Deciding Panay Electric’s renewal: The rational approach
"Where there is a sturdy and reliable horse in the picture, there is surely no need to bring in a pony."Panay Electric Co. Inc. (PECO) is one of the grandest old ladies of Iloilo business. A 95-year-old corporate veteran, PECO is now fighting for its life. Its current franchise will expire in January 2019, and it applied in 2017 for the franchise’s renewal. However, the House of Representatives overwhelmingly voted against a renewal, citing complaints from some of PECO’s customers and some Iloilo officials. Waiting in the wings, ready to take over from PECO, is More Minerals Corporation, a mining company owned by tycoon Enrique Razon Jr. Recently, Mr. Razon made an offer to the government for the development of the part of Iloilo City and one other Iloilo port. Seen against the offer, Mr. Razon’s interest in Iloilo City’s power generation and distribution business is easy to understand. With More Minerals’ public relations (PR) apparatus in full cry, PECO has clearly become an underdog. It does not have a PR apparatus to promote and defend its cause, which is the renewal of a franchise to continue providing service to a population that it has served continuously, through a world war and other national vicissitudes, for almost a century. What is the case against PECO made of? A major newspaper columnist wrote recently about “complaints from Iloilo City households over monthly bills that rose by 1,000 percent” and about “mounting consumer complaints against the firm’s service record.” That is the sum total of the case: alleged over-billing and alleged bad service record. In this regard it is pertinent, nay necessary, to point out that utilities like power companies are vulnerable to complaints relating to billing and service record. Manila Electric Co. (Meralco) is forever at the receiving end of complaints of that nature. But do they necessarily lead to the non-renewal of an expiring franchise and the grant of a franchise—in overwhelming fashion—to another company? If that were the case, Meralco’s franchise would have been non-renewed long ago. Or are power companies like Meralco and the Visayan Electric Co. (VECO) of the politically powerful Aboitiz family too big for the Representatives to take on? The newspaper columnist I cited above ended his piece with this statement: “The (family that owns PECO) thinks (the coming elections are a factor), noting that they were not big donors to politicians, unlike their rival.” And what is the case in favor of PECO’s application for a renewal of its franchise?
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