18nov27-Summing up fight for power franchise

POSTSCRIPT / November 27, 2018 / Tuesday

Summing up fight for power franchise

By FEDERICO D. PASCUAL JR.

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WHO will take care of the power needs of 64,000 household and business consumers in Iloilo City when the franchise of Panay Electric Co. (PECO) expires in January 2019?

The question may soon be answered, but not before the House of Representatives explains why PECO which has been serving the area for the past 95 years should be replaced by a mining company that allegedly has zero experience in power distribution.

The House has approved the turning over of the franchise to Monte Oro Resources & Energy (MORE) Minerals Corp. controlled by port and casino magnate Enrique Razon Jr. It is now the Senate’s turn to say who the franchise holder should be.

While the giants fight over the business that grossed P426,242,360 in 2016 and whose distribution assets are valued at some P1.7 billion, who sees to it that the ants, the electricity users, are not crushed underfoot?

Who will sort out the validated data from the falsehoods cluttering the debate, as MORE’s franchise, approved by the House of Representatives in just two months after application, undergoes Senate due diligence?

Four generations of Ilonggos, Razon said, have suffered under PECO, which allegedly has not addressed some 1,800 complaints over poor services, overcharging sometimes by more than 1,000 percent, erroneous meter readings, technical failures, high electricity rates and frequent power interruptions.

Razon said that PECO has one of the highest generation charges in the country, P2.50/kwh higher than in Manila, Cebu and Davao. That PECO has a low distribution charge, he pointed out, shows that it has not made meaningful investments in its facilities.

He added that PECO’s distribution lines, transformers and substations are 95 years old, that it has undersized and crowded feeders, leaning poles, disorganized service drops, unsafe clearances of lines and substations and transformers, resulting in power outages.

He said PECO has poor reliability indices, that its SAIFI (System Average Interruption Frequency Index) of 31.15 is 1,400 percent above the Philippine average of 2.18; its SAIDI (System Average Interruption Duration Index) is 1,612 or 3,000 percent above the Philippine average of 54; and its systems loss in 2017 was 9.93 percent, said to be the highest among private utilities.

“If PECO had been doing a good job, we wouldn’t have had the opportunity to apply for this franchise and transform it into a modern, efficient, low-cost and state-of-the-art distribution network,” he said.

 PECO belies ‘exaggerated’ plaints

ANSWERING Razon, PECO said: “For 95 years, PECO has diligently provided the power needs of Iloilo City households and business establishments. Our company stands out among over 140 distribution utilities, a fact recognized by the Energy Regulatory Commission when we were awarded 100-percent Fully Compliant in securing and insuring reliability of power supply in our franchise area. Only four other distribution utilities in the country received that award.

“As to the exaggerated and misleading allegations against our company and family, there were only 194 validated complaints (not 1,800) with the ERC from our 64,000 customers, and only 25 to date are pending ERC decision.

“Per ERC records as of 2017 (retail rates without VAT per kwh) the Province of Siquijor Electric Coop. Inc. charges P14.0763 and is the most expensive in the Visayas, while PECO charges only P8.2079. There are 19 other utilities in the Visayas alone with rates higher than PECO. Visayan Electric Co. of Cebu charges P8.1387, which is not much less than the PECO rate.

“Data from the ERC’s Distribution Management Committee on electric reliability figures state that the country averages for SAIDI are at 5,135.43 minutes, contrary to Mr. Razon’s claim of 54 minutes, and SAIFI are at 40.31 incidents, contrary to his figure of 2.18 incidents. Iloilo City’s total SAIDI of 1552.86 minutes and SAIFI of 31.71 are far below the national averages. System’s loss of PECO in 2017 was 8.37 percent, which was below the ERC cap of 8.5 percent.

(Comparative numbers are easy to check. Has anybody in the House and the Senate bothered to validate the figures being cited by PECO and MORE? — fdp)

“President Duterte in his speech in Palawan on Nov. 10, 2018, recognized the issue involving PECO and asked whether the takeover (by MORE) is justified or just an attempt to steal the business.

“What we are seeing in this latest vilification campaign is the feeding of the public wrong information to justify the railroading of the franchise in the Congress that could lead to the illegal takeover of PECO.

“We have never regarded the franchise as a birthright, which is why we applied way back in July 2017 before expiration in January 2019 to give enough time for our legislators to scrutinize the performance of PECO as a reliable, efficient and responsible power distributor. We have duly submitted all the documents and reports that they requested from us.

“What the public is not seeing is the apparent disregard of the law by some legislators who rushed the approval of MORE without due consultation with stakeholders. MORE’s application for a franchise was filed on Aug. 22, 2018, and it was approved Oct. 8, 2018, or in less than two months.

“Mr. Razon criticized PECO for supposedly having 95-year-old equipment. We have fitted out 450 kilometers of electrical lines, 20,000 poles, and 1300 distribution transformers that serve over 64,000 homes and businesses in Iloilo. These are regularly upgraded, replaced, and added to, as system needs change.

“Mr. Razon himself has not presented his concrete plan for putting up his own ‘modern’ equipment – certainly he was not required by legislators to do so before he was ‘given’ the franchise.  We have invested more than P1.5 billion and have a concrete year-to-year rollout plan to invest another P2 billion to meet the increasing demand for power and world class service in the next 10 years.”

 

(First published in the Philippine STAR of November 27, 2018. Follow the author on Twitter as @FDPascual.

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