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Wednesday, May 14, 2008
Meralco may face raps over systems loss charges
MANILA -- The Manila Electric Company (Meralco) may face a class suit following its admission that it has been passing close to half a billion pesos worth of electric bill to its consumers.
The bill, Meralco said, is part of the systems loss charges.
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Chief presidential legal counsel Sergio Antonio Apostol said the public may consider filing a class suit against Meralco.
"Somebody has to file a case against Meralco. This (class suit) is allowed by law," he said urging someone to initiate the filing of case.
Apostol reminded the public that Meralco had previously lost a case in the Supreme Court (SC) when it ordered the electric company to refund the public about P30 billion for overcharging their consumers.
Meralco, at a hearing of the Joint Congressional Power Commission (JCPC) last Monday, admitted the inclusion of the 72 million kilowatt-hours of power that they consume in the system loss charges imposed on consumers.
Systems loss is the portion of electricity, which is pilfered or is lost during transmission. Meralco's 9.5 percent system loss has been partly blamed for high electricity rates.
Deputy presidential spokesperson Lorelei Fajardo said Meralco's statement signals the need to the immediate amendment of the Electric Power Industry Reform Act (Epira).
"It is now a matter for the legislators to seriously consider amending the Epira law. In the meantime, Meralco may have to seriously consider their position on this matter," she added.
Fajardo also denied that Malacañang is exerting pressure on Meralco to get back or "defuse" the Lopezes, owners of First Holdings Corporation that manages Meralco, that are foreseen to support the opposition in 2010.
She said the concerns and suggestions raised by the General Service Insurance System (GSIS) are "legitimate" and coming from a major stockholder of Meralco.
"The concern of GSIS as an investor is a legitimate concern that affects all sectors in our society. The Palace is monitoring the outcome of the JCPC hearings and is optimistic that the resolution of the issues will cause relief to the consuming public," she said.
e-VAT
During Tuesday's hearing on high power rates at the House of Representatives, congressmen said the charging of the expanded value-added tax (e-VAT) on systems loss and on power sourced from renewable energy dramatically add up to the already soaring electricity rates of Meralco.
Camarines Sur Representative Luis Villafuerte, a member of the House energy committee that is investigating the matter, insisted that systems loss is not a "vat-able" item.
He said the charging of e-VAT on systems loss is a double whammy for the people.
Meralco has said at a pass-on rate of P5.7 per kilowatt-hour, the power firm's consumption is worth P427.5 million yearly.
Officials said 72 million kilowatt-hours of power that Meralco consumes are included in the systems loss charge imposed on consumers.
"There's confusion in the public. They think that all these items in their bill should be charged 12 percent e-VAT. That's a misleading assumption," Villafuerte said.
While Meralco defended the charging of systems loss, it supported Villafuerte's call to stop the government from including the item in its e-VAT list.
Meralco president Jesus Francisco said other electric cooperatives are even charging higher amount of systems loss to remain afloat.
According to BIR Assistant Commissioner for Legal Service James Roldan, the systems loss is part of the service fee of Meralco.
"There is actually a sale of service of Meralco," he said, drawing unfavorable reactions from congressmen. "It is still part of their distribution charge," he said.
Rates regulation
Also during the House hearing, the Energy Regulatory Commission (ERC) admitted that it cannot regulate the prices of electricity sourced from independent power producers (IPPs).
ERC executive director Francis Juan said while the ERC can regulate the prices of electricity that Meralco buys from the National Power Corporation (Napocor), it does not have the power to do same to IPPs because of contracts signed during the time of former President Fidel Ramos.
The law mandates Meralco to source 50 percent of its electricity from Napocor and the other 50 from IPPs.
Christian Monsod, lawyer for Meralco, said the average generation cost of Lopez-controlled IPPs ranges from P4.91 to P6.25 per kilowatt hour.
He however said the billing still depends on Meralco's pricing bracket: poor, middle class and rich. (Sunnex)
For more Philippine news, visit Sun.Star Cebu. (May 14, 2008 issue)
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