Senate OKs bills expanding the franchise areas of 2 power utility firms

The Senate building at the GSIS Complex in Pasay City. (Photo by LYN RILLON / Philippine Daily Inquirer)

MANILA, Philippines — The Senate on Monday approved on third and final reading bills seeking to expand the franchise areas of two power utility companies.

With 17 affirmative votes, one negative vote, and no abstention, the Senate approved House Bill No. 10306 which seeks to expand the franchise areas of MORE Electric and Power Corporation to 16 cities and municipalities in the province of Iloilo.

Senator Sherwin Gatchalian, chairman of the Senate energy committee, voted against the bill.

“Let me be clear that I am one with the body in finding solutions to improve services and lower electricity rates for all consumers in the country. However, inasmuch as I understand the intent of the sponsors of this bill, I am voting no to this proposal,” he told his colleagues.

In explaining his vote, Gatchalian raised concerns regarding the need to expand the franchise area of MORE Power.

“During the hearing of this proposal, it was established that the clamor for this bill came from the lower generation rate of MORE Power and not because of the performance of the 3 Iloilo Electric Cooperatives (ILECOs) considering that these 3 ILECOs are triple A rated and category green ECs. The lower generation rate of MORE Power is a result of an emergency power supply agreement (EPSA) directly negotiated with the Power Sector Assets and Liabilities Management Corporation (PSALM),” he said.

But the said EPSA is set to expire on July 25 this year, Gatchalian noted.

Further, he said that MORE Power is expected to yield “almost the same” weighted average generation rate as the three ILECOs at around P7 per kilowatt-hour (kWh).

“I would like to emphasize that the 3 ILECOs are triple A rated and categorized as green. This means they meet all the technical, financial, and institutional standards for ECs. Also, it has been established that after 25 July 2022, MORE Power’s generation rate will be similar to the ILECOs,” he went on.

“As such, this begs the question: what value added does MORE Power have to bring to the consumers in the proposed expansion area? It appears that there is none. Considering that a distribution utility is a natural monopoly and the ILECOs are excellently delivering services to the Ilonggos, will not the entry of MORE Power result to ruinous competition not only for the ILECOs but also for MORE Power?” he added.

Gatchalian also raised fears that allowing another distribution utility (DU) to enter the franchise area of the three ILECOs “will give rise to uncertainty almost in the entire electric power value chain.”

Meanwhile, the Senate also approved House Bill No. 10554 seeking to expand the franchise area of Davao Light and Power Company, Inc. to areas in Davao City, Panabo City, Tagum City, the Island Garden City of Samal, and the municipalities of Carmen, Dujali,  nd Santo Tomas, Asuncion, Kapalong, New Corella, San Isidro and Talaingod in Davao del Norte.

Sixteen senators voted in favor of the bill while Senator Risa Hontiveros voted against the bill. Gatchalian, for his part, abstained from voting on the measure.

Hontiveros explained her vote, expressing fear that repealing the franchise of Northern Davao Electric Cooperative (Nordeco), Inc. as implicated through the expansion of the franchise of another DU may be “exposing Nordeco’s consumer members, as well as its employees, to more risk and uncertainty.”

“My vote is a vote not against Davao Light and Power, the professionalism and competence of whose management and workforce I respect and recognize, but it is a vote for Nordeco and all similarly situated electric cooperatives,” Hontiveros said.

The Senate also approved on third and final reading a House bill granting Racitel Telcom, Inc. another 25-year franchise to operate in five Bulacan municipalities. The chamber also gave its nod to another House measure giving a franchise to Oro Broadcasting Network, Inc.

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MORE Power Corp.’s P1.9-B investment showing results in Iloilo

JPV