SC: Electric cooperatives have no right to exclusive franchise

Electric cooperatives do not have a constitutional right to an exclusive franchise within their coverage areas, according to the Supreme Court.

In a decision, the Supreme Court En Banc dismissed a petition of the Iloilo Electric Cooperative Inc (ILECOs) challenging the validity of Republic Act (RA) 11918, which expanded the franchise of More Electric and Power Corporation (MORE) to areas within ILECO’s supposed exclusive franchise area.

According to the SC, ILECO has franchise certificates to operate electric light and power services in municipalities in the province of Iloilo and in Passi City while MORE initially only covered Iloilo City.

The RA expanded MORE’s coverage to include the areas already covered by ILECO.

In its petition before the court, ILECO asked for a temporary restraining order and a writ of preliminary injunction to invalidate RA 11918 for violating their rights to exclusive franchises, due process, non-impairment of contracts, and equal protection.

However, the Court said that Section 11, Article XII of the Constitution prohibits exclusive franchises.

Further, the Court said that RA 11918 was granted to make electricity more affordable for citizens in Iloilo. Congress found that expanding MORE’s franchise would offer lower energy rates as ILECO can easily dictate the price of electricity without competition.

“Allowing the entry of another player thus benefits consumers, who no longer have to wait until ILECOs’ franchises expire in 2029, 2039, and 2053. This is in accordance with the Electric Power Industry Reform Act (EPIRA), which encourages competition in the electricity industry,” the SC said in a statement.

The En Banc also said that RA 11918 does not give preferential treatment in favor of MORE.

“As a new franchise holder, MORE is not similarly situated with other utilities which already have existing and functioning distribution systems,” the SC said.

“Thus, the added powers granted to MORE are needed to ensure it is able to provide uninterrupted supply of electricity to its covered areas,” it added.—AOL, GMA Integrated News