No ‘collusion’ in Meralco power hike – Senate energy chair Osmeña

By ANDREO CALONZO, GMA News

Published December 18, 2013 4:47pm

(Updated 10:41 a.m., Dec. 20) There was no indication that "collusion" among independent power suppliers led to the record-high power rate increase being charged by Manila Electric Co. starting this month, Senate energy committee chair Sergio Osmeña III said Wednesday.

During the Senate probe, however, Senator Antonio Trillanes IV said "conflict of interest" was evident when independent power suppliers shut down their plants, and then sold expensive power in the Wholesale Electricity Spot Market (WESM).

After a five-hour investigation on the power rate hike, Osmeña said he was convinced power suppliers did not deliberately shut down their plants to cause the price of electricity rates to shoot up.

"Wala namang cross-ownership, eh. Ikaw kikita, hindi ako. Kung malaki ang planta ko, 600 megawatts, bakit ko iko-close down para doon sa 100 megawatts, eh, hindi naman ako ang may-ari niyan?" the senator said after the probe.

"Will you shut down your bus so I can run my jeepney? I don't think so. If you also own the jeepney, baka. Pero if you don't own the jeepney, why will you shut down your bus line?" he added.

AM radio was rife after the hearing with talk of Osmeña's relationship with the wealthy Lopez clan, which is heavily invested in the power industry. The senator is married to the former Bettina Mejia Lopez.

The Lopez Group owns First Gen Corp., which in turn operates the 1,000 MW Santa Rita Power Plant, one of the power plants on shutdown cited by Meralco.

Bettina is a granddaughter of former vice president Fernando Lopez Sr., the younger brother of industrialist Eugenio Lopez Sr., who led a group of Filipino investors in buying Meralco in 1962.

The Lopez Group, through First Philippine Holdings Corp., still owns 3.95 percent of Meralco after it sold its majority stake to Manuel V. Pangilinan's Metro Pacific Investments Corp. in 2012, based on company filings at the Philippine Stock Exchange.

But Osmeña said, "My wife's family has no interest in Lopez Holdings. That's the Eugenio side. She comes from the Fernando side. They split their properties in 1985 to 1989. Fernando got the properties in Negros and Iloilo plus some Meralco shares."

Last week, the Energy Regulatory Commission (ERC) allowed Meralco to increase electricity rates by P4.15 per kilowatt hour in three tranches from December 2013 to March 2014, the highest in the power utility's history.

During a hearing at the House of Representatives last week, the Department of Energy (DOE) said it was looking at the possibility that independent power suppliers colluded to simultaneously shut down power plants that led Meralco to raise its power rate.

Palace supports probe

Malacañang said it supports the Senate inquiry into the power rate adjustments, which Presidential Communications Operations Office head Herminio Coloma Jr. said "runs parallel" to the ongoing investigation of the committee composed of the Department of Justice, DOE, ERC, and the Philippine Electricity Market Corporation.

“We hope that the Senate inquiry will also lead to concrete proposals on how existing laws can be improved so that the protection of consumer welfare will be assured," Coloma said during a press briefing on Thursday.

“We reiterate the government’s determination to uphold and protect the citizens’ welfare and to implement our mandate under the law to prevent anti-competitive and market abuse practices," he added.

'Conflict of interest'

While avoiding uttering collusion, Trillanes insisted that the conflict of interest was obvious.

"Magpapatay ako rito, tapos magbebenta ako rito para mas malaki ang kita. Hindi ba maliwanag na conflict of interest iyon?" Trillanes said.

He asked the Philippine Electricity Market Corporation (PEMC), which administers the WESM, to provide the Senate with records on who profited from the spot market at the time of the shutdown.

The shutdown and the Meralco power rate hike were the results of a "market failure," Osmeña noted.

"If you read history, they've had this problem in US, New Zealand, and the UK. That's why you always have to change the rules and improve it," he said.

Osmeña proposed that government impose a lower price cap in the energy market to prevent another huge power rate increase. — with Danessa Rivera and Kimberly Jane Tan/RSJ/VS/HS/KBK, GMA News

Tags: meralco, powerratehike, powerrates