power to jointly launch the country’s “first and most expansive” LNG terminal in Batangas.

Once fully operational, the LNG facility in Batangas is expected to supply fuel for plants that are expected to generate more than 2,500 MW of electricity.

“However, the abhorrent contravention of the EPIRA, through its IRR, allows Meralco to cartelize the power industry, to the prejudice and damage of its consumers,” the two lawmakers claimed. 

They said these apparent conflict-of-interest situations were on top of deals “freely available to Meralco in contracting power supply from its affiliates which is allowed generously by EPIRA". 

“This bill seeks to avoid this monopoly altogether by eliminating the allowance for cross-ownership in EPIRA and by adjusting its IRR accordingly,” HB No.174 stated.