MRT/LRT rate hike unfair and unjust – labor group

PRESS RELEASE

12 December 2013

The Partido ng Manggagawa (PM) renewed its call for the government to forego its plan to raise the tariff rates in the MRT and LRT systems by additional P10 during a public consultations held today.

PM spokesperson Wilson Fortaleza, said that while workers are very much interested in making their daily train travel safer and more comfortable through improved services, removing the state subsidy to millions of commuters through a fare hike further deepens the inequality and poverty in this country, notwithstanding the failure of the government to bare the real score justifying the increase.

He likewise complained that the public hearing today can never be intelligent and participatory since none of the documents that they were asking from DOTC since August this year were provided before its conduct.

Nevertheless, PM participated in the hearing to make its opposition official while several of its members holding “Palag sa P10 dagdag!” placards held a picket outside the LRT 2 depo in Pasig City where the consultation is being held.

In the consultation, PM had raised the following grounds to back their opposition to the planned P10 fare hike:

1.       The real amount of subsidy to MRT-LRT consumers (P45 for MRT and 25 for LRT) as presented by President Aquino during his State of the Nation Address this year was erroneous as he compared the cost of subsidy to the rates of air-conditioned buses in Edsa. The group’s own estimate puts the figure to just P13 per passenger ride.

2.     It is highly unfair and unequal to remove the annual P6-B subsidy to some 400 million train riders while providing the few VIP’s in government with at least P8-B travel subsidy, including the P1-M per day travel subsidy to the President and P180,000 to the DOTC secretary. PM asserts that subsidy is a necessary social tool amid inequality and poverty in the country.

3.     Ordinary workers will be mostly affected by the fare hike.  Based on the 2007 Mega Manila Public Transport Study, 67.7% MRT and LRT users earn less the P10,000 per month or less than the mandated minimum wage while another 15%, most probably students, are ‘without income’ in their economic profile.

4.   Costs borne out of onerous contracts, corporate fraud, or flawed executive decisions should not be passed on to consumers. The government should rather conduct an honest-to-goodness inquiry into allegations that the private consortium MRTC and other parties have defrauded the government and the people under the onerous BLT contract.  If such is proven, PM demands that the BLT contract rescinded at no further cost to the government.  Any liabilities accrued from such onerous or fraudulent transactions must be shared by the contracting parties and not passed on to commuters.

5.  The fare hike is a prelude to privatization.  PM maintains its position that vital public utilities such as the MRT/LRT system remain in the public sphere.

The group argued that privatization is neither the tuwid na daan, nor the way towards inclusive growth. 

“The country has had enough of devastating privatization experience in vital industries such as power and water.  With the latest hike in Meralco rates of P4.15/kwh, we can now pride ourselves as a third world country with power rates that of the first world,” concluded Fortaleza.

Advisory: Workers to picket LRT/MRT fare hike hearing

WHAT: Picket protest vs. proposed LRT/MRT fare hike

WHEN: Today, December 12, 1:30 pm

WHERE: LRT 2 Santolan, Pasig station/depot

DETAILS: Members of the Partido ng Manggagawa will have a picket-protest while their representatives will present a critique of the proposed LRT/MRT fare hike. The LRT/MRT fare hike hearing is schedule tomorrow at 2:00 pm. In its presentation, PM will assert that the fare hike is unjust and unnecessary.

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.