Gatchalian Sen. Sherwin Gatchalian

Senator says Meralco franchise renewal chance for review

May 26, 2024 People's Tonight 239 views

SENATOR Sherwin Gatchalian, vice chairman of the Senate committee on energy, said the submission to the Senate of the bill renewing the franchise of Manila Electric Company (Meralco) will provide the opportunity to scrutinize the giant utility’s performance.

“These franchise renewals, my view always is that we have to use this opportunity to review the performance of the grantee. And that’s a good way of putting accountability to the grantee,” Gatchalian said on the sidelines of the forum, Solar and Storage Philippines 2024, held at the SMX Convention Center in Pasay City.

“So, I will look at the performance of Meralco. The price, for example, since they buy power, and the service which includes connection, brownouts, speed of repairing lines, etc. For me, I have to look at the performance of Meralco before I can say whether to support it or not,” the senator told reporters.

House Bill No. 9813 seeks to extend Meralco’s existing franchise which will expire in 2028.

“Typically, the franchise emanates from the House. So, we cannot move until they transmit the franchise to the Senate. So, that’s how the process works. So far, no one has filed yet a franchise renewal with the Senate. But in this case, I think we will have to wait for the House to transmit it to us,” Gatchalian added.

Earlier, Meralco spokesperson Joe Zaldarriaga said the arguments of Sta. Rosa City Rep. Dan Fernandez are not legal and emphasized that the matter should be addressed in the appropriate forum.

Zaldarriaga said during several Congress hearings that the weighted average cost of capital (WACC) is an industry WACC that applies to all private distribution utilties in the same category, and is not a company-specific WACC.

He said that resource persons and lawmakers alike were aware that setting the WACC is a regulatory function and falls under the rules on Performance-Based Regulation, whether for the National Grid Corporation of the Philippines or for a private distribution utility.

It is a fact that Meralco does not have a determined WACC since July 2015 because there has yet to be a completed regulatory rate reset, he added.

“I would like to reiterate that as a highly regulated entity, Meralco strictly adheres to the rules governing its operations and franchise and the rates we implement always have prior approval from the regulator,” Zaldarriaga said.

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