PECO allowed to continue electricity service despite disenfranchisement

MANILA, Philippines — Panay Electric Co. (PECO) will continue distributing power to Iloilo City despite the expiration of its franchise as agreed by the Department of Energy (DOE) and Energy Regulatory Commission (ERC) to ensure continued power service in the franchise area.

A meeting was held among the DOE,  PECO and its suppliers, Panay Power Corp., Panay Energy Development Corp., and Palm Concepcion Power Corp., National Grid Corp. of the Philippines, Philippine Electricity Market Corp., and the Independent Electricity Market Operator of the Philippines (IEMOP)  to ensure uninterrupted electricity service.

PECO’s franchise, which has been in the business for 95 years, expires today,  Jan. 19. 

Congress did not renew PECO’s franchise due to bad service, high power rates and inefficiency.

“We are reassuring our kababayans in Iloilo City, La Paz, Jaro, and Arevalo that there will be no power disruptions. In the interim, PECO will remain the power service provider in the area,” Energy Secretary Alfonso Cusi said.

ERC chairperson and CEO Agnes Devanadera said the power regulator recognizes the welfare of PECO’s electricity consumers must be given utmost consideration.

“We consider this as an extraordinary situation, so the ERC must ensure the continuous provision of electricity within PECO’s franchise area. Since this is an extraordinary situation, ERC recognizes the certificate of public convenience and necessity (CPCN) issued by then Energy Regulatory Board (ERB) to PECO which mandates it to guarantee the provision of electricity for the promotion and protection of consumer interest” she said.

Then ERB, ERC’s predecessor office, issued the CPCN to PECO on May 31, 1996 effective until May 25 this year.

CPCN is the authorization issued by the ERB/ERC to entities engaged in the transmission or distribution of electricity for the operation of a transmission or distribution system.

It was anchored on the franchise granted by the National Electrification Administration’s (NEA) National Electrification Commission (NEC) to PECO.

“Since there is no entity yet granted a franchise by the Congress, the extraordinary situation calls for the ERC to honor the CPCN issued to PECO with an expiration date of May 25, 2019. ERC cannot allow the consumers to suffer the consequences of a power outage, so we are directing PECO to continue with its electric distribution service for the protection of the electricity consumers in Iloilo City” Devanadera said.

DOE assistant secretary Redentor Delola said PECO would operate “until the franchise is resolved.”

“But even then, there will still be a transition period. In the proposed bill, there is a two-year maximum transition period wherein PECO can operate,” he said.

The franchise of new player MORE Power and Electric Co. has been cleared by Congress late last year. However, the consolidated bill granting the franchise for Iloilo City to MORE Power has yet to be submitted for signing by the President.

MORE Power, led by billionaire businessman Enrique Razon Jr., has provided the new utility firm a P2-billion capitalization to improve the distribution service in Iloilo.

During said meeting, PECO agreed to continue operations even after the expiration of its franchise. 

PECO said it would likewise honor its obligations relative to its power supply agreements, transmission supply agreements, as well as its responsibilities with the wholesale electricity spot market (WESM) and other service providers while it continues to operate the distribution system in its service areas. 

The DOE is scheduled to call for another meeting next week to discuss developments on the matter.