P4.15/kWh power hike is bonus for doing nothing – labor group

PRESS RELEASE

09 December 2013

Just for doing nothing, Meralco and several generation companies (Gencos) were rewarded a whooping bonus of P4.15/kWh, the labor group Partido ng Manggagawa (PM) said in a statement.

 

According to PM, the impending increase, the highest in the country’s history and in the world, could have been avoided had Meralco and gencos planned for replacement power to address the expected load gap from Malampaya’s scheduled regular maintenance.

 

“But in a privatized industry regime under EPIRA, power utilities earn handsome profit just by doing nothing and even during times of calamities. Power utilities like Meralco control the whole industry from generation to transmission to distribution and can thus exercise monopoly pricing limited only by what the market can absorb, meaning what the consumers are willing to pay in exorbitant electricity costs,” said PM spokesman Wilson Fortaleza.

 

About 2,700 MW of power from Sta. Rita, San Lorenzo, and Ilijan plants were lost due to the shutdown of Malampaya. Luzon needs at least 6,000 MW to meet its peak load demand.

 

“Imagine a deficit of 2,700 megawatt, an anticipated crisis, yet Meralco and Gencos did nothing but wait for the billing period and impose their new and adjusted rates,” lamented Fortaleza.

 

The group, which joined the Freedom from Debt Coalition and Nagkaisa in a picket held at the ERC this morning, added that the crisis is made worse when the government, particularly the Department of Energy (DoE) and the Energy Regulatory Commission (ERC), “stood idle in the face of the surging tsunami of price hikes in the electricity market.”  The government should have disallowed other power plants to shutdown simultaneously with Malampaya to ensure stability of supply in the Luzon grid.

 

Fortaleza explained that replacement power is a global template for every power supply contract since outages, both regular and forced, is routine in the power system. In many PSA’s the obligation to find replacement power or plan for alternative set up belongs to Gencos since they have contracts to comply in ensuring reliable supply of power to their customers. 

 

Unfortunately, said Fortaleza, most of ERC-approved PSAs assigned replacement power to Meralco and the Wholesale Electricity Spot Market (WESM), where spot prices which as of yesterday range from P17/kWh to P52/kWh.

 

Fortaleza added that Gencos have options to avoid the instability and he cited the case of Sta. Rita and San Lorenzo.  Based on First Gen’s submission to the Philippine Stocks Exchange (PSE) on March 20, 2012, it explained that,“Although the Sta. Rita plant is intended to operate on natural gas, if delivery of natural gas is delayed or interrupted for any reason, the plant has the ability to run on liquid fuel for as long as necessary without adverse impact to its operation or revenues.” The same business model goes with San Lorenzo.

 

Now did Gencos, Meralco, and the government considered this option?

 

“No, they just did nothing,” concluded Fortaleza.

Highest power rate hike not acceptable, unjust

Press Release

December 7, 2013

The Partido ng Manggagawa, a member of labor coalition Nagkaisa, rejects the impending power rate hike of P4.15/kwh in the Meralco area based on the following grounds:

1.    This is unconscionable, an act of economic terror amid calamities, deepening inequality and poverty in the country.

2.    This is unjust.  When imposed, the P4.15 rate adjustment will be the highest in Philippine history.  This will also be the highest residential rate in the world.

3.    This is unfair.  Workers in NCR were only granted P10 per day or P260 per month under Wage Order No. 18.  The P4.15/kwh increase in Meralco rate is additional P830 burden for households consuming 200 kwh per month.

4.    The rate hike, on the contrary, cannot be imposed arbitrarily by Meralco as explained earlier by Malacanang.  Meralco has to secure the approval of the Energy Regulatory Commission (ERC).

5.    The steep hike could have been prevented.  The Malampaya shutdown is not due to force majeure.  It is part of regular biannual maintenance therefore expected and has already been factored in in Meralco’s power supply agreements (PSA) with its suppliers, particularly First Gas’ Sta. Rita and San Lorenzo and Kepco Ilijan.  The PSA should have included provisions on “replacement power”.

Based on First Gen’s submission to the Philippine Stocks Exchange (PSE) on March 20, 2012, it was explained that,“Although the Sta. Rita plant is intended to operate on natural gas, if delivery of natural gas is delayed or interrupted for any reason, the plant has the ability to run on liquid fuel for as long as necessary without adverse impact to its operation or revenues.” The same business model goes with San Lorenzo.

6.    This is market failure.   Collusion among generation companies, which has been the name of the game under EPIRA, is most possible after the Malampaya shutdown to drive prices at the Wholesale Electricity Spot Market (WESM) up.

7.    This is failure in governance.  The government, particularly the Department of Energy, should not have allowed this artificial shortage as a result of simultaneous shutdowns of power plants following the shutdown of Malampaya. 

Inihahalintulad namin ang delubyong ito bilang panibagong kalamidad dala ng kasakiman ng mga kumpanya ng kuryente na walang pinipiling panahon para gawin ang kanilang pandaramobong, at sa gubyerno na sa lahat ng panahon ay natutulog sa pansitan.

Predatory MERALCO price hike slammed by NAGKAISA

Press Release

December 6, 2013

Nagkaisa

Meralco already insured against maintenance shutdowns, Power Supply Agreements cover Meralco risk with power providers

The NAGKAISA labor coalition denounced the December P3.50 per kWh rate increase as an immoral imposition and an unconscionable predatory move in the face of our massive national suffering and despair. Instead of moderating its greed, MERALCO and the generating companies First Gas (Sta. Rita), South Premier Power Corporation (Ilijan) and Therma Mobile, Inc. (San Lorenzo) – which are its cohorts – chose to further impoverish hardworking Filipinos and complicate the already difficult road to national recovery.

MERALCO residential rates currently pegged at Php12.46 per kWh will now be hiked to Php15.96 per kWh, representing a 28% increase. The new rate is equivalent to US$ 37 cents per kWh. That is the highest residential rate, bar none, in the WORLD. Its consequences for families coping with the triple whammy of NAPOLES-scale corruption, spiralling oil and LPG prices, and natural calamities are immense.

For industry, where power rates already constitute 45% to 55% of operational costs, particularly for Small and Medium Enterprises (SMEs) and BPOs, the rate increase will greatly affect their business viability. For the national economy, it compromises our regional competitiveness in the ASEAN and will be a disincentive to locators remaining and to the entry of foreign direct investments.

NAGKAISA pointed out that before a new tariff formula called Performance-Based Rate-making (PBR) was implemented by the Energy Regulatory Commission (ERC), MERALCO only made an annual net profit ranging from Php3 to Php6 billion. Under PBR in 2012, MERALCO declared a net income of Php16.25 billion. For 2013 MERALCO expects a consolidated net income of Php17 billion. NAGKAISA decried this overly-generous rate of return allowed by ERC which allowed MERALCO to earn in just one year what it used to take them 3 years to earn.

NAGKAISA also countered the MERALCO assertion that the maintenance work on Malampaya and resorting to the more expensive sources of WESM would result in a power rate increase of anywhere from Php2 per kWh to Php3.50 per kWh. NAGKAISA argues the following:

·       The scheduled maintenance of Malampaya and other plants should or was already imputed in the MERALCO rate. If MERALCO management did not prudently build this into their rate then the owners and management of MERALCO should bear the loss, not the consumers. The maintenance was scheduled way ahead of time and the cost consequences should already have been placed in the power supply agreements which MERALCO entered into.

·       If there is a forced outage, MERALCO and the power producers First Gas (Santa Rita), Therma Mobile (San Lorenzo) and SPPC (Ilijan) from which MERALCO buys its power are insured against possible spikes in costs. Why is MERALCO passing the burden to consumers when there is insurance for forced outages. Again, if MERALCO did not enter into any form of insurance or contract stipulation as to who will pay for the alternative supply in case of an outage (the alternative supply in this case is WESM), then MERALCO again has acted imprudently and should bear the cost of its imprudence.

·       MALAMPAYA is providing only a certain percentage of the power needs of MERALCO. Why are the entire costs of the downtime of Malampaya being borne by MERALCO consumers? How did it amount to a possible P3.50 per kWh increase?

·       Why has the ERC as regulator not stepped-in to validate the current claims of MERALCO when there are Commission on Audit findings of overcollection in 2004 and 2007 in the generation charges of MERALCO? Does ERC take the manifestations of MERALCO and the generation players as gospel truth?

·       Why has the DOE – or the Palace for that matter – not addressed the possibility of resorting to the MALAMPAYA FUND to reduce rates and to cushion the impact if indeed there is a problem not anticipated in the power supply contracts entered into between MERALCO and the generators?

THE TRUTH OF THE MATTER IS THAT CONSUMERS ARE BEING MADE TO ADVANCE WHAT THE MERALCO WILL BE COLLECTING FROM ITS INSURERS EVENTUALLY. When MERALCO entered into its supply contracts, it inputted and covered against all projected events and the cost consequences. These costs were built into the original power supply agreement and are therefore built into the rate. Further, MERALCO insured against all risks. MERALCO IS TRYING TO COLLECT FROM ITS CUSTOMERS BECAUSE IT THINKS IT CAN FOOL THEM. ENOUGH IS ENOUGH.

NAGKAISA has warned that the Wholesale Electricity Supply Market (WESM) does not and cannot work where you have insufficient supply. Given inadequate power supply, there will be no competition to drive down rates because it will be a sellers market. NAGKAISA, as a disinterested party, had already warned the government of this in its meetings with the economic cluster of the Cabinet in April and May 2013. NAGKAISA notes that notwithstanding the notable failure of WESM to bring down electricity prices in Luzon and Visayas, the DOE is currently piloting it in Mindanao where power supply is also inadequate.

NAGKAISA warns that the general public are beginning to realize that the Palace is a defender of MERALCO by its statements that there is “regularity” to the rate increase because it was “in accordance with the law.” NAGKAISA reminds the Palace that it is not for the NAGKAISA or the Palace nor the DOE to determine regularity. That is a function that clearly lies with the ERC. It is the ERC which must determine the course of action to be taken: to set the increase aside or to cushion its impact through rate increases staggered over a longer period of time.

