Daily TribuneA study by the International Energy Consultants has concluded that Meralco’s rates are fair and reasonable since they reflect the actual cost compared to other countries whose power costs are heavily subsidized by their governments
While congressional representatives sometimes take the floor to transmit specialized information to deliver their so-called privileged speech, they also use the floor to send political messages by framing a party or an issue to the public. That is called grandstanding.
The Philippines' political landscape, like many other democracies, provides an opportunity for legislators to focus on making political points rather than making policy.
Santa Rosa City Rep. Dan Fernandez recently took the floor and claimed that Meralco is overcharging its customers.
Expectedly, Meralco denied the claim, describing it as baseless, with the distribution utility's first vice president and regulatory management head, Atty. Jose Ronald Valles refuted the overcharging allegations, insisting its rates undergo a review and confirmation process to ensure that they are fair and reasonable, just like other distributors.
"I would like to reiterate that as a highly regulated entity, Meralco strictly adheres to the rules governing its operations and franchise and the rates we implement always have prior approval from the regulator.
A testament to the strict review, these rates are still subject to periodic confirmation process by the ERC," Valles said.
"The proper venue for discussing the refund claims is the ERC, which has the rate-setting power, and the regulator has already decided on a refund totaling P48 billion, which Meralco implemented promptly," he added.
As a utility distributor, Meralco reminded the good congressman that Meralco is a regulated business with no power to set its rates unilaterally.
The Energy Regulatory Commission, the regulatory body in check of power distributors, sets the rates on electricity bills charged to consumers "following a very stringent and transparent process of public hearings," Meralco stated.
Unfortunately, the lawmaker is focusing on Meralco. When records show that Meralco is the only private distribution utility, or DU, that has made a distribution refund in compliance with ERC directive, Meralco added.
The power distributor also dismissed the points raised by Fernandez that Meralco has an "extremely high weighted average cost of capital."
Again, Meralco pointed out the setting of the weighted average cost of capital (WACC) is a function of the ERC. Meralco's last approved WACC is the lowest WACC given by the regulator under the Performance-Based Regulation, or PBR, whether for NGCP or a private DU.
The WACC was determined based on rules that underwent public consultation and thorough review by ERC. The company has not had a determined WACC since July 2015 because there was no completed rate reset during that regulatory period until now.
A study by the International Energy Consultants has concluded that Meralco's rates are fair and reasonable since they reflect the actual cost compared to other countries whose power costs are heavily subsidized by their governments.
This resulted from the company's constant efforts to source the least cost-available supply through, among others, the conduct of a transparent, competitive selection process, or CSP.
Before conducting CSP, Meralco also secures approval from the Department of Energy for its Power Supply Procurement Plan and the Terms of Reference of its proposed CSP to ensure that these are aligned with the requirements and standards set by the government.
"This is contrary to the baseless and malicious claims that Meralco's TOR is tailor-fitted to favor select generation companies," Valles said.
"Our past CSPs conducted are proof that no such tailor-fitting is happening, precisely because the TOR and other bidding documents are required to comply with existing policies of DOE and regulations of ERC, and the resulting Power Supply Agreement needs to be approved by the regulator," he added.
While there is no precise study to conclude politicians do so expecting to gain more votes in the following election, the messaging efforts of some legislators translate to increased vote share during elections.
This observation suggests that grandstanding remarks are an effective electoral strategy, although often seen as cheap talk. Grandstanding legislators are sometimes rewarded with more funding from donors.
Indeed, that grandstanding in Congress has become so cheap that congressional hearings are often referred to as "in aid of election" rather than "in aid of legislation."
