Sunday, September 26, 2004

NR0926: Anomalies in the ERC

Mula sa Tanggapan ni Anakpawis Rep. Crispin B. Beltran
News Release September 26, 2004
House of Representatives, South Wing Rm 602
931-6615 Ina Alleco R. Silverio, chief of staff
Celphone number 09213907362

Anomalies also abound in the Energy Regulatory Commission (ERC); agency
approves rate increases for consumers, high salaries for own executives and
officials - Rep. Beltran

Anakpawis Representative Crispin Beltran today trained his sights on the Energy
Regulatory Commission (ERC) and said that Congress should immediately conduct
investigations into the running of the said agency and assess its
performance, given the relentless series of increases in electricity rates and
the anomalies in the National Power Corporation (Napocor) which also involves
the ERC. Beltran said that the since the Energy Regulatory Board (ERB) was
reorganized into ERC by virtue of of the EPIRA Law in 2001, ERC's performance
has been going dowhill.

Beltran determined specific areas wherein the ERC should investigated, among
them the various functions and duties it has either failed to perform or
twisted in their implementation. Primary among them the verification and
Confirmation of Purchased Power Adjustment (PPA).He pointed out that all
Distribution Utilities (DUs) composed of 19 Private Utilities (PUs) and 119
Electric Cooperatives (ECs)in the country are required to submit to then ERB
their monthly computation of PPA together with sample customer bills for
verification and confirmation. ERB/ERC then issues Orders confirming if these
DUs are collecting the right PPA charges from consumers.

"But let's make an accounting now. How many Orders has ERC issued? The ERC
should be made to present data of this from 1996 to present. Any overcharging
by these DUs by a mere centavo multiplied by the kilowatt hour sold would amount
to millions especially since it it has been years since PPA charges were
accounted for," he said.

Beltran also said that the ERC should also present data regarding the Napocor's
Fuel Purchased Cost Adjustment (FPCA).He said that Napocor was also required by
ERB then to submit receipts of their fuel purchased (diesel, bunker fuel oil)
used to run the generation plants that used these fuels for verification and
"Is the ERC still confirming these fuel purchases which forms part of the Power
Purchased Cost Adjustment (PPCA) ? Let them show the confirmation data. Orders
issued by ERC are public documents and should be subjected to congressional

"If what Sec. Vincent Perez has said at the recent Senate hearing is correct,
that ERC has already granted five (5) rate increases to NAPOCOR, how did these
happen? The procedure that ERB followed then for granting or denying rate hike
petitions was to grant provisional authority to increase rates after proper
evaluation was made and subject to final evaluation after an audit was made as
to the impact of the rate increase. If the provisionally granted rate increase
was too much, then consumers should be given refunds. This was what happened in
the case of MERALCO in a 1994 rate increase for which the Commission on Audit
found to be too much during its audit. The ERB then issued the final authority
reducing the rate granted thereby resulting in a refund last year after the
Supreme Court decided with finality. So, how could NAPOCOR get successive rate
hikes if the previous ones has not yet been audited and finally evaluated? It
would take at least a year's data after a rate increase is granted to evaluate
it's financial impact on the petitioner and ERC began granting rate hikes only
in 2002," he said.

Beltran also said that the salary and compensation of ERC officials should also
be looked into. "ERC is neither a government-owned-or-controlled-corporation
(GOCC) or a government finance institution (GFI), but the salaries are

Position ERB (in pesos) ERC
Chairman 30,000 107,000
Commissioners 27,000 90,000
Executive Director 25,000 75,000
Director 23,000 61,000
Chief 21,000 51,000
Supervisor 19,000 41,000
Officer III 16,000 31,000

The Chairman to Director have RATA (Representation and Travelling Allowances),
discretionary funds and exclusive use of government vehicles. The retirement
package for the Chairman and Commissioners include a hefty lump sum for 5 years
and a lifetime pension equivalent to that of the last salary received.
Commissioners Ibay and Alindada whose terms have already expired are already
qualified to receive this package after only serving ERC for less than 3 years.
This is aside from the pension they will receive from the GSIS. Regular
government employees have to serve a minimum of 15 years to qualify for a GSIS
pension," he said.

Finally, Beltran said that the ERC cannot be expected to be impartial to the to
petitions of the Napocor when two of its current commissioners, Comm. Alcordo
and newly appointed Comm. Raouf Tan comes from NAPOCOR. "There is sufficient
basis to look into the ERC's management and administration and have the
Department of Budget and Management as well as the Commission on Audit examine
its records," he concluded.#


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