To avoid a power vacuum
NO, I’m not referring to any vacancy possibly occurring in the political hierarchy. What I’m trying to point out is the possible dire consequence or consequences — spelled massive blackouts — of the failure to address the impending expiration of the franchise of the country’s biggest power distributor, the Manila Electric Co., or Meralco, in 2028.
For the record, Meralco holds the power distribution franchise for 38 cities and 73 municipalities, including the whole of Metro Manila, where it is the sole electricity distributor, and some parts or the whole of nearby provinces like Bulacan, Cavite, Laguna, Rizal, Batangas and Quezon. In Pampanga, Meralco also serves some barangay in Candaba.
While it is still some four years away, the government, particularly Congress, which holds absolute authority in the grant of franchises, should not dilly-dally in resolving this matter. While extending Meralco’s franchise would pose no problem, terminating it and granting a new franchise to whoever would involve the new franchise owner having to put up its own infrastructure.
And seeing no compelling reason to terminate Meralco’s franchise in 2028, Albay Rep. and House Ways and Means Committee Chairman Jose Ma. Clemente “Joey” Salceda is pushing for the renewal of the Meralco franchise for another 25 years to ensure the continuous and uninterrupted distribution of quality and reliable power supply and “in consideration of the nature of the vital service it provides.”
Saying Meralco has been providing reliable and world-class electric service to homes and has been supporting the competitiveness of industrial and commercial customers that numbered more than 7.6 million at the end of 2022, Salceda filed House Bill 9793, which seeks to amend RA 9209 and give Meralco another 25 years to “construct, operate and maintain a distribution system for the conveyance of electric power to end-users.”
“For the year 2022 alone, Meralco delivered 48,916 gigawatt-hours of electricity to these end-users at an average retail rate of P9.52 per kilowatt-hour. Electricity consumption in the Meralco franchise area already represented more than 50 percent of the country’s total electricity consumption in 2022,” he said in the bill’s explanatory note as he cited, “Meralco’s proven track record over a span of 120 years assisted greatly in the development of the country’s key economic growth areas.”
Salceda said that while many people cite the country’s power rates as among the highest in the region, a report from the International Energy Consultants noted that tariffs in countries like Indonesia, Malaysia and Thailand are subsidized fully or substantially by their governments, while the Philippine power prices are reflective of the actual cost of electric service.
Contrary to allegations that Meralco has been overpricing, the IEC found that “if subsidized markets are excluded, then Meralco’s tariff is 13 percent lower than the world average,” even with the spikes in international fuel prices in 2022.
The resilience of Meralco’s tariffs was attributed by IEC to “Meralco’s ability to source lowcost PSAs4” and a “generation contract portfolio [that] appears to be very well-managed.”
Salceda added that upon Meralco’s own initiative that was followed by an Energy Regulatory Commission decision directing the refund of distribution-related charges arising from the final review of 2012-2015 rates and delays in the regulatory reset process, the company completed a P48-billion refund to customers, which brought the company’s distribution prices down further.
Meralco, Salceda said, has also implemented a lifeline mechanism with a range of 20 percent to 100 percent discount to customers with a monthly consumption of 100 kWh and below, subsidized by other customers, as part of the societal obligation to marginalized customers within its franchise area.
The maximum discount and range of consumption are the largest among the country’s distribution utilities.
Records also show that Meralco has assisted 6,376 low-income families in its franchise area through its household electrification advocacy, allowing them access to electric service.
Going through Salceda’s points, it seems there would be no reason to deny the extension of Meralco’s franchise unless other sectors can present incontrovertible evidence to prove otherwise. But acting on Salceda’s bill even this early will avoid a repeat of the ABS-CBN episode.
It may be recalled that even as ABS-CBN applied for a renewal of its franchise in 2014, Congress failed to act on it and only tabled its application for renewal five to six years later, finally allowing ABS-CBN’s franchise to expire in 2020.
However, the Meralco issue begs for a different treatment as this involves sole power distribution to, again, 38 cities and 73 municipalities, unlike the denial of the franchise renewal of ABS-CBN and the void it created that was ably filled by other broadcast companies.