THE PROPOSED expansion of the franchise of MORE Electric and Power Corp. in two cities and 15 municipalities is expected to increase the cost of electricity for customers in areas still covered by the competing distribution utility.
During Thursday’s public services hearing to discuss House Bill 10306, Energy Regulatory Commission (ERC) Director of Legal Service Maria Corazon C. Gines estimated that around 50% of Iloilo 1 Electric Cooperative, Inc.’s (Ileco) consumers would transfer to and avail power from MORE as its prices per kilowatt-hour (kwh) is at P6, or nearly half of the cooperative’s P11.
“It’s the price that makes the customer want to choose another distribution utility,” she said.
If consumers transfer to MORE, the base or the billing determinant — the basis for the computation of the rate — for the remaining Ileco consumers will be reduced, thus increasing the cost per kwh, Ms. Gines said.
Minority Leader Franklin M. Drilon during the same hearing said: “In other words, what you’re saying, if presented with … better service and a more competitive rate, you estimate that 50% of the cooperative consumers will migrate to MORE and the remaining 50% would have to pay higher charges to the cooperative because their coverage will be reduced by 50%.”
Senator Mary Grace Natividad S. Poe-Llamanzares, who chaired the hearing, described the situation as a quandary “because what we want to provide is better service and more affordable, more efficient, so for the people that will be absorbed by MORE, that’s exactly their outcry. They want cheaper power and better service.”
“But those who are being provided by Ileco that will not be absorbed by MORE, they will bear the brunt of this possible change. Now, are we supposed to hamper the possible improvement of service and cost for the other half of the population just so we can keep costs lower for the other group that is being provided power by Ileco?” she added. “That’s the moral dilemma.”
Ms. Gines said that if Ileco is able to compete with the rates of MORE, it is highly likely that its current customers will not transfer to a different distribution utility.
Based on data presented by ERC, under the bill, the coverage area will affect 40% of the current sales of Ileco I, 55% of Ileco II, and 13% of Ileco III, as six municipalities under Ileco I, seven municipalities and one city under Ileco II, and two municipalities under Ileco III will be affected by MORE’s proposed franchise.
In defense, Ileco II General Manager Jose Redmond Eric Roquios, who was speaking for all three electric cooperatives, during the same hearing pointed out that the low electricity rates of MORE are only temporary.
He said MORE’s low rates starting July 2021 were the result of sourcing temporarily all power supply requirements from Power Sector Assets and Liabilities Management Corp. (PSALM), which has a subsidized generation cost of about P4 to P5 per kwh, or lower than that of commercial power plants.
He added that an additional discount of 30 centavos per kwh under the law further lowers the rate.
But Mr. Roquios said the arrangement “is only up to July 25, 2022 and the true cost will be reflected afterwards.”
MORE President and Chief Operating Officer Roel Z. Castro confirmed Mr. Roquios’ statement.
Mr. Castro said that the company’s competitive selection process had been finished last year, where it awarded contracts to two power plants whose levelized cost of power at P3 per kwh is even lower than the rate of PSALM.
“This is almost like a natural selection process, wherein those that are more adapted will survive,” said Ms. Poe.
Ms. Poe said she would sponsor the measure to hear the opinion of the Senate chamber at the plenary, “so when I sponsor it, it does not mean we already favor MORE, not necessarily, this is to open the discussion in the Senate.”
She added that in the interest of competition, lawmakers might consider the franchise. — Alyssa Nicole O. Tan
