'Meralco franchise renewal good for the economy'

A key leader of the House of Representatives yesterday openly endorsed the renewal of the legislative franchise of the country’s largest private sector electric distribution utility company amid repeated notices for possible power shortages.

Albay 2nd District Rep. Joey Salceda, who chairs the House committee on ways and means, emphasized that the franchise of the Manny V. Pangilinan-run Manila Electric Co. (Meralco) deserves to be extended beyond 2028, for another 25 years, or until 2053.

“The case for renewing Meralco’s franchise is plain and simple: it has complied with the conditions of the franchise law and it is good for the economy and the consumer,” Salceda said, adding that renewing it for another 25 years is “good for the economy.”

House Bill 9793, the measure that aims to extend the Meralco franchise that Salceda filed, seeking a quarter of a century extension to the power distribution giant’s existing franchise, is now pending in the House committee on legislative franchises chaired by Parañaque 2nd District Rep. Gus Tambunting.

Meralco’s current franchise, embodied in Republic Act 9209, will not expire until 2028.

The company serves consumers in Metro Manila, Calabarzon, Pampanga and Bulacan.

“Meralco provides the most reliable service among all major electric cooperatives and distribution utilities or ECDUs, with outages suffered by the average consumer totaling to mere minutes in an entire year, versus days or weeks worth of blackouts for other neighboring ECDUs,” Salceda said.

“If all ECDUs performed like Meralco, the economy would create an additional P201 billion in gross value added annually due to avoided outages,” he added.

The distribution company covers 39 cities and 72 municipalities.

Salceda, a former National Economic and Development Authority director-general, is grateful that with Meralco’s “bargaining position and strong financials, it is able to acquire power supply agreements in full compliance with rules on competitive selection.”

At the same time, he pointed out that systems loss charges by Meralco are “likewise among the lowest in the area – a product of the P220 billion that Meralco has invested over the past 20 years to enhance its electric service.”

“As a testament to Meralco’s effectiveness as a service provider, at least 29 municipalities and cities and at least four provinces outside the franchise area have formally expressed interest to be served by Meralco,” Salceda said.

HB 9793 also seeks to expand the scope of the company’s operations, a provision absent in its existing franchise, RA 9209, which was signed into law in June 2003.

“The grantee shall also be authorized to extend service to any adjacent or nearby city, municipality, barangay or province, whenever such service is requested by its residents or inhabitants, through their local government units, pursuant to a referendum called for that purpose in accordance with the law or as otherwise directed by a court of competent jurisdiction,” HB 9793 stated.

Meanwhile, the Department of Energy should soon release the findings of its investigation following the forced outage of several power plants resulting in an increase in electricity bills, a consumer group said yesterday.

Power4People convenor Gerry Arances said they are now doubting the “sincerity” of Energy Secretary Raphael Lotilla and challenging him to resign from his position if deemed unfit to fix the country’s power supply.

“The DOE is supposed to provide reliable and affordable energy for all Filipinos, but instead chose and continues to insist on using these fossil fuels despite their proven unreliability and high prices,” Arances added.

He lamented that they have been suffering for two years now, which is the same timeline that Lotilla has been in his position as the energy secretary.

The issue was raised after the Luzon and Visayas grids were placed on red and yellow alert since April 16 due to the outage of several power plants and others running on derated capacity.

The National Grid Corp. of the Philippines yesterday announced that the Luzon grid was placed on yellow alert as available capacity was at 14,640 megawatts amid a peak demand of 13,446 MW.

The Visayas grid was also placed on yellow alert with an available capacity of 2,790 MW amid a peak demand of 2,444 MW.

P4P pointed its fingers at San Miguel Corp., Aboitiz Power Corp., First Gen Corp. and DMCI Holdings Inc. as the “main culprits” of summer outages, citing a recent report by think tank Center for Energy, Ecology and Development.

According to the report, 71.1 percent of recorded forced outages came from coal and gas plants, which took up about 51.23 and 19.87 percent, respectively.

“There is definitely a problem with the reliance on coal and gas for our country’s energy needs. Even new plants break down regularly. Already expensive, they become even more expensive as distribution utilities source electricity from the spot market at times when plants break down, where prices are higher. Filipinos pay more and more for less and less reliable electricity,” Arances said.

“Companies should also answer why they seem to earn the most when people suffer the most, especially given that the same generation companies still sold electricity on the spot market while claiming to be unable to deliver their contracted capacities,” he added.

The recent forced outages of power plants made distribution utilities resort to the wholesale electricity spot market, that is if they do not have any existing power supply agreements with power generators.

As a result, electricity prices are anticipated to increase this month.