Battle to win Iloilo power franchise rages in House
By Manila Standard Business – October 07, 2018 at 07:10 pm
The hearing for the application of two competing firms for power distribution in Iloilo City has reached an interesting phase when the House committee on legislative franchises approved on second reading the application of former mining company More Electric and Power Corp. over the one submitted by the 90-year-old utility firm Panay Electric Co. which has been serving the city for decades. The franchise of Peco is up for renewal by January 2019.
The alleged rush approval of newcomer More’s application raised questions among various sectors, including several industry players whose franchises are also up for renewal.
In a letter to committee chair Rep. Franz Josef Alvarez of Palawan dated Sept. 24, Peco legal counsel Manases Carpio requested that the committee hold in abeyance the approval, saying there was a need for further public consultations.
Carpio asked the committee to look into More’s track record and experience in power distribution, compared to Peco’s years of service to Ilonggos.
“It will be hard for More to put up the facilities at a very short time. What happens now to the people of Iloilo City in case the committee decides to grant the franchise to More? With elections to be held in just a few months, are the Ilonggos to be deprived of their right to vote and their vote be counted just because there is no electricity in polling precincts?” Peco assistant vice president Randy Pastolero asked.
Meanwhile, Peco brushed aside as “entirely false” and misleading allegations about non-refund of power generation surcharges which are customarily passed on to the end-users.
This developed as the Panay Energy Development Corp. urged the House committee to renew Peco’s franchise in recognition of the firm’s qualifications and efficiency as a power distributor.
Peco, in a statement, clarified that the refund as determined by the Energy Regulatory Commission was ongoing, and that the amount involved had been substantially reduced from P631.33 million to just P34 million at present.
Peco said the refundable amount stemmed from the generation rates charged by the electricity generators and reflected the billing statements given to the consumers.
“We would like to clarify that the amount stated was first and foremost an issue in the generation component of the bill which comes from our power supplier and not the distribution component where in PECO derives its income,” Peco said.
Peco, Iloilo City’s exclusive power distributor over the past 95 years, buys electricity from the Panay Power Corp. which took over the power generation business in the island after tstate-run National Power Corp. collapsed, weighed down by indebtedness it could no longer afford to pay.
Peco said that in the 1990s, local power suppliers were mandated to keep their prices lower or equivalent to the NPC rates.
It said hostile economic forces drastically altered the scenario when the PPC was compelled to increase its rates. As a rule, the adjustment is automatically passed on to the consumers, sanctioned by the ERC.
Power distributors like the PECO must file the appropriate price hike petitions for ERC approval after conducting the necessary public hearings.
Peco recalled that on Dec. 2, 2009 the ERC resolved Case No. 2001-333 and directed the PPC to refund the end-users P631.33 million, representing the discrepancy between the NPC rates and the PPC rates which Peco in turn passes on to the consumers.
The discrepancy, computed at P0.1595/kilowatt hour, was reflected in the billings as generation rate reduction.
“PECO sees to it that it always follows the rules and guidelines of the ERC to be a top electric distribution utility in the country. This is evident as seen in its strong partnership in the growth of Iloilo City in recent years,” the company said.
PEDCo supported Peco’s integrity as a power distributor.
“Peco has for years proven highly technical competence, experience, and expertise to run a power distribution business. Peco is also in the top 15% in terms of positive performing distribution utilities in the country compared to the other 146 distribution utilities as seen in the reliability figures in their Systems Average Interruption Duration Index,” PEDCo said in a letter to Palawan Rep. Franz Josef Alvarez, chairman of the legislative franchises committee.
“Peco’s proven competence and experience must be recognized by renewing its application for a legislative franchise,” the letter stated.
