Amicable

When elephants brawl, the ants must be protected.

Residents of Iloilo City are deeply anxious over the possibility the transition from one power distributor to another could be messy. The highly progressive city will face disruptions in its power supply unless the old concessionaire and the new one get together and plan an amicable transition process.

The old concessionaire, Panay Electric Company (PECO) enjoyed the distribution franchise for 97 years. The franchise it holds ends this month. Customer complaints, including the local government, convinced Congress not to renew the franchise and award it instead to a new player.

PECO had not reinvested in modern facilities. For a while, it was selling the most expensive electricity in the world. Power supply was unreliable. Customers were frequently issued erroneous billing statements due to the antiquated system. The ability of Iloilo to sustain its economic growth was compromised.

Both the House of Representatives committee on legislative franchises chaired by Rep. Franz Alvarez and Senate committee on public services chaired by Sen. Grace Poe agreed there was good reason to transfer the power distribution franchise to a new player, MORE Electric Power Corp. controlled by business tycoon Enrique Razon Jr.

The consolidated bill awarding the franchise to a new player now sits on President Duterte’s desk. Since the power to award franchises rests with the Congress, the signing should be a formality. PECO’s existing franchise expires on Friday, Jan. 18.

For its part, MORE announced it was ready to put in the billions required to fully modernize electricity distribution services in the Iloilo service area. This should improve reliability of the power supply and dramatically lower systems loss that should result in cheaper electricity.

During its time, PECO sourced only 1.05 percent of the power it distributed from the wholesale electricity spot market, negating the advantages prescribed by the Electric Power Industry Reform Act. MORE Power president Roel Castro, a veteran in electricity supply distribution, announced his company would purchase the bulk of its electricity from the spot market.

Castro likewise announced his company was prepared to completely take over management and operations of power distribution services in the Iloilo area by May. He offered PECO equitable compensation for its assets and promised to hire the existing workforce of the outgoing distributor. The last item should calm fears of labor dislocation due to the transfer of the franchise.

The transfer is unprecedented. This is the first time a major power distribution franchise is being transferred to a new player. If the transition proceeds smoothly, this will encourage future transfers of franchise from inefficient awardees to more efficient players. At the very least, what happened in this case should encourage other franchise awardees to shape up and be competitive.

Too many franchise awardees tend to work less efficiently, enjoying the monopoly a public service franchise gives without doing what is best for their consumers. The case of Iloilo will send a clear signal across the entire power industry. 

The optimistic timeline MORE forecasts will happen only with the full cooperation of the outgoing distributor.

To be sure, PECO is not happy with the non-renewal of the franchise they enjoyed for nearly a century. But a policy decision that will redound to the benefit of consumers has been taken. They should help ensure a smooth turnover with the best interests of consumers at heart.

Shutdown

The trade war with China is not the only uncertainty Donald Trump inflicts on the rest of the world. The partial shutdown of the US government, because the Congress would not yield to Trump’s imperious demands for funding a border wall, will now create economic ripple effects the American president had not properly calculated when he began his game of bluff and bluster with his own legislators.

The partial shutdown is now on its fourth week, longer than any other previous such incidents. There is no deal on the table for the American president and the legislators to agree on. This shutdown could go on for a very long time.

About 800,000 federal government employees are not getting paid during the shutdown. The small enterprises that cater to them are now feeling the loss of consumer spending. Soon, many of these employees will default on their mortgages and max out their credit cards with no means to settle debts. They will be a black hole in the American financial system, beginning from a small tear and growing into the eye of a financial and political storm.

Trump’s ego is on the line here. He promised to deliver a wall on the 2,000-mile border with Mexico, no matter this is the most inefficient way of ensuring border security. Ironically, illegal immigration from Latin America is at its lowest in decades and America’s drug problem consists largely of opioids made in China.

Because his ego is on the line, it is difficult to expect rational calculation from this man. Here is a character obsessed with having his name attached to large edifices.

No one knows how this unwarranted crisis will end. The Democrats, who control the US House of Representatives, and who have power over the purse, refuse to be bullied by the most erratic and infantile president the US ever had. They stand on the solid grounds of morality, principle and rationality.

The rest of the world can only wring their hands, unable to interfere in what is a domestic American concern. But the shutdown is only one of a constellation of disastrous policies this chaos-prone president has unleashed on the rest of us.