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May 14

Meralco past, present, and future

You can catch yesterday’s episode of The Explainer over at YouTube. Something went wrong with the equipment so we had to deviate from the usual format. The original script will eventually appear on The Explainer blog.

pic-05140245460692.jpgInquirer.net’s caption for the photo at left: A new witness provides this picture of President Gloria Macapagal-Arroyo and her husband Jose Miguel “Mike” Arroyo that he says was taken during a golf game at the Shenzhen Golf Club in Shenzhen, China on Nov. 2, 2006 followed by lunch with ZTE officials at the ZTE headquarters.

Old witness, now under oath: Lozada tells court Mike Defensor asked him to deny NBN scam . New witness, not yet under oath, but armed with a picture: New NBN-ZTE witness surfaces: Says Arroyo visited ZTE execs at headquarters. Same-same official response: Palace dares witness: So sue Arroyo in court.

Yesterday, I linked to two pre-martial law articles concerning Meralco that appeared in the Philippines Free Press (see Malacañang vs. Meralco and Political War and Martial Law? both circa 1971). This then brought up the question of the Marcos takeover of Meralco and the subsequent nullification of that takeover after the Edsa Revolution.

Senator Juan Ponce Enrile made fighting Meralco his campaign platform, and his latest broadside (see ‘Govt still owns Meralco’: Sen. Enrile says government can retake company) should be viewed in that context (as well as a residual loyalty to the propaganda justifying martial law and the conduct of the Marcos administration). It’s worth noting that Oscar Lopez published a full-page open letter addressed to the President in the papers today (see Lift taxes to lower power rates, Lopez tells Arroyo ). Previously, Lopez and Enrile exchanged open letters, although the Lopez one is no longer available on line.

Enrile’s assertion that the government can claim ownership of Meralco is distilled in an open letter dated October 4, 2002 and he provides links to supporting documents in an earlier open letter dated September 25, 2002. Of interest, as well, is a link to G.R. No. 95197. September 30, 1991, the Supreme Court’s decision to uphold the PCGG’s decision to lift its sequestration of Meralco shares, which I assume ratified the resumption of Lopez control over Meralco: and points to the ownership question having been determined in court.

What’s interesting is how, as Manuel Buencamino puts it, the government’s having a hard time mobilizing public support for what should be a cut-and-dried consumer interest case:

The Lopezes should have been an easy mark for a corrupt administration that is trying to look like it cares for the welfare of the masses. Unfortunately, the administration went into overkill. I guess Mrs. Arroyo didn’t think Winston Garcia could do it on his own, so she marshaled all her forces against the Lopezes. She even went to the extent of asking businessmen and the masses for help. Now, the Lopezes are underdogs.

Imagine that. One of the wealthiest, most powerful families in this class-warfare conscious society of ours has the sympathy of the public. Only the geniuses of Malacañang could have pulled off such a stunt.

Now, a public that has bitched but paid electric bills it never understood is learning that Manila Electric Co.’s (Meralco) portion of the bill is only for distribution of power. The bulk of the bill it pays goes to power generators like National Power Corp., transmission companies like you-know-whose, as well as value-added tax. So now, the public wants to know, why pick on Meralco when it’s the government that’s bleeding the public dry?

In Monday’s joint congressional committee hearing on the high cost of electricity, no one could give a straight answer to the question why electricity is so expensive and what can be done to bring down its cost.

Bong Austero bewails everyone’s inability to just get along and laments Congress getting into the act, and says a more problem-solving attitude behooves everyone concerned:

It doesn’t help, of course, that government has also been unclear about what its real agenda is – what it really wants and how, or up to what extent, it is willing to go to get what it wants on the issue around electricity rates. To complicate things further, people in government continue to sing in discordant voices. Is this really simply about lowering electricity rates, or is there more than meets the eye? Is a takeover of Meralco part of the plan? Is GSIS really acting on its own accord, or is the government behind the saber rattling? No one knows because no one is giving straight answers, which leads many people to suspect that it’s all a bluff.

It is also very tempting to picture Meralco as the proverbial big bad (greedy) wolf in this whole scheme of things. It is a profitable business enterprise, although, to be frank about it, not as profitable as it should be given its assets. It also happens to be one of the leaders in the industry in terms of compensation and benefits –  Meralco is renowned for having the lowest employee turnover rates in the country as hardly anyone resigns from the power firm because of its long history as a good provider for its employees.

