Press Release
June 4, 2008

Loren slams ERC for 'buck-passing'

Senator Loren Legarda chided today the Energy Regulatory Commission (ERC) for passing the responsibility of lowering power rates in the country to other government agencies and to the private sector.

Legarda said that the ERC itself, through many of its rulings deemed flawed by industry observers, has contributed to high power rates.

"An example often cited is the ERC's acquiescence to the highly questionable practice of power distributors to pass on the cost of their own electric consumption to consumers," Legarda said.

Manila Electric Company (Meralco), the country's biggest power distributor, is drawing flak for charging its 4.4 million customers about half a billion of pesos of its own electric consumption each year.

"While the EPIRA law needs to be amended to plug loopholes that are causing high electricity rates in our country, this law has not really been given the chance to work because its many provisions had not been implemented and enforced by the ERC," she said.

"The ERC must do its job and not wash its hands of its responsibility under the guise of consensus-building," Legarda said. "It must be pro-active and it cannot wait for petitions and proposals to come in before acting."

Legarda said that it is only proper that so-called lifeline subsidies or discounts are given to poor power users who consume less than 100kWh, but that the subsidy should be shouldered by distributors like Meralco.

"In the last ERC hearing, a government lawyer pointed out that these subsidies under the law should not be passed on to other consumers. So, I wonder why the ERC had taken this responsibility away from distributors and dumped it onto consumers using more than 100kWh."

She reiterated that the system losses of power companies should also be borne by the latter and not the consumers, who should not pay for pilfered electricity or power lost during transmission.

"If the ERC will remove the 'own-use' privilege of distributors, as well as stop the practice of their passing system losses to consumers, then power rates would surely go down across all levels," Legarda said.

The chair of the Senate Economic Affairs Committee, Legarda said that pending the removal of the own-use privileges of distributors, the ERC should strictly monitor the consumption level of distributors to stop abuses.

"In the case of Meralco, it should be resolved as to what extent its 'own-use' is, whether or not its numerous subsidiaries are also using electricity charged to Juan dela Cruz," Legarda said.

A cause-oriented group had filed a complaint with ERC chair Rodolfo Albano, questioning the spike in the 'own-use' consumption of Meralco from 84,000,000 kWh in 2004 to 133,000,000 kWh in 2005.

The group Nasecore said the big surge raises suspicion that Meralco's sister companies may have also benefited from the questionable 'own-use' benefit of the power distributor.

"That's a very serious accusation which needs to be looked into so that abuses, if indeed they were committed, can be stopped."

Earlier, Legarda sought an immediate refund of the P21.4 billion meter and bill deposits of Meralco customers, as well as the remainder of the P30 billion refund ordered by the Supreme Court.

She said the refund can be in the form of stocks equivalent given to Meralco customers, which will make them part owners of Meralco thereby giving them a voice on how the company is managed.

"Meralco customers will likewise have the chance to earn dividends if the refund will be undertaken this way," she added.

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