Workers want full prohibition not a compromise deal on power rate hike

PRESS RELEASE

NAGKAISA

20 March 2014

 Organized labor under Nagkaisa is insisting for no less than the full prohibition of the December 2013 and January 2014 rate hike, rejecting in effect the Philippine Electricity Market Corporation’s (PEMC) recomputed rate that is 80 percent lower than the approved market rate in December and January.

 PEMC, which operates the Wholesale Electricity Spot Market (WESM), said on Tuesday that it had finished its recalculation of market prices in compliance with the Energy Regulatory Commission (ERC) order of March 3.  For the December 2013 billing, it set the new spot market rates at P6.007 (76.35 percent lower) than the P25.404 per kWh, and P6.246 (77.98 percent lower) than the original P28.367 per kWh for the billing month of January 2014. 

 “The numbers are out and PEMC’s recomputed rates bared all the elements of market failure.  We insist that any residual cost coming from this failure must be deemed unjust and therefore should not be passed on to consumers,” said Wilson Fortaleza of Nagkaisa power team. 

 Fortaleza, who is also the spokesperson of Partido ng Manggagawa (PM), argued further that in this particular case, the market failure was also a result of regulatory failure the more it should not be borne by the consumers.

 He pointed specifically to the failures of the ERC and PEMC to regulate the market despite the expected tightness in supply due to the Malampaya shutdown and also being aware of official reports citing repeated occurrence of market abuse since WESM started operating in Luzon in 2006; and the failure on the part of the Department of Energy (DoE) to ensure reliable supply of power and impose sanctions on erring power plants. 

 Tomorrow, Nagkaisa and the Power to the People (P2P) network will stage a picket rally at the PEMC to call for the suspension of WESM operations, saying it is not the consumers but the rich owners of generation and distribution companies who profitably gain from this fraudulent trading scheme.

There are also reports that the PEMC Board, who are not independent but made up of the players themselves, receives fat compensations and other perks, including brand new service vehicles.

“We challenge the government to tell the people the truth that WESM won’t work in a very small and highly concentrated market ruled by certified predators in the power industry,” concluded Fortaleza.

ERC asked to fully void rate hike, suspend WESM operations

PRESS RELEASE

Nagkaisa!

Labor groups under the Nagkaisa coalition is asking the Energy Regulatory Commission (ERC) to fully void all pending rate hikes in Luzon that were affected by ‘market failure’ during the maintenance shutdown of Malampaya gas platform from November to December last year. 

In addition the group is also calling for the suspension of the Wholesale Electricity Spot Market (WESM) operations to protect consumers from predatory pricing to one of the most essential of human needs – electricity. 

The call came after the ERC, invoking police powers, ordered the Philippine Electricity Market Corporation (PEMC) to ‘recalculate’ the WESM prices during the said period.

“Now that the ERC begins to invoke police powers in dealing with market failures we then demand that it utilizes them to the max.  If not then its order for recalculation of WESM prices in December can be viewed as mere publicity stunt,” said Wilson Fortaleza of Nagkaisa power team. 

The group is particularly cautious about a recalculation that may result to mere reduction in rate rather than in complete prohibition of the amount applied which in the case of Meralco totalled P4.15/kWh. ERC Executive Director Saturnino Juan has already indicated that the recalculation may result to the reduction of rates by more than half.  

Fortaleza, who is also the spokesperson of Partido ng Manggagawa (PM), reminded the ERC of the principle stated previously by Malacanang that unjust prices resulting from wrong commercial decisions or market failure cannot be passed on to or borne by the consumers.

“We are glad that at last the ERC has finally found the elements of market failure that it chooses to ignore during EPIRA’s 12 years of implementation,” said Fortaleza.

According to the group, WESM itself is a failure since it began operating in 2006.  By concept it is supposed to be at WESM where we can buy the cheapest electricity since the product is sold here at marginal cost of declared excess capacities of power plants. 

In July 2006 the inaugural price at WESM was P2.00/kWh.  During the Malampaya shutdown between November and December last year prices at WESM breached the maximum offer cap of P62.00/kWh.

“Kung hindi ito krimen ano ang tawag dito?  The market is supposed to be ‘reasonable’, ‘rational’ and ‘competitive’, to borrow words from ERC.  But it is not. It never was under EPIRA,” said Fortaleza, explaining that a highly concentrated electricity market in the country can never be reasonable as trading is controlled by pivotal plants owned by certified predators in the power industry.

Tomorrow Nagkaisa is organizing a picket at the offices of the ERC in Ortigas Center to press for the full voiding of Meralco and other pending applications for rate hike within the Luzon grid.  It will also call for the suspension of WESM operations.