More Power and the real issues

MISREADINGS | Ted Aldwin E. Ong

Last week, More Electric and Power Corp. (More Power) conducted a forum solely for Iloilo’s influential business sector. The who’s who of Iloilo listened as Roel Castro, President and COO of More Power presented the initial blueprint outlined for Iloilo City.

I find the forum a necessary interlude for the entry of More Power in order to cool down doubts of an anxious business sector who are aware of an impending chaos because of an inevitable legal battle between More Power, Panay Electric Co. (PECO), and the government.

I’m quite certain that the forum, entitled – “More Power: How it Impacts the Business Sector” provided a valuable insightto More Power’s management on the real issues concerning consumers relative to its entry as the new franchise holder. 

The open forum that followed the presentation of More Power’s Roel Castro revealed three things. First, Iloilo’s business remains uncertain regarding the transition plan between PECO and More Power. Second, they recognized the magnitude of the effort that is needed to replace PECO both in terms of the technical, financial, and legal requirements. Third, they recognized the capacity of More Power to invest but they are apprehensive because of its impact on power rates.

First, Iloilo’s business remains uncertain regarding the transition plan between PECO and More Power. This is a complex issue which was recognized even at the early stage when meetings were conducted by the Committee on Legislative Franchises in both the Lower House and the Senate.

Almost all the government agencies who were involved admitted that this is the first time in the history of the country’s power industry that a company (More Power) applied for a franchise without a facility in place. The Energy Regulatory Commission (ERC) requested that they be given two years to work on a transition because even existing policies requires adjustments or new policies needs to be passed and adopted.

What was clear was that the government through the Dept. of Energy (DoE) and the ERC will be the one to facilitate the transition by filing an expropriation in court and by asserting government’s power of imminent domain in order for More Power to acquire the existing facilities of PECO.

How this process will unfold was beyond the capacity of More Power to explain alone to the business sector. Understandably, this is a major source of uncertainty for business because many of them are aware of the nature of an expropriation case. Let’s leave this hanging until a case will be filed.

Second, they recognized the magnitude of the effort that is needed to replace PECO both in terms of the technical, financial, and legal requirements. There was never a case in the country’s power industry which shares a similar circumstance where More Power and PECO is subjected today.Here lies PECO’s playing its natural advantage – the advantage of the incumbent and the many gray areas on our laws governing first times.

The technical requirements alone to modernize both the infrastructure and the systems in order to improve the level of efficiency and quality of service is enormous for More Power to undertake in such a short period of time – two years. But I am not saying that it cannot be done; it can be done provided that More Power will be given an ideal timeframe in order to put in place quality infrastructure.

But the issue at hand is the capacity of our legal system both in the court and in quasi-judicial court like the ERC, to handle and resolve cases in a given period without shortcuts, particularly when cases are packaged as part of a legal transition plan.

I’m quite sure that More Power would prefer that they hold legitimacy of their actions every step of the way just so they can operate smoothly and without carrying a semblance of PECO’s reputation. This is difficult to attain once the legal process will be long and over-extended from the transition period.

Third, they recognized the capacity of More Power to invest but they are apprehensive because of its impact on power rates. There was no doubt of More Power’s capacity to invest on the power distribution business especially that Enrique Razon, Jr. is the country’s No. 3 Richest Man. However, the issue of how the billions of pesos in investments will be translated into power rates is nevertheless a legitimate concern by Iloilo City consumers.

More Power presented that it will act to lower the generation charge by developing a blendedgeneration mix. This is doable of course considering that a new power purchase agreements is under negotiation. But it will still undergo the approval process of the ERC. 

More importantly, it committed to initially invest around P1.3-billion for capital expenditure. How this amount will be translated into monthly rates and for how long was undetermined. The consumers has to understand that apart from the generation charge, capital expenditures intended for distribution service comes into the monthly electricity bill in the form of a Distribution Charge. These amounts are recovered from the consumers unless the tycoon will treat it as a donation on the people of Iloilo City in appreciation of its continued loyalty to Spain until today.

The P1.3-billion investment has to undergo ERC approval and it will be subjected into a hearing just to ensure that all the items included within the amount are justified and relevant for the service. If approved, the P1.3-billion will be passed on to the consumers within a 5-year regulatory period under the current Performance Based Regulation (PBR) guidelines. The rate that will be approved will be the effective rate on top of the long list of charges in the monthly bill.

These concerns and issues are nothing but a tip of the iceberg. But it now demands serious attention from the Ilonggos, especially from those sectors and politicians who were too noisy over-simplifying the issues and by reducing it as a social media war between the Dutertards versus the Yellowtards.

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