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Zarate chides Meralco for ‘self-dealing’

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By Ellson Quismorio

Officials of power distribution giant Meralco ought to re-read the results of the House probe on the seven burdensome power supply agreements (PSAs) that it sought with its own subsidiaries, Bayan Muna Party-List Rep. Carlos Zarate said Tuesday.

Rep. Carlos Isagani Zarate (Bayan Muna Party list Facebook page / MANILA BULLETIN)

Rep. Carlos Isagani Zarate
(Bayan Muna Party list FACEBOOK / MANILA BULLETIN)

This, as the lawyer-solon chided Meralco for claiming that there was no Philippine law or policy that prevents affiliated generation companies (gencos) from participating in the bidding for the supply requirements of distribution utilities.

Zarate noted that, during an inquiry in the previous 17th Congress, the House found out that Meralco awarded to its own affiliated gencos, sans any bidding, power supply contracts containing P900 billion in overpriced power rates that Meralco would pay to itself through its affiliated gencos.

“The House investigation caught Meralco with its hands in the cookie jar, yet Meralco is feigning innocence about it,” said Zarate, who led a press conference with fellow Makabayan congressmen.

“The Ombudsman also suspended top Energy Regulatory Commission (ERC) officials for allowing Meralco to award the same PSAs to the Meralco gencos without conducting a bidding under competitive selection process (CSP). Yet Meralco claims that such anti-competitive behavior is not prohibited,” he added.

The seven PSAs or power contracts have to do with the proposed construction of coal-fired plants under questionable terms. For one, Bayan Muna claimed that the combined requirements Meralco awarded to the favored gencos at 3,551 megawatts would be like cornering the electricity requirements of both Visayas and Mindanao.

“The Ombudsman even found probable cause to charge the same ERC officials for violating the anti-graft law after they extended ‘unwarranted benefits to [Meralco] and other companies by exempting them from the coverage of the CSP requirement,'” Zarate said.

Zarate further asked Meralco executives “to think about the obligations set by Congress in renewing the company’s franchise to see if overpricing power rates by P1.55 per kilowatt-hour–as what Meralco tried under the aborted PSAs–conformed with the company’s franchise obligation to get in “the least cost manner” electricity it distributes to its customers.

“Meralco tried to award the PSAs without bidding under rules of the CSP, which should have required the company to get at least two offers before awarding a PSA,” added the Davao-based solon.

Last May, the Supreme Court (SC) rejected the onerous PSAs and ruled that all power contracts submitted by distribution utilities with the Energy Regulatory Commission (ERC) on or after June 30, 2015 must undergo the required CSP.

“Fortunately, the Supreme Court stopped the award. In blocking the PSAs, the High Tribunal even went to the extent of castigating the ERC for a CSP postponement that ‘unconscionably placed this public purpose in deep freeze for at least 20 years.’ But Meralco thinks it did nothing wrong!

“We are not singling out Meralco per se but we are urging all other electric cooperatives or power dustributors who did not follow the CSP requirements not to bid for the PSAs and we should be vigilant in guarding them,” reckoned Zarate.

The seven PSAs have a duration of 20 to 21 years.

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