MBC Supports Meralco's Franchise Renewal

04 June 2024 – The Makati Business Club respectfully recommends the renewal of Manila Electric Company’s (MERALCO) franchise. MERALCO is the largest private distribution utility in the country, their network plays a pivotal role in ensuring reliable and accessible electricity for households and businesses in the country’s key economic regions.

The franchise area covers the National Capital Region, Bulacan, Cavite, Rizal and select areas in Pampanga, Laguna, Batangas and Quezon. The National Capital Region contributes 41.4% of the services sector’s economic performance, with CALABARZON at 10.8% and Central Luzon at 8.3%. Similarly, for the industrial sector CALABARZON contributes 25.0%, with NCR at 18.6% and Central Luzon at 16.0%. ¹ These figures underscore the critical importance of MERALCO’s services in driving economic activity and growth in the country.

We acknowledge concerns about electricity prices in the country, which are comparatively high among ASEAN nations. However, it is important to note that the Philippines boasts a liberalized energy market, devoid of government subsidies. In this context, a 2023 report by the International Energy Consultants ² has shown that MERALCO’s distribution rates remain fair and reasonable, particularly given prevailing inflation rates.

Since its initial franchise, MERALCO has achieved near-universal electrification within its franchise area and has consistently met growing demand. Moreover, a renewed franchise for MERALCO aligns with government objectives to enhance energy security, resilience, and sustainability. MERALCO has demonstrated its commitment to promoting renewable energy and has implemented programs to assist customers in transitioning to cleaner power sources.

Given the significant role played by MERALCO in serving households and critical sectors such as services and industry, we urge your office to prioritize reliable energy provision to sustain economic growth and attract investments. We therefore endorse the renewal of MERALCO’s energy franchise, while also recognizing the need for targeted adjustments where necessary.

Secure, affordable, and renewable power is a key advocacy of MBC. It is essential for big and small businesses – including new investors – to grow and create jobs. We remain committed to supporting initiatives that foster economic development and enhance the welfare of our nation.

¹ Philippine Statistics Authority (2024, Apr. 25). “Regional Accounts of the Philippines” (Figures 4 and 5).  Retrieved May 30, 2024 from https://psa.gov.ph/statistics/regional-accounts

² International Energy Consultants (2023, Feb). “Regional/Global Comparison of Retail Electricity Tariffs”. Retrieved May 31, 2024 from https://meralcomain.s3.ap-southeast-1.amazonaws.com/images/ckeditor-documents/2022%20IEC%20Study.pdf