“This means distribution utilities, like Meralco, are now required to open to public scrutiny the ownership structures of companies from which it buys electricity”
TS website clearly states the company “strictly conforms [with] relevant laws, regulations, contracts, strategies, and policies governing its operations.”
Further on, it declares: “Through [a] strong culture of good governance and responsible management practices, we maintain our firm commitment to our social, organizational, and environmental responsibilities while ensuring that our long-term strategic goals and objectives are achieved.”
That’s the publicly stated corporate philosophy of Meralco, the giant power distribution facility in the National Capital Region and outlying provinces.
But is this corporate philosophy really followed down to the letter?
Hmm. At a recent joint hearing of the Senate Committee on Energy and Committee on Ways and Means, it appears the company might require remedial lessons in Transparency 101 to make the lives of its captive customers really bright.
At issue is whether the terms of reference set by Meralco for its competitive selection process is fair.
Sen. Alan Peter Cayetano, for one, doesn’t think so. He has asked the Energy Regulatory Board to defer its bidding for an additional 600 MW of electricity.
The lawmaker underscored the pressing need to address the lingering issue of high electricity cost that affects both investors and consumers: “This is not only about the high cost of power but it’s also about energy security.”
Cayetano said a phrase in Meralco’s TOR could be discriminatory because it effectively disqualified Malampaya-fueled power plants.
He pointed out the phrase “if the plant is more than 10 years old” indicated that older power plants were automatically disqualified from taking part in the CSP.
Meralco Senior Vice President and Head, Regulatory Management Office Jose Ronaldo Valles initially denied the TOR stipulated this condition, but later admitted it when pressed by the lawmaker.
“The point I am driving through is because of that simple decision, you disqualified those plants using Malampaya gas, is that right? That’s the net effect of that,” Cayetano pointed out.
“I am not an expert here but it doesn’t really take an expert to see that Meralco seems to have favored someone just [from] the TOR,” he added.
Meralco justified its exclusion from the CSP of efficient plants that run on much-cheaper indigenous gas by citing technical terms like greenfield, which means plants newly-built or still up for construction.
But the real issue is those running on indigenous gas can offer lower cost because of its fixed price and are good for the economy because of the billions in revenue they generate for the government.
The award of a substantial amount of electricity –1,200 MW – to a power generation company using imported LNG, a more expensive fuel, will mean the public will bear the cost of higher electricity prices.
Imported LNG’s real cost is not just the one written on bidding papers but the one arrived at after computing freight and regasification,
Sen. Cayetano has asked the Energy Regulatory Commission to suspend the Aug. 2 bidding for 600 MW.
This is a step in the right direction until all issues surrounding CSP are resolved. This includes Meralco’s broad authority to determine who qualifies or not.
The proposed deferment makes sense now that President Marcos Jr. has signed a law mandating disclosure of beneficial ownership information of suppliers, manufacturers, distributors, contractors and consultants that would take part in government procurement.
This means distribution utilities, like Meralco, are now required to open to public scrutiny the ownership structures of companies from which it buys electricity.
This also means the new law will include companies covered by the so-called cross ownership provision of the EPIRA law which had expanded into so-called associated firms, or generating companies with financial ties to the distribution utility which is Meralco.
What’s really needed at this point is to uphold public interest and consumer welfare through a transparent and fair process.
As it stands, the so-called competitive selection process appears to be discriminatory and could run counter to what the power distribution company claims is its “strong culture of good governance and responsible management practices.” (Email: [email protected])