But is Meralco passing on charges to its consumers in violation of legal and ethical rules? This is a valid question that Meralco refuses to answer in a straightforward manner. Meralco is preventing GSIS, which, together with other government agencies, owns 33 percent of the firm from taking a look at its books.

The truth is that Meralco has a lot of explaining to do to its stakeholders. It is benefiting from the generally low credibility of this administration, but there is a limit to how much it can shield itself by conjuring legal gobbledygook. At the end of the day, Meralco is answerable to consumers as a public corporation that thrives on its image as a responsible corporate citizen. It must aspire to be honorable even if others are not; even if the government is not.

All this talk about a takeover is really smoke-and-mirrors. Anyone out there who thinks a takeover is a viable option must be extremely naïve. The Lopezes may be sick and tired of all the regulatory restrictions that come with managing a public utility company, but aside from the fact that Meralco is a crown jewel in the family business empire, it also happens to be a firm that is closely tied in to the family’s history and legacy. Meralco is not just a business venture for the Lopezes. And anyone who thinks that the government can successfully conduct a corporate raid at a time when people – particularly businessmen – are edgy is out of his mind. It’s not going to happen.

So let’s keep the discussion focused on what is real, doable and relevant: Keeping electricity rates down. It’s an issue that is valid and which requires effective responses – both short-term and long-term.

I haven’t seen the hearings although one colleague ventured the opinion that it was a relief to see the Senators being relatively sober and buckling down to work for a change -and how the handling by Rep. Mikey Arroyo of his committee was not exactly inspiring. My colleague said that Meralco was tripped up by the revelation that it passes on its own electricity costs (i.e., the power consumption of Meralco as a corporation) to consumers; but that the larger revelation was that at every step of the generation and transmission process, the government keeps stepping and levying taxes, which bloats consumers’ bills.

For additional information, The Business Mirror‘s published 10 reasons why electricity bills are high, a primer prepared by the Freedom from Debt Coalition. Basically, companies that generate power and distribute it are in a cozy relationship, thanks to Ramos-era emergency legislation, but the result is this:

We pay for capacity we don’t use, and this is such a heavy burden on consumers that we economize on our use of electricity even further. However, the less we consume of electricity, the more we have to pay of unused capacity. This is a vicious cycle similar to a debt trap. Industries cannot survive such a setup. Poor consumers, even less so.

A vicious cycle indeed!

As At Midfield points out, what’s pissed off the public most, is having to pay for electricity they don’t consume.

In other news, the Inquirer editorial looks at the President and Esperon in Reward and punishment.

Overseas, in A Drastic Remedy Anne Applebaum lays out the case for international intervention in Burma. And in Dynasties gone nasty , Dan Kennedy (no relation to the subjects of his piece) looks at the parting of ways between the Kennedys and the Clintons.

Blogger-turned MP Jeff Ooi points to lobbying, Malaysian-style, in The Lobby Lobbyists.

Hans Kung, the noted theologian, asks whether lying should be considered an integral part of politics in The truth, the whole truth and nothing but the truth. Arianna Huffington engages in Probing a Political Paradox: Why the Discredited Right Still Sets the Agenda and Dominates the Debate.

In the blogopshere, James Fallows on Earthquake accounts from foreigners in Chengdu. See Slate’s Disaster in China for a roundup of how the online world came to grips with the news. RConversation appeals to bloggers to donate to earthquake relief and discusses her sources of online information on the China quake. And since 5.3 magnitude quake jolts Isabela , it’s time to review Philippines Earthquake Information.

fritzified.com looks at the proliferation of rice varieties in Thailand: aside from their advances in rice varieties, the manner in which Thai agriculture’s advanced by leaps and bounds points to the lack of innovation and imagination here at home, where coconut milk we buy locally comes from Thailand (which also edged us out in the case of products such as tamarinds, jackfruits, and a non-stinky variety of
Durian).

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  1. TonGuE-tWisTeD

    KG: “I reconfigure my stand, that it is Razon who has Transco and Psalm on the palm of his hand.

    You are correct either way. Walter Brown, who “represented” the Transco winners, is an expert in power transmission as Angie Reyes is an expert in Energy. Hahaha.

