Petilla’s last order protects consumers

DEMAND AND SUPPLY By Boo Chanco (The Philippine Star) | Updated July 10, 2015 – 12:00am

Former Energy Secretary Icot Petilla is one classy dude. He could have made a big deal about his last bombshell of an order that will protect power consumers from the big bad power generators, but he didn’t.

He issued no press release about the most important order of his watch at the Energy department. For someone who is said to be thinking of running for the Senate, Petilla is a strange fellow. He had a good reason to trumpet his order but he resisted the temptation.

Instead, of a big press conference announcing it, he took out a public notice advertisement in some major dailies that most of us would miss but complies with legal notice requirement. Petilla made good on his promise to stop the power cartels from self dealing by signing Circular No. DC2015-06-0008 which mandates all distribution utilities to undertake a competitive selection process in securing power supply agreements.

This is the Demand Aggregation and Supply Auctioning Policy or DASAP in the electric power industry I had previously written about. Sec. Petilla wants this landmark measure to ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability. This is the way he sees it could finally happen.

Petilla doubts, and for good reason, the bilateral agreements between generators and distribution utilities or DUs like Meralco, VECO, Davao Light and Power to coops are transparent enough to ensure fairness in power rates we consumers pay. Epira as implemented does not assure the kind of transparency needed for the system to work as promised.

The power generators and distribution utilities can claim their contracts are ratified by the Energy Regulatory Commission or ERC, but that claim can be meaningless given regulatory capture. Petilla is well aware that our power rates are the highest in the region and a big negative factor for attracting job creating investments in the manufacturing sector.

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PhilStar energy reporter Iris Gonzales explained in a story she filed this week that all DUs in the country would now have to go through competitive bidding in securing their power supply agreements. This is a departure from the existing bilateral arrangements that makes sweetheart deals a risk.

Through the competitive selection process, DUs will be able to increase the transparency needed in the procurement process in order to reduce risks, promote and instill competition in the procurement and supply of electric power to all electricity end-users. In other words, reduce if not eliminate self dealing particularly in instances when the DU has sister companies generating power.

Iris reports the new order makes DUs responsible in assuring that all CSPs produce the least cost outcomes that are unlikely to be challenged in the future as the political and institutional scenarios change. This protects the interest of the general public.

David Celestra Tan, a consumer advocate who leads the Matuwid na Singil sa Kuryente Consumer Alliance or MSK, calls Petilla’s swan song order as “a major reform electric consumers, including our organization MSK, had been clamoring for – the opening of the generation market of private distribution utilities like Meralco, Visayan Electric, and Davao Light, to the competitive bidding of their power supply contracts instead of allowing them to just negotiate with their sister generators.”

Tan observed the current practice of bilateral contracts “invariably resulted to higher generation rates, disadvantageous terms to consumers, and closed the private distribution utilities market that comprise about 75 percent of the country’s power demand, to truly independent generation suppliers.”

Normally critical of the government, Tan turned sympathetic to the efforts of Petilla to institute reform during his tenure at the DOE. He noted Petilla was early on thrown to do “the unenviable job of sorting out the electric rate conflagration of 2013 when the power establishment betrayed the Meralco consumers big time and allowed generation rate increases of 80 percent and 100 percent in December 2013 and January 2014.

“Meralco, the ERC, the PEMC and WESM, PSALM, and the conflicted players of the power market all failed to look after the consumers and all seemed foisted to pounce upon the consumers with a P4.15 per kwh one month jump in electric rates.

“Secretary Petilla spent the better part of his tenure fighting the consequent fires and valiantly trying to keep the whole sector from falling apart and restoring the public’s faith in the power supply establishment. It would have been time the clearly intelligent, dynamic, and forward looking secretary could have spent working for deep reforms to cure the ills of the sector.

“Through all these controversies though, Secretary Petilla displayed intellectual depth, astute political and leadership skill, the ability to breakdown complex problems into their parts, and the willingness to think outside the box for solutions, way more than his predecessors.”

I totally agree with Tan’s observations.

The DOE and the ERC will still have to issue rules and regulations to make DASAP operational but it would be, hopefully, difficult to turn back. When I last talked with Sec Petilla, I expressed fear that if he resigns, DASAP may be doomed before it is even born.

But Petilla made sure he delivered this major reform for the benefit of electric consumers. Sec. Petilla deserves the appreciation and support of all harassed power consumers for stepping up for us against the big guys.

I now have one person I know I will vote for if he decides to run for the Senate next year. All of us, ordinary residential consumers as well as commercial and industrial power users, would do well to support a Petilla bid for the Senate. We need someone to voice our concerns because no one seems to want to step up for us there.

Sen. Serge Osmeña, who is also likely to seek re-election, understands the power issues well. But I get the impression he is more concerned in protecting and preserving Epira, his baby, more than anything else.

There has to be someone who will dare to challenge Serge now and then with the end of making Epira evolve to give us the energy market we were promised. We need Epira to benefit consumers through market forces, real market forces rather than simulated. Every senator is intimidated by Serge on power issues. Petilla will potentially be the only one who can intelligently debate with him.

I understand the electric coops, another abused sector of the power industry, is supportive of a Petilla bid for the Senate. We all should be too, in case he decides he wants to run.

MRT 3 contract

Dismissed MRT3 general manager Al Vitangcol has a very valid point: the questioned maintenance contract couldn’t have been implemented without the signatures of Sec. Jun Abaya and Usec Jose Perpetuo Lotilla.

Indeed, the notice to proceed was signed by then DOTC Usec Rafael Antonio M. Santos who subsequently went with Mar Roxas to DILG. It is obvious that anomalous contract had Mar’s blessings. It really looks like Vitangcol was made the fall guy… nilaglag.

I am in awe of what Ombudsman Conchita Carpio-Morales has done so far. But maybe someone in her staff goofed or was persuaded by Malacañang to drop the DOTC higher ups. Perhaps, she should review things to be fair to everyone.

Besides, high officials should respect their signatures. I find the claim of Jun Abaya laughable that he was not responsible because he was only in office for two days at the time the contract was signed. But he signed it and therefore, vouched for the integrity of the contract. He should be man enough to stand by his signature.

And as was pointed out by my PhilStar colleague Dik Pascual, is Abaya saying when he washed his hands that the problem was with his predecessor, Mar Roxas? Maybe Mar Roxas should be charged together with Vitangcol and the usecs who signed off on the contract. Also, Abaya must have signed the renewals of those questioned contracts. Shouldn’t he be accountable for those?

That’s what ails DOTC. Its top officials have no integrity… no balls to defend their actions. Those years at Annapolis taught Jun Abaya nothing?

The irony of it all is there are too many topnotch lawyers there who are expected to know what they are doing, legally. Palpak on the technical and now palpak on the legal as well?