Bayan Muna: Meralco’s defense of self-dealing confirms anti-competitive practices

MANILA — Bayan Muna chairman Neri Colmenares and Bayan Muna Rep. Carlos Isagani Zarate on Tuesday urged Manila Electric Company officials to read again the results of the investigation that Congress earlier conducted as an offshoot of Meralco’s attempts to corner for its subsidiaries and affiliates power supply agreements (PSAs) whose terms were found burdensome to consumers.

Zarate aired the suggestion after Meralco claimed that there is no Philippine law or policy that prevents affiliated generation companies (gencos) from participating in the bidding for the supply requirements of distribution utilities.

He pointed out that the House investigation found out that Meralco awarded without bidding to its own affiliated gencos power supply contracts containing P900 billion in overpriced power rates that Meralco would pay to itself through its affiliated gencos.

“The House investigation caught Meralco with its hands in the cookie jar, yet Meralco is feigning innocence about it,” Zarate noted.

He added that “the Ombudsman also suspended top Energy Regulatory Commission (ERC) officials for allowing Meralco to award the same PSAs to the Meralco gencos without conducting a bidding under competitive selection process (CSP). Yet Meralco claims that such anti-competitive behavior is not prohibited,”

“The Ombudsman even found probable cause to charge the same ERC officials for violating the anti-graft law after they extended ‘unwarranted benefits to [Meralco] and other companies by exempting them from the coverage of the CSP requirement,”he said

“Meralco tried to award the PSAs without bidding under rules of the CSP, which should have required the company to get at least two offers before awarding a PSA,” Zarate added.

“Fortunately, the Supreme Court stopped the award. In blocking the PSAs, the High Tribunal even went to the extent of castigating the ERC for a CSP postponement that ‘unconscionably placed this public purpose in deep freeze for at least 20 years’. But Meralco thinks it did nothing wrong! We are not singling out Meralco per se but we are urging all other electric cooperatives or power dustributors who did not follow the CSP requirements not to bid for the PSAs and we should be vigilant in guarding them” said the Davao-based solon.

Abusive practices

As for his part, former Bayan Muna Rep. Colmenares said that “for their enlightenment, we urge Meralco’s top officials to revisit the Supreme Court decision, the Ombudsman’s suspension order and the results of the House inquiry on the Meralco PSAs. All these documents uncovered abusive practices that Meralco is not only denying now, but is also trying to perpetuate,”

“We further encourage these Meralco officials to review the country’s Philippine Competition Law on prohibited actions that substantially prevent, restrict or lessen competition,” Colmenares said.

Zarate further asked Meralco officials “to think about the obligations set by Congress in renewing the company’s franchise to see if overpricing Meralco rates by P1.55 per kilowatt-hour — as what Meralco tried under the aborted PSAs – conformed with the company’s franchise obligation to get in ‘the least cost manner’ electricity it distributes to its customers.

Foregone conclusion?

The solon also reacted to an earlier Meralco statement wherein it appeared as a foregone conclusion that Meralco’s wholly owned genco subsidiary Atimonan One Energy Inc. (Atimonan One) will start constructing a 1,200-megawatt power plant after one bidding.

According to Zarate, “if the outcome for bidding a PSA will be pre-determined, obviously the bidding will all be a charade and we will not allow it.”

Colmenares, meanwhile, added that “Meralco is also complaining that we are discriminating against it; but it was the one that had been caught discriminating against other gencos in awarding PSAs.”

“It also feels being singled out for our criticism, but conveniently Meralco hides its singular notoriety in this issue. For instance, it is the only known Philippine distribution utility that figured in an invalidated attempt to award PSAs to itself through its own gencos, so that they can build their own powerplants,” he said.

“The combined requirements it awarded to the favored gencos at 3,551 megawatts would be like cornering the electricity requirements of all of the Visayas and Mindanao,” Colmenares noted.

“The amount of overpriced charges they would pick from the pockets of consumers at P900 billion likewise would dwarf the money that supposedly Janet Lim Napoles took from government coffers,” he said.

“That’s why we continue to watch over these PSAs to make sure Meralco will not again try to award contracts with overpriced charges that will burden its customers,” Zarate ended.