Consumer advocate warns Senate of higher power rates unless Meralco franchise bill gets amended

By Dhel Nazario – Dec 18, 2024 05:41 PM
from Manila Bulletin

A consumer rights advocate called on the Senate to amend key provisions in the proposed measure to renew the Manila Electric Co. (Meralco) franchise, aiming to protect consumers from further power rate hikes.

In a letter addressed to Senate President Francis “Chiz” Escudero and other senators, consumer rights advocate Romeo Junia stated that the Meralco franchise renewal bill, if not amended, “will simply continue Meralco’s ability to abuse its dominant position as the largest distribution utility and energy player in the country.”

“The Philippines will not only maintain its dubious record of having the highest electricity costs in Southeast Asia; power costs will likely increase even further if nothing is done to curtail Meralco’s apparent abuse of market power. The franchise renewal represents a very rare occasion where Congress can put limits on Meralco’s power,” he said.

Approved House Bill 10926 seeks to renew the 25-year franchise of Meralco, granting it to maintain its electric distribution systems in all of Metro Manila and nearby provinces, which account for more than 70 percent of the Philippine economy. The counterpart bill is pending at the Senate.

Junia cited reforms and improvements in the energy sector through passed laws and pending legislation, such as the Electric Power Industry Reform Act of 2001, the Renewable Energy Act of 2008, and the proposed Philippine Natural Gas Industry Development Act. He pointed out that while Meralco plays a critical role to achieve the objectives of such laws, the distribution utility is simply “disincentivized” to implement them effectively.

“Rather, it will seek to increase its power in the energy industry by leveraging on its monopoly status, giving more business to favored power plants at the expense of competitors,” he said.

Junia urged senators to include specific provisions in the proposed franchise renewal “to unequivocally show the intent of Congress to draw the clear lines that Meralco cannot cross,  even with and especially from its dominant position in the industry.”

He asked senators to introduce amendments to the proposed Meralco franchise law to:

• End further delays in enforcing the Retail Competition and Open Access (RCOA) provision of the EPIRA.
• Halt the further delay of the net metering provision of the Renewable Energy law.
• Prevent the awarding of power supply deals or the increased use of supply from Meralco-affiliated companies, which often rely on dirty coal or expensive plants while competitors offer cleaner or less expensive solutions.
• Require Meralco to comply with laws against market power abuse, cross-ownership, and anti-competitive behavior. Cross-ownership refers to generation companies associated with Meralco through common parent companies.
• Reiterate the Department of Energy’s policy on the competitive selection process to prevent abuse in awarding power supply contracts to Meralco’s own power plants.

Junia said that while safeguards are already included in the House approved bill, these need to be reiterated through penalties, including possible cancellation of Meralco’s franchise.

“At this point, when various stakeholders have already come forward with their concerns and views over the on-going effort to renew, today, the franchise that expires in 2028, we hope the Senate will find time to resolve all the issues, address all our concerns and incorporate into the final franchise law the safeguards that will protect consumers,” he said.