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Group opposes House bill to expand franchise of electric distribution utility in Iloilo City

  • Oct 14, 2021 12:06 pm GMT
Philippine Daily Inquirer

The national association of rural electric cooperatives in the country is opposing a bill that would expand the coverage of Iloilo City's electric distributor owned by business tycoon Enrique Razon Jr.

Rural electric cooperatives in Iloilo also warned that the passage of the bill would lead to the takeover by private corporations of electric cooperatives.


In a four-page position paper dated Sept. 28 and submitted to the House of Representatives, the 121-member Philippine Rural Electric Cooperatives Association Inc. said expanding the franchise area of More Power Electric Corp. (More Power) would result in higher electricity costs, contrary to proponents of House Bill 10258.

The bill, sponsored by seven legislators, including Iloilo Representatives Michael Gorriceta and Braeden John Biron and Iloilo City Rep. Julienne Baronda, provides for the expansion of the franchise area of More Power from Iloilo City to 15 more towns and one city in Iloilo.

These include the towns of Alimodian, Leganes, Leon, New Lucena, Pavia, San Miguel, Santa Barbara, Zarraga, Anilao, Banate, Barotac Nuevo, Dingle, Duenas, Dumangas, San Enrique, and Passi City.

In their explanatory note, Biron and Gorriceta cited reduced electricity rates and rehabilitation and improvement of the power distribution system in Iloilo City a year and a half after More Power took over the distribution assets and operation of Panay Electric Company (Peco).

'We feel that such service, marked by the highest standards, and which has been proven to be fast, reliable, responsive, modern, and forward-looking should be also made available to Ilonggos outside Iloilo City,' they said.

But Philreca pointed out that these areas are already covered by Iloilo Electric Cooperative (Ileco) 1, Ileco 2, and Ileco 3.

It said granting More Power a legislative franchise to operate in these areas violates Republic Act 9136 (Electric Power Industry Reform Act of 2001 or Epira).

This also violates a provision of the National Electrification Administration Act that states '…no franchise for service shall be granted to any other person within any area or portion for which a cooperative holds a franchise..,' according to Philreca's position paper.

Allowing More Power to operate in areas where electric cooperatives already serve consumers would also be redundant and lead to additional costs, it said.


'More (Power), if allowed to expand its franchise as a distribution utility, will then construct a duplicate distribution system and redundant facilities to serve the same customers,' Philreca said.

It said More Power's rates in Iloilo City are lower than that of the rural cooperatives because its source is from a subsidized government-owned and -controlled corporation.

'In the long run, More (Power) cannot offer cheaper and more affordable electricity and energy costs in the areas being added. Instead, it will only charge the consumers a higher rate,' according to the position paper.

More Power earlier announced that from May, it had been sourcing the bulk of its supply from the Unified Leyte Geothermal Power Plants, through the Power Sector Assets and Liabilities Management Corp. through the power grid, enabling it to choose the cheapest rate.

Residential consumers in Iloilo City have been charged P6.4562 per kWh from P10.0149 in June or a drop of P3.55.

The rate for commercial consumers also dropped by P3.31 per kWh to P6.18 in July from P9.49 in June.

More Power took over the distribution assets of Peco in February last year after the Iloilo City Regional Trial Court issued a writ of possession.

Republic Act No. 11212 signed by President Duterte on Feb. 14, 2019, granted a 25-year franchise to More Power to establish, operate, and maintain a power distribution system in Iloilo City.

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