By Herbert Vego
THE good news for residents of 14 towns and a component city of Iloilo Province is the Senate’s approval on second reading the other day of House Bill 10306, granting MORE Electric and Power Corp. (MORE Power), the authority to expand its franchise area from Iloilo City to 15 towns and a component city of Iloilo Province.
There appeared to be no stumbling block to its passage with the assurance of Senator Grace Poe (bill sponsor and chair of the Senate’s Public Services Committee) that the corporation remained under control of the same major owners.
MORE Power is expected to invest P1.5 billion for its expansion to the towns of Alimodian, Leganes, Leon, New Lucena, Pavia, San Miguel, Santa Barbara, and Zarraga in the Second District of Iloilo; and Anilao, Banate, Barotac Nuevo, Dingle, Duenas, Dumangas, San Enrique and Passi City in the Fourth District. .
To the fear raised by Senator Sherwin Gatchalian that MORE Power’s provincial entry might affect the stability of the Iloilo Electric Cooperatives (ILECOs) and force them to increase rates, Senator Ralph Recto countered that, on the contrary, this would spur competition that would be beneficial to electricity consumers.
At present, MORE Power charges household customers P7.22 per kilowatt-hour. The electric cooperatives, on the other hand, charge higher rates at P11 to P13/kWh.
Would that not be incentive enough for the co-ops to reduce rates? Naturally they would exert efforts to level down to MORE Power’s rates.
Another way is for them to enter into a mutually beneficial joint venture agreement.
There is no basis to the rumor that MORE aims to expropriate the assets of the co-ops. That could not be done, according to Senator Franklin Drilon, because the ILECOs still enjoy existing franchises.
The Senate has calendared the expansion franchise for the third and final reading any day next week.
There is therefore a strong possibility that President Rodrigo Duterte would sign the Poe bill into law before his term ends on June 30, 2022.
The question that comes next: Does MORE Power have the capacity to expand its franchise area to 15 towns and a city?
“Yes,” answered MORE Power President Roel Z. Castro when asked by broadcasters Novie Guazo and Regan Arlos of dyRI-RMN-Iloilo yesterday.
“But we have to do it gradually,” Castro added, “in one year.”
The franchise expansion would amend RA 11212, signed by President Duterte on February 14, 2019, granting MORE Power the distribution-utility franchise in Iloilo City only.
If implemented, the amended law would not abolish the three branches of the Iloilo Electric Cooperative (ILECO) that have been operating in the aforesaid city and towns since the 1970s.
I remember that when the bill was still being deliberated by the House of Representatives, the Philippine Rural Electric Cooperatives Association (Philreca) had opposed its passage, alleging that “it would be a violation of RA 9136, or the Electric Power Industry Reform Act of 2001 (Epira)”; that the premise that More Power has the lowest rates in the country is not only without context but is flawed; that, in the long run, MORE would charge the consumers a higher rate; and that differences in consumer’s power rates are primarily due to generation cost, not distribution cost.”
Power consumers in Iloilo Province could not understand why ILECO could not level down its electricity cost. Like MORE, it has the option to patronize cheaper energy from various generating utilities. At present, MORE Power depends mostly on geothermal energy from the Power Sector Assets and Liabilities Management (PSALM) Corp.
Philreca’s contention that MORE would charge higher rates in the long run is speculative, since all prices tend to rise in accordance with monetary inflation and the law of supply and demand.
According to the economies of scale, a fall in cost of production results from increased output. Therefore, a competitive distribution utility would tend to offer lower prices of its services to increasing number of end users.