Consumer advocates, led by a traditional intervenor in court cases involving electricity rate increases, has urged a review of the “mega franchise” of the Manila Electric Company (Meralco).
In a statement issued to journalists covering the courts, advocate Romeo “Butch” Junia said Meralco subscribers “are getting zero benefit from the utility’s mega franchise as the ‘economies of scale’ that should reduce costs for electricity subscribers is instead just 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," said Junia who also intervenes in cases filed before the Energy Regulatory Commission (ERC) on power rates.
He claimed that “the consistent increase in power rates being charged by Meralco to its customers was puzzling as these should be on a downward trend in inverse proportion to its customer base.”
“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,” he alleged.
He also alleged that since Meralco “has now cornered electricity supply in the National Capital Region” a “downward trend in rates should follow.”
“Meralco’s franchise is obviously at an uneconomic scale, measured by its cost of service as reflected in the rates, and must therefore be cut down to economic size," he said in his press statement.
At the same time, Junia expressed his support to a recent call made by Laguna Rep. Dan Fernandez, chairman of the House Committee on Public Order and Franchises, for a review of Meralco’s mega franchise “as it has now grown too big for efficient management by a single entity.”
Fernandez’s call was supported by Laguna 1st district Rep. Ann Matibag and ACT Teachers Party-list Rep. France Castro.
“If you would take a close look, Meralco’s charges and rates and what we pay are not least cost. That alone is ground to cancel and review the Meralco franchise,” Junia also said.
Earlier, Meralco Vice President and Head of Corporate Communications Joe Zaldarriaga had pointed out "factual errors" in Fernandez's statement. "We would like to clarify that Meralco does not control ‘70 percent of Luzon's electricity,’” Zaldarriaga said.
He clarified that Meralco also does not serve "the whole of Calabarzon," contrary to the claim as “there are many other electric cooperatives (ECs) and distribution utilities (DUs) in the area.”
Also, he said that Meralco does not "control Pampanga” but serves only a handful of barangays.
Zaldarriaga stressed: “Records likewise show that Meralco is fully compliant with all government regulations and even outperformed the level of service required by the regulator. This is precisely the reason why some local government units are clamoring for Meralco to take over their service.”