Meralco cooperativism: A step toward nationalization of energy sector?

Mauro Gia Samonte

PUBLIC ownership of the Manila Electric Co. (Meralco) was believed to have been achieved by President Ferdinand Marcos Sr. by confiscating the power company from the Lopezes upon the declaration of martial law in 1972.

The company reverted to private ownership when Corazon Aquino returned it to the Lopezes upon her installation as president after the EDSA People Power Revolution of 1986. Reviewing the labyrinthine legal rigmarole undergone by the two processes, we realize neither one nor the other is true.

Meralco has never gone public. Its perceived reversion to the Lopezes with EDSA 1 was just one more transfer of the company from one private ownership to another.

And the people’s age-old clamor for public ownership of the power sector remains the magnificent dream that it always has been.

For this one single reason, the current fever over Meralco not only entertaining ideas of going public through a merger of some sort with electric cooperatives but also already actually making investment efforts in those cooperatives, deserves thorough attention.

In the personal case of this writer, whose monthly electric bill averages P9,000 — much more than what he gets for his monthly columns — Meralco alone becomes one cross too heavy to bear. It’s a blessing that he’s got kids shelling out to share some of the burden. Otherwise, he would have been nailed on the Meralco cross long ago.

But here comes what should personally strike me as the greater blessing. Call it luck or whatever, Meralco suddenly considers investing in the energy cooperatives sector. From the company’s senior vice president and chief of the external and government affairs office, lawyer Arnel Casanova, comes this lowdown by which to size up the idea.

To begin with, Meralco is the largest private-sector electric distribution utility in the Philippines, covering 39 cities and 72 municipalities. It accounts for 55 percent of the country’s electricity output.

As is always the case with successful business moguls (Mark Zuckerberg is the latest example, bequeathing his riches to not any of his kids but to foundations established for people’s welfare), who end up desiring to redistribute the success they have harvested to the consuming public, Meralco Chairman and Chief Executive Officer Manuel V. Pangilinan (MVP) had for a long time now been entertaining the idea of encouraging Meralco to expand its distribution footprint by investing in electric cooperatives that need assistance in improving their services.

“Stable and reliable electricity is crucial, especially for provinces outside Metro Manila, to attract more businesses and investment,” MVP has been wont to declare.

At the precise moment when the Philippine hoi polloi increasingly groans accordingly at the spiraling prices of prime commodities, it is completely heartening to hear MVP assuring that Meralco can lift the economy by partnering with electric cooperatives.

So, it does not take a highfalutin’ business formula to get the country’s economy moving. Just get electricity evenly distributed in the localities and that’s it, the wheels of progress will do their respective allotted turns.

Studies have shown that higher gross domestic product (GDP) per capita is correlated with higher power consumption and higher power quality requirements.

Take Pampanga, for example. It is among the most attractive investment destinations and a model of a resilient economy. But in the general terms of power, the Pampanga Electric Cooperative Inc. II (Pelco II) was categorized as an “ailing cooperative” by the National Electrification Administration in the early 2000s. But in 2014, Pelco II sealed its investment management contract (IMC) with Comstech Integration Alliance Inc. and Meralco as its technical partner.

Come 2021, Pelco II was recognized as an AAA-categorized cooperative, which is the highest rating an electric cooperative can achieve.

Along the way, the cooperative settled P249 million in obligations with San Miguel Energy Corp. (SMEC) and signed bilateral supply contracts with SMEC and Bacman Geothermal Inc., thus lowering the power purchase cost. It also refinanced Psalm (Power Sector Assets and Liabilities Management Corp.) debts with less expensive debt from PNB, which reduced interest expense from P460 million to P201 million.

At the same time, there was a reduction of system loss from 13.3 percent in 2013 pre-IMC to 9.33 percent by the end of 2023. This is well below the ERC (Energy Regulatory Commission) feeder loss cap of 10.25 percent.

With significant infrastructure improvements like roads, bridges, ecozones and transportation systems boosting business operations and logistics in the province, Pampanga has almost overnight turned into the investment hub of Central Luzon.

Investors like Alviera/Ayala are willing to locate inside the franchise area of Pelco due to the stability and reliability the Meralco reputation offers. This reputation must be what’s indelibly ingrained in every development that Pampanga’s economy has undergone in agriculture, manufacturing and services.

Today, Pampanga is the largest GDP contributor to the Central Luzon economy, making it the economic driver of the region.

What the Pelco II experience illustrates is that in every locality of the country, there are endemic elements present, be they in advance or backward stages of development, that need only to be driven in their destined courses for the locality to progress.

Electricity is the one single driving force.

And whenever we talk of electricity, do we talk of anybody other than Meralco?

Through joint ventures of all sorts with electric cooperatives which lack capital expenditure to build substations, Meralco can infuse more capital each time to improve consumer services through adequate investment in infrastructure, systems and personnel training and development.

Surely, always the motive force is business. Who is Meralco to deny this? But then again, social development is independent of man’s consciousness. One starts a business solely motivated by profit but ends up surrendering his gains to humanity. This is the case of Zuckerberg and quite a few others.

Ditto MVP?

It is a mandate of historical materialism in any case. Quantitative changes accumulate and in the process leap to one gargantuan qualitative change.

Imagine, Meralco’s partnering with electric cooperatives, as per MVP’s advice, going on and on until it encompasses the whole Philippine archipelago. The venture becomes one truly wondrous conglomeration of cooperatives that in one fell swoop must qualitatively transform from disparate private concerns to a genuine centralized socialist enterprise.