TWO lawmakers representing the Social Amelioration and Genuine Intervention on Poverty (Sagip) party-list yesterday urged the House leadership to support the passage of their bill seeking to amend the Electric Power Industry Reform Act (EPIRA) to prohibit cross-ownership among power industry players.
Reps. Caroline Tanchay and Rodante Marcoleta said the House should pass House Bill No. 174, or the proposed “Act Prohibiting Cross Ownership Among Distribution Utilities and Generation Companies,” because cross-ownership of distribution and generation facilities in the power sector is prone to abuse.
Section 45 of EPIRA allows distribution utilities to source a maximum of 50 percent of its electric supply from an “associated firm.”
“Simply put, if both the distribution utility and the generation company are controlled by one entity, they are to be considered as associated firms,” the lawmakers said in House Bill No. 174.
They said the implementing rules and regulations of the EPIRA expanded the definition of associated firms which subsequently allowed “private power firms to circumvent the already generous cross-ownership limitation in EPIRA.”
HBN 174 cited the case of the Manila Electric Company (Meralco), which controls power distribution in Metro Manila and nearby provinces that represent 75 percent of the entire economy.
Meralco, the bill said, owns a company, Powergen Corporation (MGen), which has ownership shares in power generating plants that included the 455-megawatt San Buenaventura Power Plant in Mauban, Quezon; the 237-megawatt coal-fired plant in Sarangani; and a 120-megawatt plant in Zamboanga.
On top of these ownership shares, it also pointed out that Meralco also entered into a joint venture agreement with San Miguel Corp for a 1,200-MW coal plant in Mariveles, Bataan.
“Totaling the amount of the contracted power vis-í -vis the demand of Meralco would translate to almost 95 percent of the demand of Meralco, as part of the MVP Group, sourced from associated firms,” said HB 174.
Recently, Meralco acquired majority ownership of the Ilijan Power Plant from SMC’s South Premiere Power Corp. (SPPC) and awarded the PSA to SPPC to supply 1,200 MW to Meralco.
Subsequently, a $3.3 billion deal was forged by Meralco Power Gen, San Miguel Global Power Holdings and Aboitiz Power to jointly launch the country’s “first and most expansive” LNG terminal in Batangas. Once fully operational, the LNG facility in Batangas is expected to supply fuel for plants that are expected to generate more than 2,500 MW of electricity.
Tanchay and Marcoleta however said “the abhorrent contravention of the EPIRA, through its IRR, allows Meralco to cartelize the power industry, to the prejudice and damage of its consumers.”
They said these apparent “conflict-of-interest situations” were on top of deals “freely available to Meralco in contracting power supply from its affiliates which is allowed generously by Epira.”
