Mrs. Arroyo, however, maintains her position against intervening on the issue of a revamp in the management of Meralco, Deputy Presidential Spokesman Anthony Golez said.

Government Service Insurance System (GSIS) President Winston Garcia has called for a new Meralco management in a move to bring down its rates. He has also proposed that the Meralco franchise be split into three.

The GSIS has a 23 percent stake in Meralco while other government agencies have a combined stake of 10 percent.

Mrs. Arroyo had earlier said she is not interested in taking over Meralco, but only in opening Meralco’s books to determine whether the high electricity rates are justified. Meralco said it had invited the GSIS several times to inspect the company’s books, but Garcia said Meralco had ignored his requests for copies of the records. (David Cagahastian)

Passing on systems loss is provided by law – Meralco

The Manila Electric Co. (Meralco) maintained yesterday that there is nothing illegal with its practice of passing on systems loss and its own electric bills to its 4.4 million customers, saying the whole issue has been "blown out of proportion."

Meralco Vice President and Utility Economics Head Ivanna dela Peña said the recovery of systems loss and company use are provided under Republic Act (RA) 7832, which allows distribution utilities to pass on to consumers up to 9.5 percent of their losses.

"It (recovery charge) is allowed not only here in the Philippines but all over the world. Under international practice, systems loss and company use are being recovered and it is only here in the Philippines where there is a limit so utility companies won’t become abusive," Dela Peña said.

Dela Peña said that under RA 7832, the Lopezcontrolled firm is allowed to pass on to its customers up to one percent of the total distribution output of the company in 2007 but it chose to charge consumers only 0.27 percent of its output or one-third of the 1 percent allowed.

She said the percentage covers the 77 million kilowatt per hour (kwh) or roughly R500 million consumed annually by Meralco’s central office at Ortigas, its substations, operating centers, 30 business centers, and other facilities scattered over its entire service area of 9,337 square kilometers.

Dela Peña warned of much higher power rates if customers will not be allowed to shoulder Meralco’s own electric bills. She noted all businesses pass on the cost of electricity use to customers as part of the firms’ operating costs.

Meralco treasurer Rafael Andrada said the practice of passing on systems loss to consumers is what the law provides. He said there are certain laws that may run counter to one’s moral conscience but people cannot do anything about them because these are laws that should be followed.

He said if lawmakers find system loss charges improper, they should pass a law scrapping them.

"But let it be a law that is applied to everybody because it is not only Meralco that charges systems loss. There are nearly 140 distribution firms all over the country that charge systems loss," Andrada said. (Edmer F. Panesa)