Why You would Want to Take Over an Off-Grid EC Franchise Area? It’s a lot of Headaches! 8 reasons why.

David Celestra Tan, MSK
23 February 2019

The 121 Electric Cooperative community is abuzz with the seeming frenzy in applying for Legislative Franchises for electric distribution utilities since the apparent success of a new franchise holder in winning the 25 year right to be the distribution utility in Iloilo City.

A company named MORE Reedbank, same group as MORE Electric for Iloilo City, apparently got their appetite wet and applied for the franchise for the mainland Palawan, the area currently served by the Palawan Electric Cooperative which still has 10 years to go on its franchise. Word in the Visayas is a Group identified with a San Carlos kingpin also has applied for a franchise for Northern Negros and another group reportedly identified with the Aboitiz Group is applying for a franchise for the whole Negros Island.

Maybe we can excuse entrepreneurs for coveting distribution utility franchises on the grid like those in Negros. And, for existing DU’s, those adjoining their franchise areas like the Batangas, Quezon, and Pampanga Coops that Meralco had been wanting to take over. The service areas tend to be more developed and the regulatory rules are non-missionary. The power suppliers tend to be the same and there is the WESM.

But Why would you want to take over an EC franchise that is in the off-grid missionary areas?

Electric consumers in these off-grid missionary areas actually have a love-hate relationship with their Coops. They hate their brownouts and services but they love that in theory they are non- profit, they can seek political help to get their areas electrified, they like electing directors, love the idea that their power generation is subsidized. More than that, they are scared of profit oriented private entities who would most likely charge more and will be ruthless in their disconnections.

If you want to take over a Coop, better be prepared for battle. If electric consumers love their Coop, the Coop employees love their Coop even more. So you will find a very uncooperative workforce.  The billing people and the collectors might not even generate the cash you need. So about the only way to have a reasonable operation is to buy out and retire everybody from the start. This will be a big burden for a new investor because the Coop might not have enough cash for their retirement obligations.

Some off-grid areas do not have the culture of paying for their electric bills so collection is a problem.  Many of those areas are non-viable and you will be relentlessly required to extend services by the local government officers.

With all these headaches why would a private investor bother to take over an off-grid EC specially a troubled one? Here are eight (8) reasons why:

1. You can make a 25% return on your investment without really trying because the ERC rules had already assured it for you!

2. You thought missionary electrification in the islands means the same thing as good old missionary position that electrified you in your bedroom! (Censored!)

3. You want to go into public service without really performing one!

4. Your family has a big luxury estate that you want to include in your rate base and make the electric consumers pay for it!

5. Once you have taken over the Distribution Business you can also go into the power generation business and can just negotiate with yourself (or your wife and children)

6. You will Feel like God sometimes when you can say“ let there be light” to your kids parties even if there is total blackout in the neighborhood. Or to the desperate people begging that their light is not cut-off. Hmmm, the ultimate power trip!

7. “Be like Manny”……Pangilinan not Pacquiao! Gotta have that money machine called a DU and patsies that you can charge any amount you want called electric consumers. Yes the best kind of customers…..captive!

8. You are a billionaire and have a multi-billionaire cousin to whom you can flip the franchise!

What is ironic is most of the problems of the off-grid electric coops specially those larger ones like Palawan, Mindoro, Masbate, can be solved by the government agencies themselves by just performing their oversight duties as provided by the current laws. The NEA, DOE, NPC, LGU, ERC, and Congress. Are they all just trying to hide their collective shortcomings by bailing out and privatizing the responsibility?

MatuwidnaSingilsaKuryente Consumer Alliance Inc.
matuwid.org
david.mskorg@yahoo.com.ph