Energy Regulatory Commission chairman Rodolfo Albano Sr. blamed lawmakers Wednesday for the high cost of electricity ¨C the second highest in Asia after Japan ¨C saying the laws that they crafted were used by the ERC as basis for allowing pass-on charges, including those for systems loss.

"Ito po ay dahil ito ang sina-sabi ng batas (This is because it¡¯

s what the law says)," Albano told the energy committee chaired by Pampanga Rep. Juan Miguel Arroyo when asked why ERC allowed pass-on charges.

Albano, a former seven-term Isabela congressman, said the charges include "take-or-pay" charges for electricity delivered by independent power producers (IPPs) to the National Power Corp. (NAPOCOR) or the Manila Electric Co. (MERALCO) even if such is not utilized.

He said these IPPs responded to the government¡¯s invitation for them to build power plants during the early 1990s when the country experienced a severe energy crisis, on condition that they were to be paid fully for their generation capacity regardless of how much of the power they delivered was actually consumed.

"They wanted an assurance that if they invest, they would be able to recover reasonable costs, plus a reasonable return," Albano added.

He pointed out that an inter-agency committee President Arroyo created in the early days of her administration gave its blessing to the practice of making consumers pay for the entire contracted amount of electricity.

For his part, MERALCO president Jesus Francisco said the same assurance was demanded by financial institutions that lent billions to investors who built power plants during the energy crisis.

The practice drew criticism from some lawmakers, including Rep. Teodoro Casiño of the party-list group Bayan Muna and Manila Rep. Amado Bagatsing.

"This should be treated as a business risk of generators and distributors," Casiño said, even as he admitted that lawmakers should indeed share part of the blame. "We may have to come up with legislation that will address this issue."

Bagatsing said, "We should do something about this unconscionable practice. It has been 17 long years since this was allowed."

But Palawan Rep. Antonio Alvarez, energy committee vice chairman, lamented that there is so much blame throwing on the issue.

"I appeal to all the stakeholders ¨C NAPOCOR, MERALCO and other distributors, and IPPs ¨C to make a sacrifice by reducing their charges to bring down the cost to the consumers, which is our common objective here," he said.

For his part, Rep. Luis Villafuerte of Camarines Sur asked why ERC had allowed MERALCO to make its customers pay for the electricity that it uses in its offices, which amounted to P531 million in 2007.

"It was not ERC that allowed this. It was the old Energy Regulatory Board. Its basis was Republic Act 7832, which authorizes the recovery of just cost for their (distributors) operation," Albano said.

"But if it is the pleasure of the committee to amend the law to address this issue, we will welcome it," he said.

However, the ERC chief said he personally believes that the so-called "company use" of electricity should be shouldered by MERALCO and not passed on to its customers.

"I myself was taken aback when I read about this in the newspapers," he added.

He promised Villafuerte and the energy committee that "by tomorrow, we will start reviewing this."

Bukidnon Rep. Teofisto Guingona III warned of another power crisis similar to what gripped the nation in the early ¡¯90s unless investors are encouraged to immediately build plants or expand capacity.

Nograles backtracks on EVAT

Speaker Prospero Nograles backtracked from his proposal to remove EVAT from consumers whose electric bills are below P5,000 and urged the government instead to make use of the P16.7 billion in extra tax collections to bring down the cost of power and fuel.

"If it¡¯s not feasible to lift the EVAT on power for residential users because this might cripple the economy, providing subsidy by tapping the government¡¯s tax windfall is the quickest and most practical solution to provide relief for our countrymen," he said.

The P16.7-billion collection "should be used to subsidize fuel and electricity for our people."

The Speaker said his proposed alternative is "more doable and more practical" than the EVAT removal.

It was the Congressional Planning and Budget Department (CPBD), in a study, which projected the P16.7-billion "tax windfall" because of the high cost of Dubai oil.

"The higher the price, the higher the EVAT cost. The higher the EVAT cost, the higher tax collection for the government. Ergo, this extra profit of the government from EVAT is not part of its revenue estimates," Nograles explained.

He earlier urged the House committee on energy to fast-track a study on a proposal to suspend the EVAT on the electric bills of small residential consumers and find out its impact on the Philippine economy.

