The onerous contracts entered into by the Ramos government with the independent power producers (IPPs) are the "root cause of high power rates," the Freedom from Debt coalition said.

FDC media campaigner Bobby Diciembre told abs-cbnNews.com/Newsbreak that the power purchase agreements by government with IPPs is primarily the culprit for the high cost of power and that President Arroyo should take the blame as well for failing to renegotiate these the past seven years.

Diciembre said IPP contracts are clearly disadvantageous as they oblige government to pay for the contracted generation capacity of IPPs whether such was consumed or not.

Consumers in turn are made to shoulder the costs of these contracts.

Consumer groups, including FDC, have asked government to renegotiate the IPP contracts but the "pleas were ignored by the President," Diciembre said.

ERC hearing

Meanwhile, Tuesday’s (May 6) hearing on the government omnibus petition before the Energy Regulatory Commission to compel Meralco to lower its electric rates will be attended by consumer groups, abs-cbnNews.com/Newsbreak learned. (Disclosure: Abs-cbnNews.com is the online news department of ABS Interactive Inc., a member of the Lopez group of companies.)

A newly-formed multi-sectoral electric consumer organization, EmPOWER Consumers, in a letter dated April 22, sought an audience with the ERC and other industry players Napocor, Meralco, National Transmission Corp. (TransCo), and Power Sector Assets and Liabilities Management Corp. (Psalm), "regarding the recent development in the price of power rates considering the media pronouncement of the (ERC) that there will be no price increase for at least two months during the summer season."

The group also sought explanations on alleged manipulations in the Wholesale Electricity Spot Market in 2006 and how the market competition operates in the light of very few players.

The group asked for a meeting on April 25 but ERC chair Rodolfo Albano informed EmPower Consumers, which includes FDC as convenor, to instead attend Tuesday’s consultative meeting with other industry players.

‘Posturing’

FDC’s Diciembre described President Arroyo’s appeal for big businesses to join forces with government to bring down power rates as merely "posturing." The President’s appeal was made in the context of a looming corporate battle between the Lopez family and the Government Service Insurance System represented by GSIS chair Winston Garcia over control of power distributor Manila Electric Co.

The government now holds 33 percent of Meralco shares, as against the Lopezez’s 33.4 percent.

Diciembre said Meralco is also responsible for the high cost of electricity because of its questionable business practice. He referred to Meralco’s purchase of electricity from its own power plants where the rates are higher compared with that of the National Power Corporation.

This is one negative effect of privatizing a basic and vital sector like power distribution and generation where the few players who operate can manipulate the industry to their advantage, Diciembre said. (abs-cbnNEWS.com/Newsbreak)

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