Senate Approves 25-Year Renewal of Meralco’s Franchise
- February 27, 2025
Manila Electric Co. (Meralco) recently secured Senate approval for a 25-year franchise renewal, with senators voting 18 in favor, one against, and no objections to House Bill 10926.
Under its renewed franchise, Meralco can continue to develop, manage, and uphold an electricity distribution network serving Metro Manila, Rizal, Cavite, and Bulacan along with select areas in Pampanga, Quezon, Laguna, and Batangas. This ensures power supply to over seven million Filipinos.
Sen. Joel Villanueva, who sponsored the measure, stated that the decision to renew Meralco’s franchise also strengthens the country’s power supply and safeguards consumer rights.
Senate Deputy Minority Leader Risa Hontiveros was the only one who opposed the measure. She argued that the company has repeatedly fallen short in serving the public, citing unreasonably high electricity rates as proof.
She stated, “Before even considering a franchise renewal, my view is that Meralco must be made to properly refund its customers for its past overcollections.”
(Also read: Meralco Plans ₱19B Refund, Critics Call It Insufficient)
Concerns raised About the Power Firm
Earlier this year, Sen. Hontiveros asserted that Meralco should return approximately P100 billion in alleged overcharges to consumers. During discussions on the company’s franchise renewal, she pushed for a Senate probe into its pricing methods before approving any extension.
She also alleged that Meralco artificially raised electricity rates through various tactics, such as applying an inflated weighted average cost of capital (WACC), exaggerating its regulatory asset base, and imposing double inflation charges on consumers since 2012.
“As the country’s largest distribution utility, Meralco should be working with the government to provide affordable, reliable electricity – not violating regulations in pursuit of greater profit,” she declared.
However, Meralco countered that it could set its rates to ensure fairness and affordability. It clarified that, excluding corporate income tax, its effective WACC was around 10.5%, lower than the 12% return upheld by the Supreme Court.
Another complaint arose in December 2024, when consumer rights advocate Romeo Junia wrote to Senate President Francis Escudero, urging changes to key sections of the bill renewing Meralco’s 25-year franchise. He pushed for the strict enforcement of Retail Competition and Open Access (RCOA), a policy allowing consumers to choose their electricity supplier for better rates and service.
Additionally, he emphasized the importance of adhering to regulations set by the Department of Energy (DOE) and Energy Regulatory Commission (ERC) for a fair and transparent competitive bidding process.
On the other hand, Meralco officials have repeatedly maintained that all bidding followed “an open and transparent process that ensures fairness and integrity.”
(Also read: The Reality of Coal in Our Energy Transition)
Fast-tracked franchise renewal
As early as May 2024, Albay 2nd District Rep. Joey Salceda and Cagayan de Oro City 2nd District Rep. Rufus Rodriguez introduced bills seeking to extend the power utility’s franchise.
Salceda noted, “The case for renewing Meralco’s franchise is plain and simple: it has complied with the conditions of the franchise law and it is good for the economy and the consumer.”
In November 2024, Senator Juan Miguel F. Zubiri filed a bill for franchise renewal, stating that Meralco contributed approximately P10.43 billion in taxes to the government and allocated around P275 million for community initiatives.
But Hontiveros was quick to point out that the renewal was ahead of schedule. “Meralco’s franchise doesn’t expire until 2028, giving ample time to correct these wrongs and refund every peso unjustly collected from consumers,” she said.
Support from industry groups
Despite controversies, numerous business and industry organizations nationwide have since supported the prompt renewal of Meralco’s franchise.
Federation of Philippine Industries (FPI) Chairman Jesus Lim Arranza said there was no reason to disrupt Meralco’s operations, stating that “not renewing its franchise is not only extremely counterproductive but also a big disservice to Filipinos.”
According to the Japanese Chamber of Commerce and Industry of the Philippines, Inc. (JCCIPI) Vice President and Executive Director Nobuo Fujii, renewing Meralco’s franchise is essential for maintaining the country’s economic growth and development. “A favorable decision will ensure that the manufacturing industry, along with many others, can continue to thrive and contribute to the nation’s prosperity,” he added.
Still, Hontiveros maintained that Meralco should be held accountable for its alleged overcharges. “We should not reward Meralco’s misdeeds with a brand new legislative franchise,” she said. “They should first return the billions they over-collected from the people.”
Recently, Meralco officials announced that it exceeded its targets in 2024, posting record-high earnings. A 22% rise in core net income to P45.14 billion was recorded, surpassing the P43 billion forecast. Growth was said to be fueled by strong distribution, power generation, and improvements in retail electricity supply.
Manuel V. Pangilinan, Chairman and CEO of Meralco anticipates the company’s income to exceed P50 billion in 2025.
Sources:
https://www.philstar.com/headlines/2025/02/04/2419066/senate-oks-25-year-meralco-franchise-renewal
https://www.pna.gov.ph/articles/1242355
https://business.inquirer.net/497447/senate-urged-to-put-guardrails-on-meralco-franchise-push
https://www.philstar.com/headlines/2024/05/14/2354906/meralco-franchise-renewal-good-economy
https://business.inquirer.net/501270/industry-groups-rally-behind-meralco-franchise-renewal
https://www.philstar.com/business/2025/02/25/2423910/meralco-earnings-all-time-high