    He’s the dummy’s dummy.

  2. UP n student

    vic: Canada’s 5-cents per kwH rate is because hydroelectricity is cheap to produce. [Then add the fact that Canada is energy-rich “on all cylinders” — Canada ia a net-exporter of electricity, oil, and natural gas. Also has a population of only 34 million people, compared to Pinas with over 84million citizens.]
    Electricity is 5-cents per kwH for “Energy-rich” Canada; average of 14-cents per kwH for USA (it is about 22-cents per kwH for ConEd/New York City); and 25-cents per kwH for energy-“empty” Pinas.

    Singapore’s rate is Singapore$.2388 per kwH (residential).
    Belgium’s residential rate is 6 euroCents per kwh.

  3. UP n student

    But forget residential rates for one moment, and think the implications that eectricity (for factories, other industrial clients) is about half-price in Singapore than in Pinas!!! And it is even lower in Malaysia!!!

    [Think about that again, and if tears roll down your cheeks, I will understand.]

    Electricity Costs for Industrial Clients, 2006

    Source: OECD Energy Prices and Taxes, 1st Quarter 2007 (International Energy Agency);
    National Sources

    Country US$ per kWh
    France 0.05
    New Zealand 0.05
    Indonesia (2) 0.06
    Taiwan 0.06
    United States (4) 0.06
    Malaysia 0.06
    Australia (1,4) 0.06
    Korea 0.07
    Germany (3) 0.08
    United Kingdom (3) 0.09
    Singapore 0.09
    Hong Kong SAR 0.11
    Japan (3) 0.12
    Philippines 0.17

    Footnotes:
    Data for China, India and Thailand not available.
    1: Data are for 2004.
    2: Data are for 2003.
    3: Data are for 2005.

    —————-
    The Philippines has to go nuclear!!!

  4. UP n student

    While Philippine residential electricity cost is 25% higher than factory-electricity cost, the US residential electric cost is at least 300% higher than factory-electricity cost; Singapore residential electricity is more than double the electric rates charged to factories.

    Danding Cojuangco, Lucio Tan and Intel-CAVITE will approve, BUT I suspect GMA knows that Ellen Tordesillas, Randy David and Conrado de Quiros (also Satur Ocampo and Senator Trillanes) will NOT be supportive to a proposal to increase residential electricity rates by 15% in order to lower factory-electricity rates by 40%.

  5. UP n student

    But of course, if you ask Walden Bello, PhD, he’ll say that nuclear energy has higher cost-per-KwH than solar or wind or even oil. And this, Walden Bellow will claim, is even before factoring in the cost of disposing of the spent nuclear fuel rods or the risk of a Chernobyl. And if the World Bank or the IMF were to suggest that Pinas go nuclear, then Walden Bello, Phd will be even more belligerently against the “nuke” proposal independent of oil at USD$90 or oil at $500-a-barrel.

    On the other hand, a 1995 World Nuclear Association report, which distills recent independent studies, concludes that nuclear power has become, in most major countries, the least-cost means of producing added base-load electricity. Entitled The New Economics of Nuclear Power and prepared by an international team of industry experts, the WNA Report focuses on economic costs and attaches no weight to other attributes of nuclear energy.

    Total electricity costs for power plant construction and operation were calculated at two interest rates. At 10%, mid-range generating costs per kilowatt-hour are nuclear at 4.0 cents, coal at 4.7 cents, and natural gas at 5.1 cents. At a 5% interest rate, mid-range costs per kWh fall to nuclear at 2.6 cents, coal at 3.7 cents, and natural gas at 4.3 cents. Increased fossil fuel prices tilt this balance still further toward nuclear power.

  6. UP n student

    But not to forget the Pinas issues with Meralco.

  7. kapirasongtinik

    ITO TALAGA ANG DAHILAN NG LAHAT NG ITO. BAHALA NA SI LORD SA KANILANG LAHAT.

    http://www.philstar.com/index.php?Bansa&p=50&type=2&sec=54&aid=2008051864

    Bansa
    Meralco sinusulot ng 3 GMA crony

    Monday, May 19, 2008

    Tatlong “crony” umano ni Presidente Gloria Arroyo ang nag-aagawan sa pag-take-over sa Meralco.

