‘Midnight deals’? Negotiations with power suppliers began 2012, says Meralco

September 27, 2017 - 11:36 PM
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Meralco meter, bworld online
Meralco meter, file photo. BUSINESSWORLD ONLINE

MANILA – Meralco has denied allegations that it had so-called midnight deals with the Energy Regulatory Commission (ERC), a matter that the House of Representatives is now investigating.

Bayan Muna party-list Rep. Carlos Zarate has alleged that Meralco’s power supply contracts did not undergo competitive bidding and are disadvantageous to consumers.

The power utility said, however, that the agreements being questioned are bilateral contracts that were the subject of long negotiations with generation companies, and have yet to be even approved by the ERC.

Meralco likewise denied having lobbied the ERC to extend the deadline for applications of power supply agreements with the commission.

Meralco said that while it does in fact have contracts with affiliate generation companies, these all fall within the mandated cap of 50% of its total supply.

‘Yung cross ownership naman, that is not prohibited: it is allowed under EPIRA [Electric Power Industry Reform Act]; mayroon lang [there’s just a] certain cap that you cannot contract more than 50% of your power requirement from affiliated generation companies. In our case, we are actually below the 50% requirement,” explained William Pamintuan, head of Meralco legal and corporate governance office.

“Our assurance when we conduct and contract these power supply agreements [is] we always ensure that we follow our mandate to get the least-cost power for our consumers,” he added.

“We are wondering why we are being questioned when we just complied with a government regulation that says you are allowed to file, so we filed on that basis. Now, the bilateral contracts that we filed — hindi naman yan [those are not] midnight deals [because] we have been negotiating with these power suppliers way back 2012, 2014, so there were extensive negotiations between us and the gencos,” Pamintuan pointed out.

The allegation of “midnight deals” arose from the observation by Zarate and Meralco critics that the ERC had postponed the Nov.6, 2015 deadline for distribution firms like Meralco to conduct a competitive selection process for procuring their power supply.

It was alleged that the extension – to April 30, 2016 – favored Meralco, which forged 20-year power supply deals with seven generation companies. The agreements were reportedly signed just days before the new deadline, hence the allegation of “midnight” deals.

The House energy committee conducted a hearing on the matter on Tuesday, at which Zarate grilled ERC officials.