No more MORE-PECO conflict

By Herbert Vego

 

It’s all over but the shouting!

That idiom aptly describes the peaceful turnover of the business office of the defunct Panay Electric Co. (PECO) to MORE Electric & Power Corp. (MORE Power) the other day.

The security guards and caretaker made no resistance when a city sheriff served the order of Judge Victorino Maniba (Regional Trial Court Branch 39) implementing the expropriation of the building on Gen. Luna St. and several other estates elsewhere in favor of MORE Power as the new power distribution utility in Iloilo City.

There have been conjectures that such seizure of “private property” was unlawful.

Not so. In a radio interview over RMN-Iloilo, MORE spokesman Jonathan Cabrera said that PECO had already recovered its investment for the contested assets from its consumers.

This corner agrees. As stipulated in Republic Act No. 9136 or the “Electric Power Industry Reform Act” (EPIRA), “the costs for the acquisition, construction and the establishment of the power distribution system were allowed to be recovered through the retail rate approved by the Energy Regulatory Commission (ERC).”

The Supreme Court has ruled on the constitutionality of the takeover based on Republic Act No. 11212. MORE has been running the utility since February 29, 2020.

The unchallenged takeover indicates PECO’s recognition of MORE Power as its legitimate successor for the next 25 years.

Under Article XI, Section 11 of the 1987 Constitution, public utilities like PECO must secure a legislative franchise before it could operate.

The only remaining matter to be threshed out is the implementation of the “just compensation” clause that RA 11212 requires MORE Power to pay PECO. The amount offered is PHP481,842,450 – based on its tax declaration — which has already been escrowed in a bank for that purpose.

There had been rumors that PECO was demanding for P2 billion or even more, but this was never admitted.

There had also been published columns insinuating that MORE Power’s chairman Enrique Razon Jr. had offered to buy PECO for PHP6-billion but this was denied by PECO Administrative Officer Marcelo Castro when interviewed by DyRI broadcaster Henry Lumawag. He added that the value of the business was much more than that.

The transition law could have been implemented soon after President Duterte signed it on February 14, 2019. But PECO, despite the expiration of its franchise on January 19 that year, contested the constitutionality of two of its provisions in court, namely Sections 10 and 17.

Section 10 on the “right of eminent domain” says, “The grantee may acquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted, including but not limited to poles, wires, cables, transformers… Provided, that proper expropriation proceedings shall have been instituted and just compensation paid.”

Section 17 provided for a smooth transition: “Panay Electric Co. (PECO) shall in the interim be authorized to operate the existing distribution system within the franchise area… until the establishment or acquisition by the grantee of its own distribution system and its complete transition towards full operations as determined by the ERC.”

The only way for the new franchisee to begin its job was to expropriate its predecessor’s power lines, substations, poles, feeders, transformers and other facilities.

With the expiration of PECO’s legislative franchise on January 19, 2019, it had no more legal leg to move on.

BUT PECO held on by virtue of a “hold-over” certificate of public convenience and necessity (CPCN) issued by the Energy Regulatory Commission (ERC).

PECO questioned MORE Power’s capacity to take over because, as a newcomer, it had to build itself from scratch.

There is no more doubt that MORE Power, in its first 11 months of operation, has proven itself capable. The “inexperience” issue has faded away with the transfer of more than 50 of PECO’s engineers and linemen to the new franchisee. No less than MORE’s president and chief operating officer, Roel Z. Castro, had held the same post with Palm Conception Power Corp.

Knowing Castro to be reconciliatory, we can only hope for a happy ending to their war on power.