Iloilo power dispute resolution sets huge precedent for PH businesses

August 23, 2020

Favorable MORE ruling can legitimize hostile takeovers.

THE final Supreme Court ruling of the two-year power dispute between MORE Electric and Power Corporation (MORE) and Panay Electric Company (PECO), which will be deliberated on next week, will set a huge precedent for Philippine businesses as well as foreign direct investment (FDI) coming into the country.

This was the main, if urgent message of the virtual press conference held on August 22 by Iloilo City’s foremost consumer rights advocate group, Koalisyon Bantay Kuryente (KBK). The presser is also a call to action as an outraged cry for help made by the people of Iloilo to the national government, the Energy Regulatory Commission (ERC), and particularly the Supreme Court. According to PECO’s legal counsel, Atty. Estrella Elamparo, MORE’s hostile takeover of the electrical facilities of the almost century-old legacy company is unconstitutional and illegal.

Worse, a judicial ruling  in favor of MORE can effectively legitimize hostile takeovers of other enterprises and franchises by interested parties who will not need to prove competence, expertise, or industry history. The resolution of the MORE-PECO case has national implications---and go beyond what seems to appear as a mere power tussle between two regional rival companies.

“If the MORE position is affirmed by the courts, it will be followed by others who are not qualified and are not deserving to be granted a franchise by Congress,” Elamparo stressed. “A company with zero experience and capabilities and just wants to make money will just look for a franchise that is about to expire, and then lobby to be given the right to take over the franchisee’s assets as well as its franchise rights.”

Prior to its applying for and securing a distribution franchise in the Iloilo City power sector, MORE was a mining company with absolutely no experience in building and running an electrical company.

Meanwhile, the KBK urged the ERC to immediately investigate the alleged non-compliance of MORE Power by charging systems loss rates that are almost double the ERC-mandated cap. As a result, consumers said that they are overbilled and are now demanding a refund from the new power distribution company in the city.

“MORE Power has gone as far as to defy direct court orders,” Elamparo asserted. “They have even fed the ERC and the courts with cherry-picked representations of the power situation in Iloilo to cover up their inability to deliver the power that the city deserves.”

The PECO legal counsel added that MORE Power’s disregard of the Iloilo RTC’s order to ensure a proper transition period between MORE and PECO was responsible for “the deterioration of the electrical services in Iloilo, causing the people to suffer,” Elamparo stressed. “This crisis should not have happened in the first place because the takeover is unconstitutional.”

Allen Aquino, KBK coordinator, said that a speedy resolution to the case now in the Supreme Court is imperative. Each day of delay is causing Iloilo City, its families and businesses, to lose ground in the recovery of its economy as well as the people’s return to normalcy. As he described their dire situation, “Iloilo has suffered more than 400 hours of power failure that plunged us into darkness since February up to June. Very recently, another series of brownouts, lasting a total of 678 minutes from August 7-11 alone, plunged our city into darkness yet again.”

Another concern that Aquino brought up are the overbillings foisted on the consumers by MORE’s failure to follow the ERC’s approved systems loss limit. “Based on a comparison of consumer bills, MORE’s systems losses are being billed to consumers close to 12%, which is almost double the government-mandated rate of 6.25%,” revealed Aquino. “MORE’s failure to achieve systems loss reduction is costing our consumers potential countless savings, while confusing and causing them unnecessary stress with their inexplicable overbillings.”

According to KBK Chairman Ruperto Supena, most worrisome to the Ilonggos is MORE’s questionable usage of the millions of pesos in electric bill payments. “MORE should have been conducting the necessary processes that would have caused systems loss reduction such as systems review and evaluation, system load balancing, management of thermal scanning, and equipment load, among others. Instead, what we are experiencing are overbillings that charge an unjustifiable increase of almost double the ERC-approved systems loss.”

Supena also pointedly asked, “Considering the long power outages in the city, where are all our payments going to?  Consumers have the right to know, and we are demanding an answer.”

Constitutional expert and Ateneo School of Government Dean Tony La Viña, who has been following the MORE-PECO case for years, attributes the power failure and overbillings that the Ilonggos are suffering to the Congress’ failure in not following the legal “criteria for giving a franchise which is supposed to be for the public interest. The franchise for a major electrical system was given to a company that has no experience in delivering electricity. That creates a problem for the city.”

La Viña, who continuously monitors legal and policy developments in energy and its crucial link to national development, also pointed out that similar takeovers by unqualified, inexperienced companies of franchises and enterprises in other industries---and not just power---can prove disastrous to the nation.  He painted a dire picture, saying, “If companies like that just get Congress to give them a franchise, and expropriate the actual business’ facilities and equipment, without building their own—-that would allow monopolistic behavior and allow control of a vital part of our economy to a single conglomerate or family.

“This will make the situation for investors, especially in the utilities industry like water and power, very tense.There is no protection for your investments, domestic and foreign, if this kind of legislature is allowed. This development will be a blow to FDI.”

In conclusion, Elamparo stressed the importance of monitoring the case up to the resolution in the Supreme Court. She also expressed her hope that the highest judicial body in the land sees the Iloilo power predicament for what it is:  “”This is not a fight between two companies, PECO and MORE. What are at stake here are the interests of the people.”