Meralco franchise renewal bill filed in Senate

A SENATOR has filed a bill seeking to renew Manila Electric Co.’s (Meralco) franchise for another 25 years.

Under Senate Bill No. 2876, which Senator Juan Miguel F. Zubiri filed on Nov. 12, the power distributor will be allowed to continue to construct, operate, and maintain its electric distribution systems in areas such as Metro Manila, Bulacan, Cavite, Laguna, Batangas, and Rizal.

“Manila Electric Company is the biggest electric distribution utility company in the Philippines, powering households and businesses in 39 cities and 72 municipalities in the country,” Mr. Zubiri said in the bill’s explanatory note.

Meralco is the main power distributor for Metro Manila and nearby areas, delivering electricity to at least 7.75 million Filipinos.

Citing government data, Mr. Zubiri said Meralco remitted about P10.43 billion in taxes to the government last year and spent about P275 million on community investments.

The House of Representatives earlier this month approved on final reading a bill seeking the same franchise renewal, including a provision that will allow Meralco’s franchise to be effective four years ahead of its initial concession’s expiry.

Under the Senate bill, Meralco must operate in a “least cost manner” to ensure that its services are provided at “reasonable and just costs” within its franchise areas.

“The grantee shall not engage in any activity that will constitute an abuse of market power such as, but not limited to, unfair trade practices, monopolistic schemes, and any other activities that will hinder competitiveness or businesses and industries,” the bill said.

It also said that all retail rates and charges for the distribution of electric power will be subject to the approval of the Energy Regulatory Commission (ERC).

RATE RESET
In a related development, Meralco said it may need more time to study the proposed amendment by the ERC on the rules for setting distribution wheeling rates (RDWR).

The draft rules issued by the ERC also concern Meralco’s fifth regulatory reset, which ruled the years 2022 to 2024 as a lapsed period.

“Meralco will submit our comments. We note that the period given to us is considerably short,” Ronald V. Valles, Meralco’s senior vice-president and head of its regulatory management, told BusinessWorld in a Viber message.

“We need a little more time to study the draft rules and intelligently prepare our comments,” he added.

On Friday, the ERC posted the draft rules amending the Modified RDWR, seeking comments from all interested parties on or before Wednesday.

The ERC added provisions governing the setting of distribution rates for the lapsed period. It also amended the period covered for Meralco’s fifth regulatory period (5RP) to 2025 to 2028 from the originally planned 2022 to 2026.

In an order promulgated on Oct. 30, the ERC granted the motion of partial reconsideration filed by Meralco and ordered it to re-file its rate reset for the 5RP, which will cover the years 2025 to 2028.

Mr. Valles said the company will file its formal request to extend the deadline to submit comments as it will probably need 15 more days.

“It took ERC more than one year to finally resolve our motion to withdraw and all other urgent pleadings filed by the parties,” Mr. Valles said.

“We believe it is only fair for ERC to allow stakeholders more time to study the proposed rules and submit their comments, to afford them a genuine opportunity to be heard,” he added.

Under the Electric Power Industry Reform Act of 2001, or EPIRA, the ERC is mandated to establish and enforce a methodology for setting transmission and distribution wheeling rates for a distribution utility.

Distribution utilities such as Meralco are subject to performance-based regulation, wherein they are required to undergo a rate reset process prior to the start of the next regulatory year.

The rate reset process is usually a forward-looking exercise that requires the regulated entity to submit forecasted expenditures and proposed projects for the ERC to review and adjust rates.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.

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