Meralco eyes JV with electric coop

By BUSINESS SNIPPETS – Marianne Go – December 11, 2024 | 12:00am
from The Philippine Star

In a briefing to members of the Monday Circle at the start of the week, Meralco senior vice president and chief government and external affairs officer Arnel Casanova explained that Meralco’s objective is to help improve the delivery of reliable power to Batangas with its booming manufacturing and tourism potential.

Walter Bollozos, file

Pangilinan-led Manila Electric Company, better known as Meralco, is eyeing a joint venture with the Batangas II Electric Cooperative Inc. or BATELEC II, one of the two electric cooperatives that distribute electricity to Batangas province, as Meralco strives to enhance its services to provinces adjacent to the Mega Manila grid.

In a briefing to members of the Monday Circle at the start of the week, Meralco senior vice president and chief government and external affairs officer Arnel Casanova explained that Meralco’s objective is to help improve the delivery of reliable power to Batangas with its booming manufacturing and tourism potential.

Over breakfast at the Westin Manila, Casanova emphasized that “our objective really is to make the Philippines competitive in the global economy, particularly in a world that is becoming digital. So when it comes to food security, we need power for cold storage.

“When it comes to healthcare, we need power for our hospitals to operate very well. And, of course, for the quality of life of people and for businesses.”

Meralco, Casanova said, has already submitted a proposal to BATELEC II “because that’s an adjoining province, Batangas is already surrounded by the Meralco franchise from Quezon to Laguna to Cavite.”

BATELEC II, he pointed out “is considered the biggest electric cooperative in the Philippines, but is still suffering from a lot of problems.” Casanova, who hails from Batangas, laments that the province “suffers eight hour brownouts on weekends, and intermittent and fluctuating power.”

Elaborating further, Casanova added that “the frequency of brownouts is really bothersome. For many businesses, they’re being discouraged to actually move there. Even for tourism and healthcare, you know, because a lot of resort and resort businesses – they are complaining of break down of their air conditioning and refrigeration because of the fluctuation and the frequency of brownouts.”

Meralco’s proposal, he said, involves gaining “a majority, because in that way, we’ll be able to influence the service,” with the hope of completing the deal quickly “so that we could provide better services to our people.”

Under the proposal, Meralco is offering to infuse equity “only within the legal entity. We are not going to take over the franchise.”

“We have just submitted the proposal and we have to do the due diligence to be able to come up with the number for the capital expenditure. We have somehow a figure in our mind, but we had to evaluate closely the assets of the electric operatives because to upgrade the service, we need to know what’s the condition of the transformers, the substations and even the lines,” he explained.

Batangas’ power problem, Casanova said, “reflects why the countryside is poor. We lack literally power. So, our thrust in Meralco is to lend our size, our economies of scale, our technological capability and advancement because we are so far the best in service, and when it comes to technology, you may observe also that even during typhoons, the lights are still on. We only turn it off when there are floods, which for safety reasons. But because of our capability, we want that same quality of service to be all over the country. So hindi kami madamot sa ganyang teknolohiya and the and capability.”

The Meralco executive cited his own experience growing up without electricity in Batangas, relying on gas lamps for illumination while doing his schoolwork, with their barangay only energized when he was already 10 years old in 1980.

Life without electricity, Casanova recalled was difficult, “but when electricity came, we were able to read more…we were able to study more. My mother was able to produce more. And because of that the quality of life has really improved. And we’ve seen this happen as the good electrification moved on over the decades and now almost 95 to 98 percent of our countryside are already energized residentially.”

However, he continued, “We are now in the era of digitalization and artificial intelligence. In the 1970s and 1980s, we had typewriters… there was no internet, there was no cell phone during our generation. But now, the industries and everything is driven by electricity, because it has gone digital. And more so in the future, in the coming years, because with the a momentum and the speed that artificial intelligence (is developing), it has impacted our lives. We believe that eventually artificial intelligence is going to be a part of our lifestyle in the same way that our tablets and our cell phones have become, and social media has become part of.”

He noted that the impact of electrification is “so much more that power is demanded.” Last summer, Casanova cited that the Meralco grid experienced red alerts, “simply because people had turned their air conditioning on in the very hot summer created by climate change. So climate change is also a an issue because we have hotter summers, longer summers… and also flooding and during rainy season.”

Meralco, Casanova said, “wants to lend its capability and be a nation builder in this sense. Without doubt we are the biggest power distribution utility in terms of size, but in terms of area that we cover, that’s only three percent. We want to uplift the lives of the people, for the entire country so that we may be able to build industries, the cold storage for farmers, industries for our engineers.”

He lamented the fact that the country has been left behind in becoming a center for research and development, citing the recent signing of an agreement between India and Vietnam to establish their center for research and development for AI. “We could have had that center… for a long time, Texas instrument has already been here. Samsung has already been here. We have been a key player in semiconductors and electronics for a long, long time, but we need power, both in the supply, so we need to invest more in (power) generation.

Meralco, Casanova said, is on a “trail blazing, nation building mode.” However, he acknowledged, “Meralco’s franchise is only within three percent of the land area of the Philippines. Unknown to many Filipinos who think that Meralco is all over the country. The truth is we only actually cover three percent of the entire land area. But within that three percent of the land area, within Meralco’s franchise, we distribute 55 percent of the entire country’s power supply. Which means also that 55 percent also of the GDP is being produced within that three percent of land area.”

He pointed out that “if you look at the economic data, you will see that the GDP per capita of Filipinos within the Meralco franchise is about P500,000 per annum. Yet, in the rest of the country, outside the Meralco franchise, the average GDP per capita of Filipino is about P150,000 to 100,00 only per annum. That’s a very big gap between those within the Meralco franchise and those outside the Meralco franchise and being served by the electric operatives. That’s also the reason why you may observe that our economy is comprised and driven mostly by services. Simply because the industries and manufacturing are crowding within the Meralco franchise and cannot move out to the countryside.”