POSTSCRIPT / March 18, 2001 / Sunday

By FEDERICO D. PASCUAL JR.

Philippine STAR Columnist

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We electricity-users sizzle in our own fat

WE’RE marching backwards, to the drum of lobbyists and influence peddlers, in the big business of generating and distributing electricity in this country.

While the trend in enlightened economies is to break up monopolies and protect consumers, here we have a Congress busy laying the basis for vested interests to control and monopolize power generation and distribution—with consumers ironically footing the bill.

Under the Omnibus Power Act quietly being wrapped up in the bicameral committee, instead of investors paying for some obligations incurred in deals with their sister companies, helpless consumers will be made to pay for the stranded costs.

Aside from installing a monopoly, the proposed law would pass on to captive consumers stranded costs estimated at P20 billion, without their being given shares of stock equivalent to their hefty contribution.

* * *

THE proposed law would lift the policy banning control of both power generation and distribution by the same business bloc. It would allow the same monopolistic interests to be simultaneously in the generation and the distribution aspects of the business.

Under the present setup, the National Power Corp. (Napocor) has been assigned exclusively to power generation and, in the case of the national capital region, the Manila Electric Co. (Meralco) which used to also generate electricity has been confined to just distributing it.

Under the Omnibus Power Act, however, the owners of Meralco — to cite an example of a beneficiary of the proposed law – would be allowed to also invest in the power generation business.

Many sectors have warned against the anti-consumer effects of this move to go back to a monopolistic setup.

* * *

THE anti-people provisions of the Omnibus Power Act are being denounced, for one, by Sen. Juan Ponce Enrile in a letter to President Gloria Macapagal Arroyo and in huge advertisements in newspapers.

The senator blew the whistle as a frustrated member of the bicameral committee finalizing the monopolistic law.

Enrile gave the example of the Meralco claiming equal treatment with Napocor concerning stranded costs, although Meralco’s expenses arise from contracts with a sister company — the wholly Lopez-owned First Gas.

The senator pointed out that since the contact was negotiated privately within the same family, “the probability of sweetheart pricing and escalator and fuel indexing is very high.” The stranded costs estimated at around P20 billion could be passed on to unwary consumers, he said, as “purchased power adjustment.”

* * *

ONE safeguard which should be written into the law, Enrile said, is the elimination of these sweetheart costs before private utilities are allowed to recover their stranded costs from consumers.

Many sectors have warned against the padding of power rates that could arise when the ban against cross-ownership between generators and distributors is lifted. The retail price of electricity, for instance, could be manipulated when the supplier and the seller of electricity are one and the same business group.

* * *

OTHER areas underscored by Enrile where manipulation and exploitation of consumers has been ongoing even now:

  • Utility income tax — Meralco’s income taxes running to billions yearly are actually being paid for it by consumers! The legality of this arrangement has been questioned. Imagine a squatter family helping pay the taxes of the mighty Lopezes!
  • Guaranteed Return on Rate Base (RORB) — Enrile said that an 8-percent RORB is actually equivalent to 24 percent return on invested equity. If that is made after tax, he added, it is actually 37 percent of guaranteed profits.
  • Double family profits — Refers to the sweetheart contracts of Meralco for procuring equipment and services from sister companies. Enrile said this allows the transfer of additional profits from a regulated business (the distribution utility) to a non-regulated company (the vendor-suppliers).

* * *

IN the court case questioning Meralco’s RORB computation, complainants pointed out that the guaranteed profit level had been padded by the inclusion in the computation of various Meralco or Lopez assets far removed from the electricity business.

One notable example being given is the upscale Rockwell property in Makati developed into a luxurious mixed-use community that has nothing to do with power generation and distribution. Its value has been reportedly added to the base used in computing the allowable profits of Meralco.

* * *

THESE are just a few of the salient features of the Omnibus Power Act that are, even from the point of view of ordinary consumers, monopolistic and anti-people.

With the complexity of the loopholes written into the measure, it will take more than a hurrying bicameral committee to cleanse it. The suggestion of concerned consumers is to send the bill back to the incoming Congress for closer review.

* * *

ON the insurgency problem, the Arroyo administration just inherited the mess and it may not be fair to blame it wholly for some disturbing developments in its move to negotiate an end to the communist rebellion.

The agreement to sit down at a still undecided “neutral” place for the resumption of peace talks with the National Democratic Front has stirred some disturbing elements.

For one, Luis G. Jalandoni, chairman of the NDF negotiating panel, is now saying in his formal statements that the government has recognized the status of belligerency of the community front.

(Many of us, btw, cannot understand why we are negotiating with foreigners on an issue that is strictly Filipino. Jalandoni and some others in his group are reportedly Dutch.)

* * *

ANNOUNCING his order to the NDF troops to release captured Army Major Noel Buan, Jalandoni said:

“It is an act in the exercise of the political power and authority of the people’s democratic government… The people’s democratic government has once more asserted and proven its status of belligerency under the laws by its capability to detain a prisoner of war for a long period of time and accord him with humane treatment and respect for his human rights.”

By citing its supposed status of belligerency, the NDF is actually saying that it is a people’s “democratic government” negotiating on the same co-equal level with the Philippine government.

* * *

WE don’t know if the Arroyo administration intends to confer the insurgents such a status, but there they are claiming it and proclaiming it to the world. The government has to officially clarify its stand on the matter, as its silence amounts to acquiescence.

In fact, the intentional reference to Buan and other soldiers captured by the rebels as “prisoners of war” has a political significance which should not be lost on the negotiators of the government.

Without our being aware of it, the government is slowly being sucked into the deliberately prolonged negotiations, with the whole world watching, and unwittingly conferring on the NDF a status of belligerency.

* * *

NOTE that even in the simple release of Buan, Jalandoni said elaborately:

“I have issued the order under a special authority delegated by the NDFP national executive committee on behalf of the Communist Party of the Philippines, the New People’s Army and organs of political power of the people’s democratic government and in compliance with the Geneva Conventions and its protocols and the Comprehensive Agreement on Respect for Human Rights and International Humanitarian Law (CARHRIHL).”

Note the reference to Geneva international conventions and the CARHRIHL. By accepting back Buan as a prisoner of war under the NDF-announced parameters, are we accepting also their terms of reference?

The government cannot remain silent on these points.

* * *

(First published in the Philippine STAR of March 18, 2001)

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