Big energy fight in Iloilo

"Why let a rookie bypass a veteran player in the middle of a crucial game?"

The Panay Electric Company (PECO) has been the power service provider of Iloilo City since the early 1920s. In 1994, its franchise expired but was again renewed via a fresh 25-year franchise as the sole power distributor in the city. With the passage of the Electric Power Industry Reform Act (EPIRA) carrying with it the mandate that Electric Distribution Utilities can no longer produce power but only buy from power suppliers, PECO sold its stake in the Panay Power Corporation (PPC) and shut down its diesel-generating units to primarily focus on sourcing of power and distributing it to the consumers of Iloilo City.

In January 18, 2019, PECO’s franchise expired. In the interim, to avoid power interruption, the Energy Regulatory Commission granted a provisional Certificate of Public Convenience and Necessity (CPCN) allowing PECO to continue distributing power in Iloilo City.

The problem started when, on February 14, 2019, President Duterte signed into law Republic Act 11212 granting More Power Electric Corp. (MORE) owned by billionaire Enrique Razon, the franchise to distribute power in Iloilo City. This notwithstanding PECO’s protestations that it has been bypassed for franchise renewal. According to PECO administrative manager Marcelo Cacho, PECO has been waiting for the schedule of its franchise renewal hearing since last year, but no schedule was given despite "constant follow-ups." Inexplicably, PECO’s application was denied by Congress even before PECO could submit its supporting documents and data to back up its franchise renewal bid.

It is apparent that in granting the distribution franchise to MORE, the legislature has not accorded PECO the right to defend its 95-year track record as a power distributor in Iloilo. Its application was denied perfunctorily even before the old power distributor could submit documents and data in its defense. This smacks of a denial of due process. Elementary due process dictates that PECO should at least been given the opportunity to defend its record.

PECO is an experienced veteran in the field of power distribution with almost a century under its sleeve. It has all its facilities in place and readily installed that could be utilized to continue its service of providing electricity to the Ilonggos. On the other hand, MORE is an upstart with no facilities in place in the locality; hence, it has to acquire the assets of PECO to even start its power distribution operations. In its bid to expropriate the facilities of PECO in order to start providing power, MORE has betrayed its inability to perform the conditions of its franchise. This PECO is now questioning—the authority of MORE under its franchise to acquire the assets of PECO, as the Razon company has now initiated that process.

It is obvious by now that granting franchise to MORE, a neophyte in the game of power distribution, is ill-thought of and myopic, to say the least. Why let a rookie bypass a veteran player in the middle of a crucial game? A basketball coach worth his grain of salt would never do such a thing. As Cito Beltran wrote in his Philippine Star column in 2018: "How on earth can a 90-year-old-plus company that went from the ground up in power distribution covering 64 square kilometers of Iloilo City and with an investment of P1.7 billion pesos in its operation simply be taken over by a mining firm whose only possible ace card would be the billions it can tap into from sister companies engaged in gambling and port operations. The would-be competitor for the franchise does not have the track record, history, or logistics on the ground that would make them a legitimate aspirant for such a takeover. If the Panay franchise were subject to bidding in a fair and square process, MORE Inc. would automatically be disqualified on the basis of  having no experience in power distribution."

Sadly, that is precisely what Congress did when it passed R.A. 11212 and ousted PECO. Understandably, irate Iloilo residents are venting their anger on social media over the almost daily prolonged power interruptions; the city council lamenting the effects of these brownouts on the economy, which is already reeling under the weight of the extended community quarantines. According to some residents, the brownouts they are now experiencing are worse than those they experienced under PECO.

Should MORE emerge as the sole electricity provider in the city, to sideline PECO, Iloilo City will be back on square one to the utter detriment of the Ilonggos who can only cry out—Walang liwanag ang bukas!! (There is no light tomorrow.)

In Part 2 of this column, I will write about the legal and policy issues at stake here as it has serious implications on Philippine energy policy not just for Iloilo but for the country.

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Topics: Tony La Vina , Panay Electric Company , PECO , More Power Electric Corp. , MORE , Iloilo City
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