Peco in danger of losing legislative franchise

By Lenie Lectura – October 10, 2018
from Business Mirror

THE failure of Panay Electric Co. (Peco) to rationalize its billing system could lead to the nonrenewal of its legislative franchise that expires in January 2019.

Rep. Franz Josef E. Alvarez, chairman of the House of Representatives Committee on Legislative Franchises, said complaints from Peco customers of up to 1,000-percent increase in monthly electricity bills is just one of the factors being seriously considered by the House committee in coming up with a decision whether pr not to extend the franchise.

Iloilo City Councilor Joshua Alim said that, early this year, the city had to ask the Energy Regulatory Commission (ERC) to help resolve the complaint of many Iloilo residents regarding erroneous billing, mainly on account of a new metering system employed by Peco.

During the ERC session last April 2018, Peco admitted the errors occurred because of the new meter-reading system it implemented.

The ERC resolved 80 percent of the complaints of the Iloilo City consumers, except the ones that concerned the sudden increase in the bills due to alleged uncollected consumption, indicating the utility firm continued to have problems in its system, the Iloilo city councilor said.

Peco posted profits and declared tens of millions of dividends to its stockholders from 2015 to 2017 amid strong protest from residents of Iloilo City complaining of Peco’s penchant to over-bill its customers, including the most recent case of a sudden 1,000-percent increase in many residents’ monthly bill.

Alavarez said the committee could not reconcile Peco’s ability to declare dividends amid mounting complaints from its customers.

Based on company declarations with the Securities and Exchange Commission, Peco paid the Lopez-owned First Philippine Holdings Corp. which owns 30 percent of Peco, P51 million in dividends in 2017, up from P43 million in 2016 and P41 million in 2015.

“The committee, after a careful deliberation, decided we cannot tolerate continued abuse of the congressional franchise as shown by PECO’s failure to protect the interest of consumers. We based our conclusion on the recommendation of the Iloilo City Council resolution seeking the denial of Peco’s franchise renewal and the tons of complaints that the ERC has received from Iloilo residents on over-billing and inefficient service,” Alvarez said.

Alim also noted Peco’s ability to declare dividends while ignoring the complaints of its customer base.

“While we do not mind the ability of the company to make profits, it should have given priority to addressing the complaints of its customers as it makes money and profits from the payment of city residents,” Alim said.

“Consumers have a right to be properly informed of the cost of the service they procure. In Peco’s case, it just went and billed Iloilo residents with no regard if such bills could be paid properly or not, and the worst is that had the ERC not step in, these residents would have had their connection cut for failing to pay these bills,” Alim said.

The committee is recommending that the legislative franchise to operate the electricity distribution service in Iloilo be granted to another applicant, the Razon-owned More Minerals Corp.