POWER SHIFT: ERC mulls 2-year transition period from PECO to MORE

MANILA – To avoid power disruptions in Iloilo City while a new company takes over the power distribution system in the southern metropolis, the Energy Regulatory Commission (ERC) has proposed a two-year transition period from Panay Electric Company (PECO) to MORE Electric and Power Corporation. PECO’s franchise expires on January 2019.

ERC bared its proposal during yesterday’s meeting of a technical working group that the Senate’s Committee on Power Services formed to ensure a smooth transition of power distribution in Iloilo City.

The committee approved in principle the franchise application of MORE last month.

According to ERC, PECO may be authorized to operate for two more years until such time MORE has established or acquired its own power distribution system or has completed its transition towards full operation.

PECO applied for a renewal of franchise but this has been stuck at the House of Representatives’ Committee on Legislative Franchises for over a year now.

“To ensure uninterrupted supply of electricity in the franchise area, PECO shall in the interim be authorized to operate the existing distribution system within the franchise area as well as implement its existing Power Supply Agreement with generation companies that have been provisionally or finally approved by the ERC for a period of two years,” according to ERC.
ERC said it could grant PECO a Certificate of Public Convenience and Necessity covering such interim period.

Meanwhile, “the applicable generation rate shall be provisional or the final rate approved by ERC,” the regulatory commission stressed.
Iloilo City councilors Plaridel Nava and Joshua Alim who attended yesterday’s meeting of a technical working group representing Iloilo City consumers suggested that the transitory period be shortened to six months.

They said two more years under PECO would only prolong the suffering of consumers from, among others, erroneous billing, poor customer service and high power rates.

Sen. Sherwin Gatchalian, a member of the Senate’s Committee on Power Services, suggested that the transitory period be limited to one year only. Six months is too short while two years is already too long, he said.

For its part, MORE said it would take over as Iloilo City’s new power distribution utility only after having obtained a Certificate of Public Convenience and Necessity (CPCN) from the ERC.
“In the public interest, (PECO), notwithstanding the expiration of its franchise, shall be allowed to continue on holdover capacity under its current CPCN until a new entity with a legislative franchise applies for and is granted a CPCN to engage in the transmission and distribution of electricity in the affected franchise area,” MORE said.
“The ERC shall prioritize the applications filed relating to this situation to measure the length of the transitory period. The ERC shall also ensure that there is no interruption in the provision of electric distribution services in the franchise area during the transition between the new operator and the current operator,” it added.

If ever both parties are unable to agree on the terms and conditions of the transfer, the franchise holder shall be authorized to exercise the right of eminent domain, MORE further said.
“With the writ of possession issued by the Regional Trial Court with jurisdiction, the franchise holder shall take possession and control of the distribution system assets to operate it to assure the continuity of the services in the franchise area,” it said.
In approving in principle the franchise of MORE as new distribution utility in Iloilo City, Senate Committee on Public Services chairperson Sen. Grace Poe said she received numerous complaints from consumers during a visit to Iloilo City about PECO’s “bad service” and “penchant for overbilling customers.”

“People were saying they were not happy of the service (of PECO),” Poe said.

PECO has been the sole power distribution utility in Iloilo City for 95 years.

Though a newcomer in the power distribution business with no facilities of its own yet in Iloilo City, MORE assured Ilonggos it could get the job done.

Its legislative franchise House Bill No. 8302 authorizes it “to exercise the power of eminent domain” and “to acquire such private property as is necessary for the realization of the purposes for which the franchise is granted.”

The “private property” to be acquired can only refer to the existing assets and business of PECO.

MORE president Roel Castro admitted early this month they wanted to buy the assets of PECO.

“There could be a just compensation of assets that we may use,” said Castro.

Castro admitted it would take time to set up a new power distribution network. But what happens if PECO won’t sell its assets to MORE?

“We are confident that government regulatory bodies will be looking into that. The primary concern is making sure there would be no interruption of service,” said Castro.

Castro, former president of the Palm Concepcion coal-fired power plant in Concepcion, Iloilo, assured Ilonggos More Power would be efficient in distributing electricity even if it is a new industry player.

“Running an electric utility is not so much a specialized job or skill as we may think. What I am trying to emphasize is maraming talents out there. It is not as if it’s too specialized that you really have to go out and look for them,” he said./PN


  1. “Running an electric utility is not so much a specialized job or skill as we may think. What I am trying to emphasize is maraming talents out there. It is not as if it’s too specialized that you really have to go out and look for them,” You can change the management overnight, but not the technical, accounting and IT people. You cannot replace stored knowledge and historical data You will only do more harm to the people of Iloilo City if you do not retain important positions. i am just wondering why employees are not being consulted on this quagmire.


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