News Release
May 5, 2006

BAYAN doubts Arroyo efforts to lower power rates
 
The Bagong Alyansang Makabayan today expressed serious
doubts over the Arroyo government’s efforts to lower power rates by applying pressure on the Lopez-owned distribution firm Meralco.

“The government’s efforts will eventually fall short of the desired effect of lowering power rates. There are more fundamental reforms needed in the power sector and there are concrete steps that can lower power rates that the government is not addressing,” said Bayan secretary general Renato M. Reyes, Jr.

Bayan said that power rates are high because of the policies of deregulation and privatization in the energy sector and the presence of the Value Added Tax on power which is levied on all items in the electricity bill.

“Privatization, deregulation and high taxes on energy are
the reasons why power rates are so high. The ‘power play’ being done by the Arroyo government on Meralco may score the President some populist pogi points, but that’s all there is to it. Even the so-called bid of the Arroyo government to take over Meralco will not ensure the lowering of power rates, not when the policies of the EPIRA remain,” Reyes said.

“In fact, the Arroyo government is poised to collect more
from the people by passing on Napocor’s questionable stranded debts including the P9 billion WESM transaction that was the result of market power abuse in 2006, as well as the cost of overpriced coal purchases done last year,” Reyes added.

Bayan proposed the immediate lifting of the VAT on power which will save consumers around 10-12% in monthly electric bills. Consumer group People Opposed to Warrantless Electricity Rates (POWER) earlier computed that consumers using up to 200 kWh a month will save up P206/month.

As to Napocor’s reduction of generation rates for Meralco, the group said that this will merely result in added debts for Napocor, similar to the 2003 case of Napocor lowering its PPA by 60%. These debts, according to Bayan, will also be paid for by the consumers and the government that succeeds Mrs. Arroyo. “There will be reductions today but we will be paying the same high rates in the future. The government is just juggling the high costs,” Reyes said.

An “Arroyo monopoly”?

While generally supportive of the nationalization and
government control and regulation of the power sector, Bayan said that Arroyo lost an opportunity to reform the power sector when it signed the Electric Power Industry Reform Act which paved the way for the full privatization and deregulation of electricity. The group said that nationalization must first entail the repeal of the EPIRA

“If the Meralco takeover is true, then the Arroyo faction is merely trying to control the power sector for itself and not on behalf of the consumers. It’s not really a government take-over. Maybe it’s an Arroyo takeover,” Reyes said.

Bayan cited several “disturbing” conditions in the energy
sector today. “The strategic transmission sector or Transco has been privatized and placed under the control of close associates of the Arroyo family. The House
energy committee is being chaired by a son of Mrs. Arroyo. Now there are talks of Malacañang wanting control
of Meralco (through the GSIS). Are the Arroyos seeking some sort of dominant control over the power sector?” Reyes asked.

“If the takeover is true, then we will have a new dominant player in the power sector, the Arroyo family and its close associates. Will this situation bring down power rates? We doubt it. Not when the EPIRA remains
the policy framework of the power sector,” the Bayan leader added. ###
Posted on 05 May 2008