House asks ERC, Meralco to explain power supply deals

Lawmakers on Tuesday asked the Energy Regulatory Commission (ERC) and Manila Electric Company (Meralco) to explain the Power Supply Agreements (PSAs) which are allegedly “midnight contracts.”

The House committee on good government and accountability started looking into the questionable contracts between ERC and the power generation companies affiliated with Meralco.

Acting on House Resolution 566 filed by Bayan Muna Rep. Carlos Zarate, the committee questioned the ERC for allegedly extending an order that allowed all distribution companies to conduct a competitive selection process (CSP) in procuring power supply.

Report said that the deadline was originally set for November 6, 2015, but was “mysteriously” moved to April 30, 2016.

With this extension, the Meralco was able  to secure 20-year power supply agreements for its seven generation companies without public bidding.

“The ERC—supposedly the guardian of public interest, protector of the consumers against monopolization and cartelization, and promoter of competition and least cost power—however,  mysteriously extended by five months the implementation of said DOE circular,” Zarate said.

Zarate added that this suspicious ERC act effectively denied the consumers the benefit of competition and subjecting them once again to the presumably overpriced negotiated prices between Meralco and its affiliated generation companies;

Bagong Henerasyon Rep. Bernadette Herrera-Dy, on the other hand, questioned the cost of contract, stressing that consumers will carry the burden of higher price of electricity.

The 20-year contracts would easily translate to P12.44 Billion a year, Herrera-Dy said.

Historically, Meralco data show that it pays its sister generators up to 20 percent (P1.00 per kwh) higher rates compared to unrelated generators, and,  the difference between the rates from competitive bidding and self-negotiated rates at P0.50 per kwh.