NAGKAISA also reminds the Palace that perhaps something is deadly wrong with the EPIRA Law and that it is time to take a second hard look on how to ensure affordable power and supply that is reliable. We reiterate our call for the creation of a Presidential Task Force to bring down power rates. The Palace should talk to disinterested parties – not the power cartel.

Finally, NAGKAISA reminds the Palace that if in its fight against corruption, it brought down an Ombudsman and a Chief Justice, it can certainly do something about a certain ERC Chairperson named Ducut. Consumer and labor representation in the ERC is long overdue.

Ilustrado class failed this nation – labor group

PRESS RELEASE

30 November 2013

 

The ilustrado class failed this nation, the labor group Partido ng Manggagawa (PM) declared on the 150^th birth anniversary of the plebeian hero, Andres Bonifacio. 

The group, which joined the broader labor coalition Nagkaisa! in a march to Mendiola today, compared the country’s present rulers -- the corrupt, traditional politicians (trapos)  -- to that of the ilustrados and “lahi ni Legazpi” described then by Bonifacio in his “Ang Dapat Mabatid ng mga Tagalog”, as a race we allowed to live “most bountifully and lavishly” while we ourselves suffered deprivation and hunger.

PM Chair Renato Magtubo made this parallelism in the face of unaddressed problems of poverty and inequality in the country under the more than a century of uninterrupted rule of elite regimes. “Today, an elite club of 50 richest Pinoys controls more than half of our nation’s wealth, their combined wealth equivalent to a year’s income of 31 million minimum wage earners. While the elite live bountifully and lavishly, majority of our people remain jobless, homeless and hungry,” stated Magtubo.

Bonifacio day rallies were also staged by PM in Cebu City where workers marched around downtown Colon and in Bacolod where factory and agricultural workers held a program at the city plaza.

The labor leader added that the gaping inequality and deepening poverty in the country is made worse by the devastating impacts of climate crisis and the government’s inability to effectively respond to them as manifested in the case of Yolanda.

Magtubo pointed out further that even the “haring bayan” or “sovereign people” concept which was the idea of democratic rule by Bonifacio during that time, remains a dream as the country continues to be ruled by ilustrados which metamorphosed into what is called today as “trapos.”

“These trapos do not have the vision of Bonifacio’s ‘kasaganaan and kaginhawahan’ (abundance and prosperity) as their concerns revolve around selfish greed,” said Magtubo, pointing to the high level corruption scandals involving high officials of the land. 

The labor group averred that the situation could have been different today had Bonifacio and the Katipunan movement gained complete freedom from colonial powers and democratic institutions were formed and truly ruled by the sovereign people.

“Unfortunately the old colonialism was only supplanted by modern globalization in which processes are captured by imperialist nations.  And the country’s rulers just changed clothes,” explained Magtubo.

The struggle, he said, continues with workers willing to carry on with the tasks of realizing Katipunan’s vision of kalayaan, kasaganaan, at kaginhawahan.

Labor urges gov’t to make employment, building new communities a priority in post-Yolanda rehab

PRESS RELEASE

28 November 2013

Tacloban City and the rest of typhoon-ravaged places in Regions 8, 7 and 6 must be rehabilitated and rebuilt based on a framework of building the people’s capacity to survive calamities and live a secure and dignified life thereafter, the labor group Partido ng Manggagawa (PM) said in a statement.

“A new model of community must be built out of the ruins of Yolanda. Employment must be a top priority since it is regular income that gives people a sense of long-term security and a life of dignity,” said PM spokesman Wilson Fortaleza. 

Fortaleza pointed out that since the private sector where the government completely relies on job generation is not capable, prior to and after Yolanda, of providing employment to the poor people of these particular regions, the rehabilitation plan must therefore include a medium to long-term public employment program where the State plays a key role. 

“Such program may include social service activities such as healthcare, climate-resilient mass housing projects, education and skills training, as well as building new, smart and renewable power and transport systems that would create green jobs, among others,” added Fortaleza. 

The labor group likewise stressed that if “Yolanda” is the “new normal” vis-à-vis climate change, then the government must not stay on a normal mode of asking, repacking, and delivering relief goods from northern countries in the face of 20 Yolandas in every semester of the whole year.

“There must be a shift – from relief operations to building prepared and secured communities,” said Fortaleza.

He added that northern countries whose high carbon emissions produce many Yolandas in the Pacific must be made to pay for a climate debt they owe to poor nations such as the Philippines – the compensation coming from them must be utilized for building new kind of communities.  

However, the labor group finds it very unfortunate that this country had been, up to this moment, is under the rule of the Ilustrado class whose vision of the country cannot go beyond the insular demand of their pockets. 

“It’s very clear that government’s failure in Yolanda, both national and local, is the failure of trapo politics,” said Fortaleza

On Saturday, November 30 and the 150^th birth anniversary of working class hero Andres Bonifacio, Partido ng Manggagawa will join the NAGKAISA! coalition march to Mendiola to raise the many working class issues that past and present governments failed to address, including climate crisis.