THE energy watchdog group Power for People Coalition (P4P) last Wednesday sounded the alarm over the partnership formed by three of the country’s biggest energy companies to run a $3.3 billion imported liquefied natural gas (LNG) plant as a single entity, raising fears it would lead to higher electricity rates.
The P4P also warned that the mega energy deal among the power subsidiaries of San Miguel Corp, Manila Electric Co and Aboitiz Power Corp. indicates the possibility of “collusion” among the power generation firms.
“P4P is considering its options as this deal raises red flags about cross-ownership in the power industry and the possibility of collusion among power generation companies,” P4P convenor Gerry Arances told reporters.
“For now, P4P urges both the Energy Regulatory Commission and the Philippine Competition Commission to take action to protect the interest of consumers,” Arances stressed.
P4P said the partnership formed by the three power subsidiaries allowed Meralco and Aboitiz to acquire stakes in SMC’s LNG facilities in Batangas province which would handle imported LNG.
The partnership came just weeks after Meralco awarded 2.4 gigawatts of new power supply agreements (PSA) to power companies using imported LNG handled at SMC’s Batangas facilities.
Meralco is part of the partnership through its MGen power-generating arm.
Under the partnership, Meralco would in turn acquire a 40 percent stake in the Ilijan LNG Power Plant, originally owned by SMC and Excellent Energy Resources LNG Power Plant, which would exceed shares owned by both Aboitiz and SMC.
It effectively makes Meralco, whose franchise is for power distribution, also a producer of electricity which is prohibited by the Electric Power Industry Reform Act or Epira.
“In January, Meralco gave away 80 percent of its new power requirements to these two SMC gas plants based on terms that give consumers the short end of the stick,” said P4P convenor noted.
“Now, we learn that Meralco, all this time, was intending to buy those plants, and would be directly benefiting from expensive costs of fuel passed on to consumers,” Arances said.
SMC, Aboitiz and Meralco are also seeking to acquire the adjacent liquefied natural gas import and regasification terminal owned by the Atlantic Gulf & Pacific Company with Linseed Field Power Corporation.
According to P4P, these moves violate the spirit of Epira which prohibits conflict-of-interest situations in the power industry and cross-ownership of generation and distribution utilities.
The law encourages competition to provide consumers with the least-cost electricity and protect against abuses.
“Government authorities should put a stop to this,” Arances said.
“Letting SMC, Meralco and Aboitiz as they are would be a disservice to consumers.”
