Too little, too late for PECO to invest

posted November 13, 2019 at 07:35 pm
by  Ray S. Eñano
Panay Electric Co., or PECO, should quit while it’s ahead. It stands to gain money from an expropriation proceeding by re-investing the proceeds to another business venture.

There’s no use of hoping against hope that it will regain the business of distributing electricity in Iloilo City. Congress has already awarded the franchise to More Electric and Power Corp. The franchise award left PECO with nothing to hold on to.

Marcelo Cacho, a scion of the super-rich Cacho clan of Iloilo City that has lorded over the business and economic environment of the idyllic southern city of Iloilo, and his family are fighting a losing battle after a 95-year monopoly in the distribution of electricity.

Cacho, the public engagement and government affairs head of PECO, earlier announced the company would spend P1.1 billion in improving the city’s electricity distribution system. Cacho’s statement is baffling. Even if his family spends P1.1 billion on the distribution system, PECO can no longer retail electricity in Iloilo City and its nearby municipalities because Congress awarded the utility franchise to MORE late last year. 

Cacho, to put in simple terms, is announcing an expansion plan for a business that no longer exists after losing the franchise, an authority under the Constitution that the state gives to any corporation to do a service business for the benefit of Filipino consumers.

Cacho’s statement would have made sense had the Court of Appeals upheld the family’s petition questioning the expropriation of its distribution assets by MORE, owned by tycoon Enrique Razon Jr., who is also investing close to P10 billion in developing two Iloilo ports to serve as alternative cargo handling hub in this part of Southeast Asia.

The CA, in a 17-page decision handed down by Associate Justice Alfredo Ampuan, ruled that it had no jurisdiction over the case filed by PECO. Only the Supreme Court, it said, had jurisdiction over distribution utilities, as provided in Republic Act No. 9136, or the Electricity Power Industry Reform Act.

Ampuan said even if the CA had jurisdiction over the case, PECO still failed to show its business suffered from the expropriation of its distribution assets in Iloilo City. It no longer owns the DU franchise after Congress gave it to MORE.  President Rodrigo Duterte subsequently signed Republic Act No. 11212 granting the franchise to MORE.

PECO’s argument that MORE’s expropriation of its distribution assets would plunge Iloilo City into blackout also did not make sense. MORE, as the new franchise holder, would take over PECO’s aging distribution assets, Justice Ampuan noted. 

“As for PECO’s fear of having Iloilo City plunged into darkness, suffice it to say that MORE is actually averting the same by pursuing its obligations as the grantee of a Legislative Franchise to operate,” he said.

Ampuan stressed in his decision that Congress granted MORE the distribution franchise in Iloilo City as part of its powers under EPIRA, a law that restructures the electricity industry to make it more efficient and ensure continuous supply of affordable electricity to Filipino consumers.

Congress ignored PECO’s own application to renew its DU franchise that expired early this year because of a cacophony of complaints from Iloilo consumers and businesses, which exploded into open anger when the utility’s billing system turned into a big mess. A Senate hearing exposed that PECO’s consumers received bills that were 1,000 percent higher than their previous bills. 

Instead of acting on PECO’s application for the renewal of its congressional franchise, the House of Representatives and the Senate approved a franchise for Razon’s MORE.

RA 11212, which put into law MORE’s legislative franchise, gave PECO a temporary permit to continue its operations until MORE had completed the transition. MORE has received the power of eminent domain so it could take over any asset, including electric poles and other distribution assets of PECO, and do the job assigned to it by Congress and Malacañang.

Had Marcelo Cacho made the announcement that PECO was spending P1.1 billion five years ago, he would have made sense. It now appears to be a pathetic attempt to increase the value of whatever properties the company may be selling to MORE.

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Topics: Panay Electric Co , PECO , Marcelo Cacho , Enrique Razon Jr , Rodrigo Duterte
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