Consumers seek to block Meralco’s bid for increased rates

The Power for People Coalition, led by its member organizations, consumers and renewable energy advocates, led by the Philippine Movement for Climate Justice (PMCJ), Sanlakas, and the sustainability think-tank Center for Energy, Ecology, and Development (CEED) on Thursday registered their objection with the Energy Regulatory Commission (ERC) concerning the applications of the South Premiere Power Corporation (SPPC) and the San Miguel Energy Corporation (SMEC), which both companies filed together with the Manila Electric Company (Meralco), to further increase electricity prices.

SPPC and SMEC both have power supply agreements with Meralco which also set the rates that can only be changed by circumstances beyond the control of SPPC and SMEC. SPPC now argues that the restrictions on gas supply brought about by the depletion of the Malampaya gas fields are such a change in circumstance which justifies their proposed price hike, while SMEC is using higher coal prices in their application.

“Experts knew as early as 2015 that the Malampaya gas fields might be depleted by 2024. And everyone knows that the price of coal fluctuates, as with all other fossil fuels. Did these companies ignore the realities of the fossil fuel market so they can offer a low price at first and then increase it later as it is trying to do now? Consumers should not pay for this,” said Gerry Arances, P4P Convenor.

The Electric Power Industry Reform Act of 2001 (EPIRA) requires all parties involved to provide the lowest cost of electricity possible, to be secured by a transparent process of public bidding. Price adjustments in PSAs evade the public bidding requirement as the contract is already in force.

“Should the ERC allow Meralco, SPPC, and SMEC to increase power rates, it will send a message that energy companies can evade the spirit of the law and pass on all their costs to consumers. They will encourage other energy companies to recklessly quote low prices and then adjust these prices later, guaranteeing their profits while burdening consumers already suffering from high inflation,” said Manjette Lopez, National President of Sanlakas.

The advocates further argue that these companies are proving what they have been saying all along that fossil fuels are not a good investment compared to renewable energy, which is cheaper, cleaner, and does not have to be imported.

“We keep saying that if the Philippines wants energy security, energy that is reliable, more affordable, and more sustainable, it should invest in renewable energy. Private companies always choose fossil fuels because they can always make the consumers pay more. One must also note the culpability of the Philippine Government of perpetuating the undue advantage of fossil fuels over renewable energy. If the ERC removes the ability of energy companies to keep passing on charges to consumers, then we give them the financial reason to transition to renewable energy, protecting consumers and the environment,” said Ian Rivera, National Coordinator of PMCJ.