EIGHT years ago today, former President Gloria Macapagal-Arroyo signed into law the Electric Power Industry Reform Act (Epira) or Republic Act 9136 after boasting that power rates would immediately go down by P0.30 per kWh from P3.62 per kWh as soon as Congress passed the measure.
Arroyo pushed for the passage of Epira after the senatorial elections in May 2001 and offered several reasons to convince Congress to pass it.
Among them was that the Epira, according to her, was necessary for the World Bank and the Asian Development Bank to release a loan of $950 million to the country and that its enactment into law would mean cheaper electricity.
What happened? Instead of going down, the rates went up, triggering a public outcry.
To stress her point, the former president vowed to veto the bill if it will not lower power rates. And so, as far as the public is concerned, there is only one criterion in judging the bill: whether it will bring down power rates in the next three years before the 2004 presidential elections.
However, shortly after the passage of the Epira, Arroyo’s boast to lower the cost of electricity in the country did not happen. Instead, the electric bills of consumers skyrocketed, to the public’s dismay and shock.
To placate the enraged public, she announced in a press conference her concern for the people that she was ready to “squeeze blood out of stone” to reduce the PPA.
She ordered the NPC to reduce its PPA from P1.25 to P0.40. This drove the NPC into bankruptcy. This, as we have learned from a report of the American Chamber of Commerce, was a very expensive publicity stunt to be paid for with taxpayers’ money. It turned out that the government had to borrow $500 million to cover the Napocor-PPA reduction that President Arroyo ordered.
However, for reasons only she would know, she refused to touch Meralco’s PPA from its own independent power producers. To make matters worse, Meralco refused to honor its 10-year 3,600 megawatts power-supply contract with the NPC. This was to allow Meralco to use the power output of its own independent power producers whose prices range from P5.74 to P6.26 to P7.39 per kWh, compared with the NPC’s price of P3.62 per kWh.
Meralco’s mega-franchise
That time, the House of Representatives and the Senate approved with unbelievable dispatch the grant of a mega-franchise to Meralco. That mega-franchise covers an area of 9,337 square kilometers or 3,647.3 square miles, where a quarter of the entire population of the country lives —in 22 cities and 89 municipalities. The original area of Meralco, before the Lopezes sold and transferred it to the Meralco Foundation in the ’70s, was 1,018 square miles, embracing seven cities and 40 municipalities.
The mega-franchise bill breezed through Congress despite Meralco’s dismal record as a public service utility and some glaring evidence of its abuses, excessive PPA charges, its sweetheart deals with its own IPPs, and shenanigans in its return on rate base.
We all know, of course, that no less than the Supreme Court has ruled with finality that Meralco has been illegally passing on its own income taxes to its hapless customers. Yet, Meralco says it will go bankrupt if it refunds the billions of pesos it has legally exacted from the public.
That Meralco is in dire financial straits as it claims, while its affiliate IPPs—like First Gas—end up among the country’s most profitable corporations, is a classic demonstration of the evils of cross-ownership, which the Epira promised but failed to curb.
Undoubtedly, the PPA or universal levy, or whatever name they now call it, is anti-people. It makes the people pay for electricity they have not used. It makes the cost of electricity exorbitant. It makes the country uncompetitive in the world market. It deprives the poor and the jobless of an opportunity to find employment because the high cost of electric power translates to fewer investments and, therefore, fewer jobs.
It also means an unjust enrichment of people who are already immensely rich, at the expense of the consumers. For the truth is the people themselves are the ones paying for the power plants and electric distribution facilities being used to provide electricity to them. And yet, they will never own these power plants and facilities. These will remain the property of powerful, influential and smart businessmen who managed to wangle legislative franchises from Congress and power-supply contracts from the NPC.
To reach the writer, e-mail cecilio.arillo@gmail.com.