Consumers in the midst of legal struggle

MISREADINGS | Ted Aldwin E. Ong

It all boils down to a legal fight and the country’s power industry will chronicle another landmark legal battle between More Electric and Power Corp. (More Power), Panay Electric Co. (PECO), the government through its relevant agencies, and power end-users (consumers) of Iloilo City. 

The two companies who fought out to hold a 25-year franchise for power distribution service in Iloilo since last year have entered a new phase by availing of legal relief provided under the Philippine laws in their struggle to uphold each other’s agenda and protect its interest. This is demonstrated by the filing of two distinct cases on two separate courts in the country in over a week.

Last Monday, More Power filed a 14-page Complaint for Expropriation to acquire PECO’s assets at the Regional Trial Court in Iloilo as mandated by a transitory provision of its franchise. PECO, on the other hand, sought out for a Declaratory Relief and for the issuance of a Temporary Restraining Order by filing a 97-page complaint against the issuance of franchise to More Power at the Regional Trial Court in Mandaluyong City.

Certainly, this is a predictable move which I have anticipated from day one when the two companies decided to lock horns and followed by a wanton discharge of the ammos from their respective war chest for an intensified but self-lacerating PR war which made the media extra joyous if not victorious.

Knowing the fact that the country’s power industry is governed by a minefield of laws, the trading of cases between the two companies will set a significant precedent as pondered by the peculiar legal circumstance by which More Power and PECO are grounded today.

The context of the battle is the legitimate control of electricity service. A major input to the economy, electricity is considered as a major commodity in a modernizing society like Iloilo City. The ultimate demand of the constituents is a sustained and undisrupted delivery of service setting aside the unequivocal legal impasse which stems from the absence of established mechanism that can be rightfully applied to resolve the situation that they are in. Therefore, a precedent.

As cases where now filed in court, debates from its chambers will for sure echo the opposing views and legal analysis of the two camps. The two will continue to mobilize their paid hacks who will oversimplify the highly technical and legal process that will characterize these cases in order to connect to the public and gain support.

The prevailing condition in Iloilo City and how the actors will play its role to arrive at a resolution on the cases will become an interesting legal subject which can be used once a similar circumstance will present itself. This is maybe a first time, but definitely this will not be the last.

The situation by which More Power and PECO are now standing may be unusual but a temporary procedure that of a “transition” arranged by the government through the Dept. of Energy (DoE) and the Energy Regulatory Commission (ERC) implies that the government is confident of the steps that they are taking. So things are falling on its proper places.

More Power is the new 25-year franchise holder, but currently it has no operational function considering that the facilities and assets to deliver a power distribution service to Iloilo is still with PECO. It holds, however, a delegated authority from the government to assert the power of imminent domain by buying out PECO’s assets through an expropriation case.

Moreover, the new power utility is set to secure a Certificate of Public Convenience and Necessity (CPCN) from the ERC; obtain approval from the ERC of its proposed Capital Expenditures for distribution service; secure power purchase agreements from power generators; and apply for approval of the rates that they will charge to Iloilo City power end-users. This is a short list of the requirements while the ERC has more on its checklist.

PECO, on the other hand, is mandated to sustain the delivery of service in spite of the fact that its franchise has expired in January 18 this year. It currently operates on a hold over capacity, an authority which emanated from a hand extended by More Power’s franchise through the transitory provision as stated in Section 10 of RA 11212.

PECO’s CPCN is set to expire on May 25 this year, yet the government agencies who are responsible in supervising the transition has failed to state or clarify if a CPCN provides a legal backbone stronger than a legislative franchise signed by the President. There were no provisional authority or extension of franchise that were issued covering the transition phase.

In a Complaint for Expropriation filed by More Power, it listed all the properties of PECO which forms part of its physical asset and it reflected a P481-million amount as a monetary equivalent for the expropriation. If the amount is correct, then PECO is a company whose value has never increased even from the time that they were slapped by a P631-million refund by the ERC.

As a careful observer yet an engaged participant on the issue, I cannot help but approach the current development from the vantage point of a historically neglected, under-represented, oppressed, and abused power end-users of Iloilo City.

It is ironic that while the intention behind all these moves is to upgrade the level of efficiency, reduce power rates, and improve the quality of service to the constituents of Iloilo City, the cases that were filed in courts does not reflect a consumer conscious sentiment and for me it mirrors the unchanging disposition of a privately-owned power company.

It is worth noting that legal actions from this point onwards must not only consider the rights of More Power or PECO. These processes is not only about assets that are worth expropriating and owned using the legal means through a delegated government power. Moreover, this is not also about using the legal means to preserve a family-run company by asserting private ownership while claiming it is used for public interest.

Public utilities is imbued with public interest as such the government is exercising its step in rights – a right that must be exercised for the interest of the end-users and not for a private company. One of the major consideration that may have been missed in the rearrangement of things are the more than 64,000 registered power end-users who holds an individual contract of service with PECO before its franchise expired.

For More Power to become different from PECO it has to take a conscious step by recognizing that the real asset of a power distribution utility are the end-users and not the land, infrastructures, facility, and equipment. They are, after all, the ones who are using electricity and they are the ones who pay for the service; hence, they are the reason behind an existence of a power distribution business.