Power rates ought to be the same

By Herbert Vego

THE last time I met President Roel Z. Castro of MORE Electric and Power Corp. (MORE Power), he enthused about his dream of bringing about “One Iloilo, One Rate, One Service”” in electricity distribution.

He said it would establish a gold standard of service across the province, ensuring that superior power reliability is guaranteed regardless of where an investor chooses to invest.

“The benefit of this is that investors would know where to invest within Iloilo,” Castro said. “If the rate is the same, it would remove confusion.”

Investors can then focus on other considerations such as location, real estate cost, and business environment conducive to their business.

“You make it easier for them. Whether they go to the city or the province, the rate is the same. It will no longer be a point of decision. They can just decide where it is more practical for their businesses,” Castro said.

How can I disagree with that? At the moment, MORE Power charges the lowest monthly rates in Western Visayas at PHP 12.1421 per kilowatt-hour.

Unfortunately, a unified rate structure could not remain constant because the costs of fuel, generation and transmission charges continuously fluctuate and are embedded in the end user’s bill.

As revealed by Niel Parcon, one of MORE Power’s vice presidents, 60 percent of a consumer’s electricity bill comes from various power plants that generate electricity.

Anyway, this brings to my mind House Bill 7647. Sponsored by Rep. Janette Garin (1^st District, Iloilo), it would allow MORE Power — Iloilo City’s sole power distribution utility — to compete with Iloilo I Electric Cooperative Inc. (ILECO 1) in her turf.

It seeks to amend Republic Act No. 11212, which awarded MORE Power a franchise to distribute electric power to Iloilo City, and Republic Act No. 11918, which expanded its franchise to include Passi City and 15 municipalities in Iloilo.

By and large, competition is favorable to consumers because it forces competitors to lower prices, improve product quality, and win customer loyalty.

The bill has been approved by the House of Representatives and now awaiting corresponding action by the Senate.

However, is ILECO 1 in a position to survive competition with MORE Power?

At present, it has around 85,000 consumers in the 1st District of Iloilo, while MORE Power has 105,000 in Iloilo City alone.

ILECO 1 is now losing customers to MORE Power in the towns of Pavia and Sta. Barbara, which are now among the towns covered by MORE Power.

Pavia and Sta. Barbara are among the 15 municipalities covered by MORE Power’s new franchise under Republic Act 11918. The rest are Alimodian, Leganes, Leon, New Lucena, San Miguel, Zarraga, Anilao, Banate, Barotac Nuevo, Dingle, Dueñas, Dumangas and San Enrique, plus Passi City.

Assuming that ILECO 1 still enjoys the patronage of 250,000 total number of 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.

No less than former ILECO 1 General Manager Wilfred Billena commented on Facebook:

“No matter what argument ILECO 1 makes, it’s a fact that their services have deteriorated over the years. Their system average interruption frequency index and other similar indexes had considerably gone up to the annoyance of consumers. And that situation is not an indication of preparedness for competition.”

If I may say my two cents’ worth, the approval of Garin’s bill need not result in competition, since ILECO 1, being a non-stock cooperative, does not have the resources to generate private funds.

It would be mutually beneficial for the two distribution utilities to enter into a joint venture agreement.

The ILECO 1 management is no doubt familiar with the joint venture agreement inked between the debt-ridden Central Negros Electric Cooperative (CENECO) and Primelectric Holdings in Bacolod City, resulting in the emergence of Negros Electric and Power Corporation (NEPC or Negro Power) in 2024.

The resulting partnership saved CENECO from bankruptcy. Otherwise, it could not have paid various bank debts estimated to be between PHP 600 and PHP 800 million.

Concequently, Negros Power has grown by leaps and bounds, starting from 177,737 customers in August 2024 to around 300,000 today.