A call for MORE Power-ILECO 1 JVA

By Herbert L. Vego

In my previous column, I cited an emerging “friendly competition” between MORE Electric and Power Corp. (MORE Power) and Iloilo 1 Electric Cooperative (ILECO 1) because of Rep. Janette Garin’s House Bill 7647, which provides for the extended franchise of the former to distribute electricity in the 1st District of Iloilo that she represents.

The bill has passed the House and is now in the Senate, and ILECO 1 — which is still the lone power distributor in all seven towns of her district — appears well-prepared to beef up its own expansion in the still unenergized barangays.

In light of the global oil price surges due to the Iran-Israel war, however, would it not be practical for the two distribution utilities to pool resources through a joint venture agreement (JVA)?

Otherwise, the one with cheaper rates would eventually “drown” the other, and let us remember that Garin filed her bill purportedly in response to public clamor for better service, citing a Supreme Court ruling that allows competition in the distribution utility sector.

She cited a resolution of the Sangguniang Bayan of Miag-ao, partly stating: “The driving premise behind this initiative is the collective aspiration of the constituents to enjoy the same improved quality of electrical service currently available in areas already served by MORE Power.”

Garin would only withdraw her bill if ILECO 1 would slash its residential rate by at least 2 pesos per kilowatt-hour, but ILECO 1 would not.

While I was listening to a radio newscast yesterday, a news report carried the voice of MORE Power President Roel Z. Castro, enthusing, “Yes, we are open.”

It was his response to a reporter’s question on whether he would be open to a partnership with ILECO 1.

Castro cited the now-successful joint venture agreement with Central Negros Electric Cooperative (CENECO), resulting in the emergence of Negros Electric and Power Corp. (NEPC) in 2024.

That joint venture saved CENECO from impending bankruptcy due to its incapacity to pay its accumulated bank debts amounting to PHP 800 million.

This is not to say, however, that ILECO 1 has a similar predicament; rather, it is a matter involving economies of scale, where a larger competitor has the advantage of producing more goods or services at less cost per unit.

Garin’s House Bill 7647 is another amendment to Republic Act (RA) No. 11212, which awarded MORE Power a franchise to distribute electric power to Iloilo City, and to RA 11918, which expanded its franchise to include 15 municipalities and Passi City in the province of Iloilo.

If the bill morphs into law, will the 7 municipalities of the 1st District — Igbaras, Tubungan, Oton, Tigbauan, Guimbal, Miag-ao and San Joaquin — remain “loyal” to ILECO 1?

Or will ILECO 1 give up more or less 50% of its customer base to MORE Power?

At present, ILECO 1 has around 85,000 consumers in the 1st District of Iloilo.

MORE Power has 105,000 in Iloilo City alone.

However, take note that, outside the city, MORE Power has already won the franchise (RA 11918) to also energize the 15 municipalities of Alimodian, Leganes, Leon, New Lucena, Pavia, San Miguel, Santa Barbara, Zarraga, Anilao, Banate, Barotac Nuevo, Dingle, Dueñas, Dumangas and San Enrique, plus Passi City.

Since 6 of them — Alimodian, Leganes, Leon, San Miguel, Pavia and Santa Barbara — are already being served by ILECO 1, it goes without saying that the MORE Power — ILECO 1 competition has already kicked off in these service areas, notably in Pavia, where some ILECO 1 customers have already shifted to MORE Power, where the latter’s power lines have emerged.

Therefore, the two distribution utilities are now vying for overlapping service areas.

Assuming that ILECO 1 still enjoys the patronage of 250,000 customers, losing more or less half of them to MORE Power would reduce its customer base to a level that could undermine its ability to compete and sustain viability.

Let this writer’s personal view be food for thought.