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Facebook: Laban Konsyumer Inc.
November 14, 2021
ATTY. AGNES VST DEVANADERA
Chairperson, Energy Regulatory Commission
Subject: Moto Propio investigation and /or Laban Konsyumer Inc. Complaint under Section 43 of the EPIRA with notice and hearing on the additional cost impact of the 24-day Malampaya shutdown to consumers with prayer for provisional authority to stop the collection of the additional costs from the consumers.
Dear Chairperson Devanadera and Members of the Commission,
As early as September 21, 2021, our consumer advocacy group, the Laban Konsyumer Inc. has alerted that the scheduled maintenance shutdown of the Malampaya Deepwater Gas to Power Project from October 2 to 25, 2021 would result in a series of spikes in the generation charge of distribution utilities and electric cooperatives and would be an additional burden to consumers.
We have proposed to the Senate Committee on Energy to compel the Malampaya consortium, and not the consumers, to bear the cost impact of the shutdown that effectively increased the cost of power from the
Wholesale Electricity Spot Market and Independent Power Producers
We even suggested that the Energy Regulatory Commission (ERC) and Department of Energy (DOE) be allowed to invoke their mandate under Presidential Proclamation 1218 or use their extraordinary powers to source funds and to shield consumers from these unwarranted additional costs.
All of the above suggestions had fallen on deaf ears and we in Laban Konsyumer Inc. are disappointed in the show of indifference by all of the above institutions to the prejudice of the consumers who will now absorb added costs on their power bills .
Manila Electric Company (Meralco) announced last Friday, November 12, 2021 a Php0.3256 per kilowatt-hour (kWh) hike in its overall rates mainly driven by a Php0.2911/kWh increase in the generation charge as a result of lesser available generation capacity in the WESM, and its IPPs’ shift to more expensive alternative fuel to ensure continuous supply and avert outages during the 24-day Malampaya maintenance shutdown.
Charges from IPPs increased by Php0.8186/kWh following First GasSta.Rita and San Lorenzo plants use of more expensive fuel to ensure supply and avert outages. The tight supply conditions in the Luzon grid also resulted in sustained high prices in the spot market and triggered the secondary price cap – which pushed WESM charges to increase by Php1.7073/kWh.
If we do not consider the Distribution Rate True-Up refund amounting to Php0.2761/kWh and the deferred collection of generation costs of about Php0.52/kWh arranged with suppliers, Meralco customers would have been forced to paying for more expensive electricity rates this month. The deferred charge of Php0.52/kWh will be billed to consumers on a staggered basis over a period of four months or until March 2022.
Before the maintenance shutdown, persistent gas supply restrictions have already pushed power rates to increase in the previous months, and consumers have been bearing these costs, as First Gas – Sta. Rita and San Lorenzo gas power plants’ opted to use more expensive alternative liquid fuels.
We read based on news report that First Gas’ Sta. Rita and San Lorenzo can pass on the costs of using alternative liquid fuels to its customers like Meralco. However, we have not read if the existing contracts do allow such pass on costs, as well as the legal basis of the pass on of costs and whether the pass on cost is the least cost, and more importantly, whether ERC had approved the pass on cost with due notices and hearings.
Under Section 43 of the EPIRA, we deem the ERC – given its rate making quasi-judicial authority to fix rates – to conduct a moto propio review and direct the generation companies and other parties involved to explain that these specific contract provisions are legal and the pass on cost the least cost to protect the consumers from bearing these unwanted costs. Foremost, in the light of the 2019 Supreme Court decision in ALYANSA NG BAYAN vs. ERC, DOE and Meralco , whether the mentioned generation companies conducted a competitive selection process to determine that the costs of the alternative fuel is the least cost to the consumers.
Moreover, a review of the supply contracts between the Malampaya consortium and the generation companies should also be investigated and to hold the Malampaya consortium accountable for the additional costs incurred because of the persistent gas restrictions and maintenance shutdowns.
Such hearings were held about 4 years ago, where I stood in the hearings of the ERC and where I opposed when ERC approved a one-time increase of Php0.66/kWh – which was billed in three installments – in Meralco generation charges as the alternative fuel used were much more expensive than that of the Malampaya gas. I took the position that a regular and announced regular maintainance shutdown should not be an instance of force majeuere even when the contracts then say so. It now is evident that ERC did not learn from these hearings and glaringly shows the indifference to consumer interests.
As precedent, the Metropolitan Waterworks and Sewerage System – Regulatory Office (MWSS-RO) – to protect consumers from any water rate increases – announced the imposition of a tariff freeze until December 31, 2022, and the removal of the Foreign Currency Differential Adjustment (FCDA) from the customer bills of Manila Water Co. Inc. and Maynilad Water Services, Inc., following the review and approval of the two concessionaires’ Revised Concession Agreements (RCA), which will take effect on November 18, 2021.1
We had written this letter to the Commission to immediately initiate moto propio hearings on the Meralco added costs and pending said hearings, to immediately issue a provisional authority to stop the implementation of the announced additional costs to ensure that consumers are no longer made to absorb the costs arising from the persistent gas restrictions and shutdowns of the Malampaya Deepwater Gas-to-Power Project.
The Commission can accept this letter from Laban Konsyumer Inc.
as a formal complaint against the announced power rate increases.
Very truly yours,