Senate urged to amend Meralco franchise bill

The Senate has been urged to amend House Bill 10926, or the bill that gives Meralco a fresh 25-year franchise, by putting provisions that would curb what a consumer rights advocate called the company's "apparent abuse of market power."

Consumer rights advocate Romeo Junia wrote to Senate President Francis "Chiz" Escudero expressing his concern about the current version of the bill, saying the present form "will simply continue Meralco's ability to abuse its dominant position as distribution utility and energy player in the country."

"The Philippines will not only maintain its dubious record of having the highest electricity costs in Southeast Asia; power costs will likely increase even further if nothing is done to curtail Meralco's apparent abuse of market power," Junia said in the letter.

The consumer rights advocate pointed out that franchise renewal would be the "very rare occasion where Congress can put limits on Meralco's power."

While Congress pushed for laws and bills to improve regulations in the energy sector such as the Electric Power Industry Reform Act of 2001, the Renewable Energy Act of 2008, and the proposed Philippine Natural Gas Industry Development Act, Junia said Meralco is "disincentivized" to implement these measures.

"Language should be written into the final Meralco franchise law, if it is to be renewed, to unequivocally show the intent of Congress to draw the clear lines that Meralco cannot cross, even with and especially from its dominant position in the industry," Junia urged.

He then suggested several amendments to the current version of the bill including:

• ending further delays in enforcing the Retail Competition and Open Access (RCOA) provision of the EPIRA;
• halting the further delay of the net metering provision of the Renewable Energy law;
• preventing the awarding of power supply deals or the increased use of supply from Meralco-affiliated companies, which often rely on dirty coal or expensive plants while competitors offer cleaner or less expensive solutions;
• requiring Meralco to comply with laws against market power abuse, cross-ownership, and anti-competitive behavior; and
• reiterating the Department of Energy's policy on the competitive selection process to prevent abuse in awarding power supply contracts to Meralco’s own power plants.  

 
"While it may be argued that these protections are already in the law, they need to be reiterated and emphasized in the Meralco franchise. Putting these provisions in the Meralco franchise would mean violations are subject to penalties on Meralco, including cancellation of its franchise," Junia said.

"At this point, when various stakeholders have already come forward with their concerns and views over the on-going effort to renew, today, the franchise that expires in 2028, we hope the Senate will find time to resolve all the issues, address all our concerns and incorporate into the final franchise law the safeguards that will protect consumers," he added.

The bill renewing Meralco's franchise is currently under the period of interpellations in the Senate.

Meralco responds

Asked for comment on Junia's letter, Meralco's Joe Zaldarriaga said that the distribution utility company has always been compliant will all laws, regulations and policies governing its franchise and the energy sector in general.

"Meralco takes its mandate seriously, recognizing our responsibility to support national energy policies and objectives. Our adherence to the Electric Power Industry Reform Act (EPIRA), the Renewable Energy Act, and other energy laws has been consistent and above board. On top of that, we have always been committed to advancing energy efficiency, promoting renewable energy integration, and upholding retail competition, as mandated by existing laws," Zaldarriaga said.

"As a highly regulated entity, our operations are conducted transparently and in accordance with the stringent oversight the ERC (Energy Regulation Commission),"  he added.

Further, Meralco said the rates that it charge to its customers "undergo a thorough review, approval, and confirmation process that includes public hearings."

This, he said, ensures that our rates are fair, reasonable, and reflective of the actual costs of delivering reliable electricity service.

It similarly guarantees that Meralco’s operations adheres to the principles of fairness and aligns with the public interest. We have met and in fact surpassed the  guaranteed service levels set by law and this is of public record, he added.

Zaldarriaga also refuted allegations of abuse of market power or unfair practices, saying these are "totally unfair and without factual basis."

"Mr. Junia fails to recognize the strict regulatory framework under which we operate. Considering he has attended public hearings I am surprised why he is unaware of this," the Meralco official said.

Zaldarriaga said Meralco welcomes constructive dialogue and engages with all stakeholders to address any concerns. — BM, GMA Integrated News