THE call of Santa Rosa City Rep. Dan Fernandez to review the franchise of the Manila Electric Co. (Meralco) gained more support as consumer advocates also expressed belief that the power DISTRIBUTOR “HAS GROWN TOO BIG FOR EFfiCIENT management by a single entity.”

Romeo “Butch” Junia, who was involved as intervenor in cases filed at the Energy Regulatory Commission (ERC) related to power rates, said a franchise review would be timely because Meralco “appears to have abandoned its franchise duty to provide services at the least cost as the upward trend of power rates would show.”

“If you would take a close look, Meralco’s charges and rates and what we pay are not least cost,” Junia said. “That alone is ground to cancel and review the Meralco franchise.”

“A franchise, as you know, is a privilege. So it is time for the House to take another look at it,” he added.

He said that subscribers of Meralco are getting zero benefit from the utility’s mega franchise, as the “economies of scale” that should reduce costs for electricity subscribers is instead bloating the utility’s size and profits.

“Usually in economies of scale, as we understand it, the larger you grow, the lower is your cost. So, how come the gargantuan franchise of Meralco has not been able to benefit us?” Junia asked.

He added that the consistent increase in power rates was puzzling, as these should be on a downward trend in inverse proportion to its customer base.

Economies of scale normally lead to lower costs as subscriber base grows, he said.

“Instead of inverse proportion where the bigger the size, the lower the cost, it became the opposite where increase in rates followed an increase in business,” said Junia, who has been engaged as intervenor in cases filed at the ERC by various groups like Nasecore, Freedom from Debt Coalition and others.

Junia said Meralco has cornered the electricity supply in the National Capital Region, which should have been followed by a downward trend in prices.

“The reference rate for comparison should be the RoRb (return on rate base) of P0.79 per kWh (kilowatt hour) to the rate today of P1.35 per kWh, which peaked at P1.64 per kWh under PBR (performance base rating),” he said.

“Meralco net earnings rose from P2.7 billion under RoRb to the current level of P20+ billion. If that is the measure of economies of scale, Meralco is fantastic,” Junia said.

Fernandez had urged Congress to split the mega-franchise of Meralco into three, as the power firm has grown too big and dominant in the power industry.

“It’s high time we renew its franchise to pave the way for the split of the mega-franchise we granted Meralco,” the Laguna lawmaker said.

Fernandez said Congress has the power to “amend, revoke, suspend and even subdivide their franchise.”

The power firm last week defended its rates after ACT Teachers Rep. France Castro and Laguna 1st District Rep. Ma. Rene Ann Lourdes Matibag also voiced support for Fernandez’s proposal.

“We have strictly abided by the rules and guidelines of our franchise as operations are heavily regulated by the ERC,” Meralco Vice President for Corporate Communications Joe Zaldarriaga said.

Zaldarriaga said that electricity rates in the country reflected the true cost of electricity, unlike that of other countries’ which were heavily subsidized by their governments.

He cited the latest study of the International Energy Consultants which showed that Meralco’s rates were fair and reasonable.

He said that the company has always been transparent about its rates and the causes of adjustments.

The distribution charge had not moved since the P0.0360 per kWh reduction for a typical residential customer starting August 2022.

“In terms of quality, Meralco has consistently delivered stable and reliable service and performed well within regulatory standards. Meralco also continuously invests in projects and new technologies that would improve and strengthen its distribution network to better respond to the needs of our 7.8 million customers,” Zaldarriaga said.