The Meralco Controversy
by Hector Bryant L. Macale, Kristine Joyce G. Magadia, and Apple Jean C. Martin
The Manila Electric Company (Meralco) has always been a controversial on again, off again news subject, the high cost of electricity being a major target of consumer ire. This time—from late April up to this writing in May—it stayed in the news because of too obvious government moves to take the power company over.
While legitimate, however, the focus on the political side of the Meralco controversy edged all else out of the news, including why the cost of power has been so high it is regarded as a major and steadily growing burden by consumers.
Much of the necessary information came only last May 12, during the first hearing on electricity rates by the joint congressional power commis-sion of the Senate and the House. The hearing came almost three weeks after Meralco announced another increase on power costs April 22. Full-page ads either favoring the Lopez-controlled Meralco or the government also provided facts and figures on electricity costs. But the press did not bother to check which of these claims were true or distorted or mis-interpreted to serve the interests of either contending party. The result was a failure to explain what is in every Meralco consumer’s mind—the reasons behind the high cost of electricity.
Meralco’s April 22 announcement of a rate increase was another missed opportunity—for the press to provide informative reports on why the increase despite already high electricity rates. Much of the press chose to report the accouncement of the increase as just one more item in the business section.
From there, press coverage focused on the political side of the rate increases when Winston Garcia, president and general manager of Government Service Insurance System (GSIS), complained that the company was not transparent with its documents and its transactions with independent power producers (IPPs) owned by the Lopez family. The Lopezes own 33.4 percent of Meralco, while GSIS owns around 25 percent. President Gloria Macapagal Arroyo followed Garcia’s complaint with a call for lower electricity rates.
The possibility of a government takeover of Meralco was widely viewed as Arroyo’s attempt to get back at the Lopezes for ABS-CBN’s supposedly biased and critical coverage of the administration. The television giant is also a Lopez company. The press coverage focused on the personalities involved, and produced the usual he-said, she-said reports.
PJR Reports reviewed the coverage of the Meralco controversy by the three biggest newspapers and two major business dailies, as well as the primetime newscasts of the country’s two major networks and government-owned NBN-4, and the reports by the major news websites. The reports monitored were from April 23, a day after Meralco announced another increase in electricity rates, to May 13, a day after the joint congressional hearings on the issue began.
In an interview with PJR Reports, economist Cayetano Paderanga said that technical issues that directly affect electricity prices were not adequately discussed by the press. These issues include rising oil prices, the cost of inputs for both Meralco and the National Power Corporation (NPC), and government taxes. Paderanga said that the press should have explained these technical issues so consumers could understand why electricity costs were rising.
Paderanga, who teaches at the University of the Philippines School of Economics and was director general of the National Economic and Development Agency, said the press should have also scrutinized the NPC’s financing and stranded costs that determine the price of the energy they generate and which appears in electricity bills , as generation charges.
Elpi Cuna, Meralco’s vice president for corporate communication, told PJRReports in a phone interview that while the news reports have been “quite fair,” they do not explain many important points. Most reports stated that Meralco’s administrative costs are being charged to consumers, said Cuna, but did not point out that only one percent of the company’s costs can be so charged under existing laws. Cuna pointedly suggested that reporters improve their knowledge of the electric industry so they can put the facts in context.
The coverage should have also looked into the capability and competency of the Energy Regulatory Commission (ERC) and if there is a need to review the Electric Power Industry Reform Act (EPIRA)—the first major bill Arroyo signed into law when she became president—and why seven years after its implementation, it has failed to lower electricity costs. There was also a dearth of reports explaining how government taxes on electricity, among them taxes imposed on local usage of natural gas, boost those costs.
Despite its frequent mention of the Wholesale Electricity Spot Market (WESM), the press did not provide enough explanation on the nature of WESM and its possible contribution to high electric charges either.
Neither did the press look into allegations that Garcia personally stands to gain from a possible government takeover of Meralco because his family is involved in the Visayan Electric Company, the country’s second largest power utility.
Laudable efforts
Departing from the usual he-said-she-said accounts, some reports and columns, however, tried to close some of the gaps in the coverage.
BusinessWorld published a three-part explanatory report on the factors that contribute to high electricity rates last May 12-14. The first part discussed how the slow privatization of state-owned power plants contribute to high rates and Meralco’s “unexplained” rate increases (“Expensive Meralco power justified?”). The second part tackled the difficulty of lowering power costs because of the highly-regulated electric industry and the heavy government taxes and royalties it collects (“Reducing Meralco’s power rates easier said than done”). The last part looked at the “give and take” relationship between the government and Meralco, pointing out that the Arroyo administration had used Meralco to boost its public popularity and image (“Power sector give and take”).
For its part, BusinessMirror published a primer from the Freedom from Debt Coalition (FDC) last May 13 listing and explaining the reasons for the high cost of electricity in the country. “The issue of high electricity prices is a result of a confluence of factors, from bad governance to corruption, to mismanagement to rent-seeking to framework concerns,” the FDC primer said, stating that the real problem is rooted in “structural, management, policy, governance, and paradigmatic causes.”
Government interest
If most reports in the privately owned press were generally fair, Batingaw, the new news program of government-owned NBN-4, was clearly used to promote the government position and even to mislead the public. Most of Batingaw’s reports on the controversy focused on government officials’ denial of a possible government takeover. Others reported only the side of government officials, and allowed their claims against Meralco to air without verification.
As if to further show viewers the extent of its bias, its reports also highlighted how high Meralco’s electricity charges are and the government’s alleged efforts to bring these down.
Much heat and too little light was generated in the reportage on the Meralco issue, as a result of which the public has remained uninformed as it was when the controversy started on an issue that is among those at the heart of homeowners’ concerns.
- with a report from Karen Nicolas |