But Quezon Rep. Danilo Suarez warned of the proposal¡¯s adverse impact on the country¡¯s fiscal position.

"Whichever will bring the best benefits for the people and the economy, we will go for it. What is paramount is to give relief to our people without resulting to long-term economic dislocation," he added.

Government financial managers use the Dubai oil, among other "predictable tax intakes," as basis for making revenue assumptions.

Upon the recommendation of the CPBD, Nograles said the P16.7-billion tax windfall from Dubai oil can be "re-channeled towards subsidizing the public¡¯s electricity and fuel consumption."

According to the CPBD study, the previous Senate proposal to scrap the 12 percent VAT on oil products could be "counterproductive because it will permanently reduce the tax base of the government."

"There will be an estimated revenue loss of P51 billion on oil alone. Moreover, shelving the 12 percent VAT on fuel may be difficult and may take a long time to implement because it will require a legislative action by amending the Reformed VAT Law or Republic Act 9337, which may even face veto from the President," the study said.

No plans for MERALCO

Meanwhile, Erramon Aboitiz, chief operating officer of Aboitiz Equity Ventures Inc., said MERALCO is an "attractive investment" but is not in the company¡¯s plan at the moment.

Aboitiz Equity is the holding company of the Aboitiz group whose owners are relatives of First Gentleman Jose Miguel Arroyo.

"We haven¡¯t even looked at it (MERALCO). I think we¡¯re quite busy on our investment program right now so I guess we¡¯ll focus on that first," he said.

Asked if they consider investing in MERALCO, he said: "It depends on the terms, what happens ¨C frankly it¡¯s too early to make a comment since we don¡¯t know exactly what¡¯s happening."

According to Aboitiz, they have not been talking with anybody for a possible entry into the country¡¯s largest power distributor.

"No one has approached us yet. We don¡¯t know what the deal is. MERALCO should be an attractive investment. But like what I¡¯ve said, we have not looked at it," he said.

Some groups observed that Government Service Insurance System (GSIS) president Winston Garcia may have plans to tap the Aboitizes as potential buyer of the state fund¡¯s share in MERALCO.

Foreign partners needed

The Lopez group has said it does not have enough resources and may have to hook up with foreign groups if it decides to acquire more shares in MERALCO.

Oscar M. Lopez, chairman and chief executive officer of First Philippine Holdings Corp., said several foreign entities have signified interest in buying the government¡¯s shareholdings in MERALCO.

When asked by a shareholder recently if the group was willing to further beef up its shareholdings in the country¡¯s largest electricity distributor, Lopez said: "I don¡¯t think we can do that. We need a strategic partner to enter the picture."

FPHC president Elpidio Ibañez said the company has been in talks with around five foreign financial and strategic groups since last year for the acquisition of the government¡¯s shareholdings in MERALCO, which stood at 29 percent then. "We were looking at forming a consortium to bid for government¡¯s shares in MERALCO back then. But the situation has dramatically changed. We don¡¯t know what¡¯s available now," Ibañez said.

In a related development, MERALCO vice president for corporate communication Elpi Cuna dismissed Garcia¡¯s statement that the Lopezes are engaging in dirty tricks.

"It was and will never be the policy of MERALCO management to engage in dirty tricks. I don¡¯t know if that holds true with Mr. Garcia. In fact, if observers will note, we never engaged Garcia in a word war ever since he started peddling his unsubstantiated claims," Cuna said.

He said Garcia and his spokesperson Estrella Elamparo have "made it a habit to spew false information and unsubstantiated claims."

Cuna also rejected Garcia¡¯s claim during the Cabinet meeting in Panglao, Bohol on Tuesday that the officials of MERALCO are paying a flat rate on their electricity expenses.

"I pay what all customers exactly pay. Translated on a per kwh basis, I pay about P10 per kwh while a marginalized consumer pays only about P4 per kwh because of the lifeline rates. This benefits almost half of the entire residential customers or close to two million residential customers," he said.

"Mr. Garcia and Atty. Elamparo are welcome to scrutinize and look at my electric bill if they want," he added. With Donnabelle Gatdula and Zinnia dela Peña