Part One Meralco must be in a celebratory mode these days. Congress gifted it with a new franchise with no forthright and honest review of the old. The Energy Regulatory Commission (ERC) has bent and twisted to its will, rewriting ERC’s rules to suit Meralco’s convenience. The Palace and Congress are neck-deep in divisive politics; no one in power and authority is looking out for Meralco’s captive customers.
There was a perfect opportunity to do right by consumers when Meralco prematurely sought renewal of its franchise expiring in 2028, but there was no one home at the House and the Senate. No one cared to listen or read the consumer papers submitted, especially the cases and calculations of over and excessive charges that dramatized Meralco’s violations of its least cost supply obligation under the current and renewed franchise.
One did stand and speak up for consumers at the Senate – Sen. Risa Hontiveros – but she was a lone and solitary voice/vote squelched by the Meralco horde of 18. Given the weight of arguments and supporting data brought to the Senate, the one vote for review, refund before renew could mean our Senate has serious reading and comprehension problems. I dread if that be true.
Meralco today operates under a legislative franchise granted in June 2003 for a period of 25 years or until June 2028, three (3) years and some months from now. According to its last Annual Report, Meralco in 2023 generated gross revenues of P443.6 Billion from which it derived a Reported Net Income of P38 Billion. Cash dividend per share was P19.80. Energy sales for the year was 51 Billion kwh to a customer base of 7.8 Million, predominantly residential. Average retail rate for the period was P10.60 pkwh.
Under Sec. 1 of RA 9209, the current franchise, Meralco was granted “a franchise to construct, operate and maintain in the public interest and commercial purposes, a distribution system for the conveyance of electric power to the end-users in the cities and municipalities of Caloocan, Las Pinas, xxx(long inclusive list follows) and Vizal Sto. Nino in Candaba, Pampanga. xxx distribution system refers to the system of wires and associated facilities xxx extending (to) xxx the metering point/facility of the end-user.” The same provision is carried verbatim into the new franchise.
Sec. 4, Responsibility to the Public, mandates in clear and unequivocal terms: “The grantee shall supply electricity to its captive market in the least cost manner.” Thesame is restated with the following new proviso: “The Grantee shall only incur reasonable and just cost for its services…”
As early as 2014 under the 16th Congress, there already were calls for the review of the Meralco franchise. Akbayan Party List Representatives Walden F. Bello and Ibarra M. Gutierrez III filed House Resolution No. 821, dated 13 February 2014, calling for an inquiry on Meralco’s compliance with the terms and conditions of its franchise. Specifically, the inquiry was to look into “allegations that the distribution company (Meralco) engaged in acts constituting as abuse of market power, unfair trade practices, monopolistic schemes and other activities that hinder competitiveness or business and industries.”
While the inquiry did not result in any conclusive outcome for consumers, the Freedom from Debt Coalition (FDC) was able to file in March 2015 its Position Paper for the Revocation of the Meralco Franchise. The paper cited franchise violations ranging from exceeding the territorial and sectoral/industry boundaries to excessive rates and profits that resulted in Meralco’s rate not being least cost. The paper apparently died with HR 821but the issues raised persist to the present.
Back to the early renewal of the franchise, in May last year, I received an invitation to the hearing of the House Committee on Legislative Franchises under Chairman Rep. Gus Tambunting. But I was on travel at that time so I submitted instead an updated version of the FDC Position Paper and a separate Position Paper on Performance Based Regulation (PBR), the enabling tool for Meralco’s rates not being least cost.
Unfortunately, I did not hear back from the Committee anymore, although I was home by end July. The new Meralco franchise was approved by the House in November last year. Like most everyone else, what I now know of the approval is only from published news accounts. But still, there are some insights to share.
Next Week. The House deliberations. Or the lack thereof.
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