The People for Power (P4P) coalition raised alarm over what it said was the rush to renew the franchise of the country’s biggest power retailer Manila Electric Co. (Meralco), which would expire in 2028, but is already being pushed for renewal now.
P4P said in a statement the advanced renewal of the Meralco franchise also appears to be intended to whitewash the various allegations against the giant power distributor, which it has yet to fully address.
“If we give Meralco an early franchise renewal, we are giving them a free pass on all the allegations against them,” said P4P convenor Gerry Arances.
“Giving them a decades-long franchise now will remove the ability of the government to hold them to account and protect consumers,” he added.
Arances said Meralco’s current franchise will expire four years from now but, already, Albay Rep. Joey Salceda is pushing for a renewal this early, filing a bill to extend the Meralco franchise for another 25 years.
“The fact that Meralco is pushing for an early renewal shows that they want to escape any responsibility for any findings that the House of Representatives or any government body might find in an investigation into their practices,” Arances said.
“Their franchise is still good for a few more years, they’re earning a lot of money, they can wait until consumers have their say,” he said.
For its part, Meralco spokesperson Joe Zaldarriaga said the filing of separate bills to renew the legislative franchise of the company by veteran and respected lawmakers “is a firm validation of the relentless efforts of Meralco to deliver power and serve millions of Filipinos.”
“Granting the franchise renewal would allow Meralco’s growing number of customers to continue enjoying stable and reliable electricity service, which is vital in powering not just households, but also industrial and commercial customers that drive the country’s economic progress,” he said.
“As a highly-regulated entity, Meralco has always been strictly compliant of the laws and regulations governing its franchise,” Zaldarriaga added.
However, the P4P leader said Meralco is required by its existing franchise to deliver quality service to consumers at least possible costs.
“They do not exactly have a clean track record on this end, with consumers repeatedly questioning terms, expensive fossil-based contracts, and other business practices that weigh heavily on our pockets,” Arances said.
Among the various issues raised against the Meralco franchise renewal during a hearing of the House legislative franchise committee were its continuing use of 14.97 percent as its weighted average cost of capital (WACC), which has been used as the ceiling for its profit margin since 2011.
Legislators questioned the figure, saying it should have gone lower because the 14.95 percent was arrived at 13 years ago. The level of WACC allows Meralco to raise its profits.
P4P also questioned the inclusion of the Meralco theater, Meralco museum, wellness center and other facilities in the utility’s asset base which, in turn, is used to compute its WACC.
They also raised concern over the grant of power supply contracts to associate firms or companies that are owned by Meralco’s mother company, Metro Pacific, and which they said puts Meralco in a conflict-of-interest situation.
The number of legislators opposing the rush to renew the Meralco franchise is growing, among them Sta Rosa City Rep. Danilo Fernandez and Surigao del Norte Rep. Johnny Pimentel.
Fernandez is vice chair of the House energy committee while Pimentel is vice chair of the House legislative franchise committee, which is now deliberating the proposal to renew the Meralco franchise way ahead of its expiry.
