Why should the 20-year contracts of the Manila Electric Co.’s (Meralco) controversial power-supply agreements (PSAs) last longer than the power company’s franchise life?
This was one of the questions asked by Bayan Muna Party-List Rep. Carlos Zarate during the resumption on Tuesday of the House of Representatives’ investigation on Meralco’s PSAs that allegedly did not undergo competitive bidding.
The House committee on good government and public accountability, in joint hearings with the committee on energy , has been investigating the seven PSAs of Meralco with its sister companies that cover 3,551 megawatts, or approximately 90% of its power requirements for the next 20-25 years.
Meralco’s franchise life expires in 2028. In 2003, then President Gloria Macapagal-Arroyo signed Republic Act 9029 into law, renewing the company’s franchise to distribute electricity in parts of Luzon island for another 25 years.
Zarate asked officials of the Energy Regulatory Commission why the seven controversial PSA contracts would be longer than Meralco’s franchise.
In a previous hearing, Zarate had claimed the terms of the agreements between Meralco and its affiliated PSAs would disadvantage consumers who could lose P12.44 billion annually due to these supply deals.
In Tuesday’s hearing, Zarate also asked ERC Commissioner Josefina Patricia Asirit if it’s true that one the seven PSAs had already been approved by the regulator.
Asirit replied that Meralco’s PSA with Panay Energy Development Corp. (PEDC), which involves 70 MW, had already been given “provisional authority” by the ERC.
Surigao del Sur 2nd district Rep. Johnny Pimentel, chairman of the House panel, asked Asirit what she means by provisional authority.
“It gives the utility the ability to draw power from the existing plant,” Asirit explained, noting the approval is still “subject to final determination.”
Meralco has a 14 percent stake in PEDC. Under the deal, Meralco will purchase up to 70 MW from PEDC, which operates the 2 x 82-MW coal-fired power generating facility in Brgy. Ingore, La Paz, Iloilo, and another 150-MW plant in the same location. PEDC is a subsidiary of Global Business Power Corporation (GBP), one of the largest power producers in the Visayas.
Zarate said the ERC should not have approved the PSA applications submitted after the deadline of the mandatory competitive selection process, knowing fully well the House is still investigating the issue.
Zarate also chided the ERC’s failure yet again to submit the transcripts of meetings in connection with the seven Meralco PSAs.
“Can you comply with the request of Rep. Zarate? Because if you don’t want to comply, we have to issue a subpoena,” Pimentel warned Asirit, adding it was “highly-suspicious” that the ERC can only submit excerpts of meeting minutes and not the entire transcript.
The House Appropriations Committee had initially slashed the ERC 2018 budget to just P1,000 budget from its P351-million proposal because of the regulator’s failure to deliver the necessary official documents to enable legislators to investigative the corruption issues hounding it. (The ERC budget was restored last week.)
Various consumer groups have questioned the legality of ERC’s extension of the mandatory competitive selection process that paved the way for Meralco to enter into 20-year supply contracts with its alleged sister companies.
The seven Meralco PSAs being investigated in the House for allegedly skirting the mandatory competitive selection process are the following:
- Meralco with Redondo Peninsula Energy Inc., which covers the supply of 225 MW;
- Meralco with St. Raphael Power Generation Corp. (SRPGC), which involves 400 MW;
- Meralco with Atimonan One Energy Inc. for the full output of the latter’s 2×600-MW supercritical coal-fired power plant;
- Meralco with Panay Energy Development Corp. (PEDC), which involves 70 MW;
- Meralco with Global Luzon Energy Development Corp., which covers 600 MW;
- Meralco with two San Miguel power plants, Central Luzon Premiere Power Corp.
- Mariveles Power Generation Corp. (MPGC), for the purchase of up to 528 MW of capacity
William Pamintuan, Meralco legal department head, said in November last year, that these PSA were filed by Meralco “in accordance with existing ERC rules and regulation which go through a very transparent and rigorous hearing process.”