    Ayon kay Bayan Muna Partylist Rep. Teddy Casino ang tatlong ito ang itinu­ turong “utak” sa demolisyon sa Meralco para magka­roon ng dahilan ng government take-over sa pinaka­malaking distribution utility sa bansa at hatiin ito sa tatlong franchise area.

    Ang plano ng tatlong malalaking pamilya ay ibinulgar matapos parata­ngan ni Casino na ang “Cebu Mafia” ang nasa likod ng mga serye ng atake sa pamilya Lopez at sa Meralco. Ginagamit umano ng mga pamilya na ito si Government Service Insurance System (GSIS) president and general manager Winston Garcia upang pataasin ang stake nito sa Meralco at atakihin ang mga polisiya ng nasabing distribution utility.

    “Clearly, Winston Garcia has a track record of using his position in GSIS to serve the interests of the Aboitiz group,” ayon naman kay Alliance of Concerned Teachers (ACT) president Antonio Tinio.

    Tinukoy din ni Tinio na ang pamilya Aboitiz ay nasa power generation at distribution din, banking, shipping at kilalang supporter at malapit sa Arroyo administration.

    Bukod sa pamilyang ito ay pinapaboran din ng Malakanyang ang Alsons Group na kon­tro­lado na­man ng pamil­yang Alcan­tara. Si Tomas Alcan­tara ay kilalang ba­hagi ng kit­chen Cabinet ni Pangu­long Arroyo at siya uma­nong tu­matayong lider ng bulong brigade ng Napocor mafia.

    Ayon sa mga sources sa industriya ng kuryente at opisyales ng Napocor, ang dalawang grupong ito ang nag-eengganyo sa Mala­ kan­yang na awayin ang kasalukuyang management ng Meralco sa pa­mamagitan ng pagkakalat ng intriga na ang mga Lopez ang sanhi ng mataas na presyo ng kuryente at hindi ang 12 porsyentong EVAT at ang mataas na singil ng Napocor.

    Idinagdag pa nila na ang mga Aboitiz at Alcan­tara ay naglalaway din sa mga power generating plants na pag-aari ng mga independent power producers (IPP) at gagamitin ang impluwensya nila kay Arroyo upang sungkitin ang mga ito. Bukod sa pagiging kamag-anak ni First Gentleman Mike Arroyo, isa sa mga lalaking Aboitiz ay matalik na kaibi­gan ni Pangulong Arroyo.

    Sinasabi rin ng mga sources sa Philippine Stock Exchange (PSE) na ang nangangasiwa sa pamimili ng Meralco shares ay Vivian Yuchengco, isang stock broker at opisyal ng PSE, at ang ATR Kim Eng ang siya namang dinadaanan ng mga transaksyon.

    Upang mapabilis ang paghawan ng Meralco shares, si Diosdado “Bu­boy” Macapagal at si En­rique Razon ng ICTSI, ang ingatyaman ng partido ni Arroyo, ang siyang gina­gawa ngayong bukal ng pera para mamili ng Meralco shares.

    Kinondena na ng mga kongresista ang ginaga­wang maniobra ni Garcia at ang sobrang pakikialam nito sa usapin ng Meralco ga­yong hindi niya maipali­wanag kung saan nauuwi ang salapi ng GSIS at kung bakit sangkaterbang rek­lamo na ang ginawa ng mga pensyonado at ng mga kawani na pamahalaan na bumubuhay sa institusyong ito.

    Lumilitaw din na bukod pa sa pagiging presidente at General Manager ng GSIS, si Garcia ay umuupo at sumasahod din ng milyun-milyong piso sa ibat-ibang kumpanya na may investment ang GSIS.

  8. john

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  9. JohnyDude

    What this thing about the sudden benevolence of government in trying to hold at bay electric power is an earnest attempt by Arroyo Canine Loyalist to Deodorize the Deities. If you think of the arroyo presidency, you can only remember one thing… corruption from them and their cronies… gratuitous patronage politics… hard times… lots of taxes… and dirty voting systems not to mention her lawyer hubby who contrives the the foulest legislations like EO464.To deodorize the stink… they have hypocritically contrive to pretend to promise lower power rates and free text messages to the angry public… smoke and mirrors to quell the angry lust to sue them and bring them all to jail after their term expries… My opinion.

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