House OKs Meralco franchise extension on second reading

By Kenneth Christiane L. Basilio, Reporter

THE HOUSE of Representatives approved on second reading late Tuesday a bill extending Manila Electric Co.’s (Meralco) franchise for another 25 years, acting on it four years before its current franchise expires.

House Bill (HB) No. 10926, which extends Meralco’s operation beyond 2028, was approved by voice vote. The bill retains a provision preventing Meralco from expanding its service area outside Metro Manila, Bulacan, Cavite, Rizal, and parts of Pampanga, Laguna, Quezon, and Batangas.

The House also adopted amendments to the bill’s consumer interest provisions, requiring Meralco to include its social responsibility initiatives in its annual report, specifically efforts to provide electricity access to unenergized areas.

“Meralco’s mandates under its current franchise were clear. It has met its mandates, hence its franchise merits renewal,” Albay Rep. Jose Ma. Clemente S. Salceda said in plenary during his sponsorship of the bill.

Mr. Salceda said Meralco has complied with its “least cost, efficiency, and reasonable price mandates,” observing all government regulations. “It complies with all the rules of competitive selection, obliged by ERC (Energy Regulatory Commission) rules on maximum rates, as evidenced by the ERC itself.”

“It is among the lowest system losses and is highly dependable,” he added. “It is on the lower end of rates among its neighboring [distribution utilities] in the region.”

Meralco is the main power distributor for Metro Manila and nearby areas, covering 39 cities and 72 municipalities, delivering electricity to at least 7.75 million Filipinos. It provides power to a region responsible for half of the country’s gross domestic product output.

The distribution utility’s franchise should be renewed as it performed better than average power companies, according to Mr. Salceda, citing data on Meralco’s outage frequency and duration.

“[Meralco’s] frequency of outages in minutes is 123.7 minutes per year. The national baseline is 214 [minutes], the world median is 168 [minutes], Meralco was better,” he said.

“In terms of systems loss 5.8%, national baseline 9.4%, the world median is 8%,” he added.

Mr. Salceda said Meralco’s kilowatt-hour (kWh) rate for consumers is lower than the national and global baseline of electric distribution utilities. “Meralco’s at $0.175 versus the national baseline of $0.20 and the world median of $0.198.”

“The reason electricity from Meralco is expensive is because of taxes, while in other countries, it is cheaper due to subsidies,” he said in Filipino.

Meralco in early September said the overall rate will climb by P0.1543 per kWh to P11.7882 per kWh in September. The adjustment will result in an increase of around P31 in the total electricity bill of residential customers consuming at least 200 kWh.

Meralco’s majority owner, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls.