Salceda: New Meralco franchise good for economy; Makabayan wants no rush

Albay 2nd District Rep. Joey Salceda at Kapihan sa Manila Bay. INQUIRER PHOTO

MANILA, Philippines — Albay 2nd District Rep. Joey Salceda believes that renewing the legislative franchise of Manila Electric Company (Meralco) for another 25 years will be good for the Philippine economy.

Salceda said in a statement last Monday — just as hearings on the proposed new franchise for Meralco began — that Meralco has been able to comply with the conditions of its current franchise.

“The case for renewing Meralco’s franchise is plain and simple: it has complied with the conditions of the franchise law and it is good for the economy and the consumer,” Salceda, who filed House Bill (HB) No. 9793 seeking to renew Meralco’s franchise for another 25 years.

“Meralco provides the most reliable service among all major electric cooperatives and distribution utilities (ECDUs), with outages suffered by the average consumer totaling to mere minutes in an entire year, versus days or weeks worth of blackouts for other neighboring ECDUs,” he added.

But lawmakers from the Makabayan bloc, particularly ACT Teachers party-list Rep. France Castro and Gabriela party-list Rep. Arlene Brosas, said that hearings for Meralco’s new franchise should not be rushed because a lot of issues have to be reviewed.

In a press briefing on Thursday, Brosas mentioned that Meralco will impose an electric rate increase despite the company generating huge profits for the first quarter of 2024.

“Yesterday with the announcement of Meralco of a price increase in electricity, from P10.9518 per kilowatt-hour to P11.4139 per kilowatt-hour, who stands to gain from this?  Definitely it’s not the consumers because they shoulder the price increases.  Then Meralco posted an 11 percent increase for its first quarter earnings of P10.083 billion,” Brosas said.

“That’s too big, they really obtain huge profits.  That’s why we need to properly scrutinize the proposed franchise renewal of Meralco, and this should not be rushed,” she added.

READ: Move to split Meralco franchise hit 

Castro in a separate message to INQUIRER.net said she also hopes the House committee on legislative franchises would be able to study it properly first.

Meralco’s current franchise expires in 2028.

“Yes, it’s too early to discuss, they want to secure the franchise immediately […] hopefully this can be studied properly by the committee on legislative franchises before it is approved,” Castro said in a message.

Brosas said that the focus of the House instead is on the repeal of Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA) and to refrain from allowing private businesses to control the power industry.

“Our call is the immediate repeal of the EPIRA law, which started all these.  Private corporations should not have control over these because they only prioritize profit from the services badly needed by the public,” she noted.

But for Salceda, Meralco’s performance should be emulated by other distribution utilities.

“If all ECDUs performed like Meralco, the economy would create an additional P201 billion in gross value added annually due to avoided outages,” he said. “(Systems loss charges by Meralco are) likewise among the lowest in the area — a product of the P220 billion Meralco has invested over the past twenty years to enhance its electric service.”

“As a testament to Meralco’s effectiveness as a service provider, at least 29 municipalities and cities and at least four provinces outside the franchise area have formally expressed interest to be served by Meralco,” he added.

This is not the first time that lawmakers weighed in on issues surrounding Meralco and its impending franchise renewal.  In November 2023, Santa Rosa City Rep. Dan Fernandez accused Meralco of deliberately refusing to compute their weighted average cost of capital (WACC) — a percentage that determines how much return a company should be getting to ensure the viability of its investments.

Fernandez claimed that the 14.97 percent WACC since 2010 is no longer accurate, claiming that it could be just down to 9.23 percent — which means electric bills of consumers can be charged with a lower WACC, if true.

But Meralco spokesperson Joe Zaldarriaga responded by saying that the company’s rates and services are monitored by state regulators, and that they have performed above what is expected of them.

READ: Meralco’s capital cost too high, passed on to customers – House rep 

Fernandez, however, was called out by fellow lawmakers and consumer groups as the discussions were supposedly unfruitful, with Cagayan de Oro City 2nd District Rep. Rufus Rodriguez suggesting that the focus should be on finding ways to bring electric prices down.