Meralco

The Manila Electric Company (PSE: MER), also known as Meralco (Tagalog: [mɛɾalˈkɔ]; stylized in its logo as MERALCO), is an electric power distribution company in the Philippines. It is Metro Manila's only electric power distributor and holds the power distribution franchise for 22 cities and 89 municipalities, including the whole of the National Capital Region and the exurbs that form Mega Manila.

MERALCO
Public
Traded asPSE: MER and MERB
IndustryPower distributor
PredecessorLa Electricista
Compañía de los Tranvías de Filipinas
FoundedMarch 24, 1903 (1903-03-24)
HeadquartersMeralco Center, Ortigas Avenue, Pasig, Metro Manila, Philippines
Key people
Manuel V. Pangilinan, Chairman
Atty. Ray C. Espinosa, President and CEO
Ownersee list
Websitewww.meralco.com.ph

The name "Meralco" is an acronym for Manila Electric Railroad And Light Company, which was the company's original name until 1919.

History

La Electricista

Organized in 1891 and beginning operations in late 1894, La Electricista was the first electric company to provide electricity to Manila towards the close of the Spanish era. La Electricista had built a central power plant on Calle San Sebastian (now Hidalgo Street [1][2] ) in Quiapo, Manila.[3] On January 17, 1895, its streetlights were turned on for the first time and by 1903, it had about 3,000 electric light customers.

Founding of the Manila Electric Railroad and Light Company

On October 20, 1902, during the American Colonial Period, the Second Philippine Commission began accepting bids to operate Manila's electric tramway, and by extension, providing electricity to the city and its suburbs. Detroit entrepreneur Charles M. Swift was the sole bidder and on March 24, 1903, was granted the original basic franchise of the Manila Electric Company.[4] March 24 thus is marked annually as the company's anniversary.

The Manila Electric Company acquired both La Electricista and the Compañía de los Tranvías de Filipinas, a firm that ran Manila's horse-drawn tramways which was founded in 1882.[5] Construction on the electric tramway began that same year. In addition to acquiring La Electricista's Calle San Sebastian power plant, the company built its own steam generating plant on Isla Provisora (later becoming the Manila Thermal Power Plant), which powered the tram system and eventually also the electric service. By 1906, the Manila Electric Company's annual power output capacity was around eight million kWh.

Manila Suburban Railways Company

Swift was awarded another franchise in 1906 to operate a 9.8 kilometres (6.1 mi) extension line from Paco to Fort McKinley and Pasig and founded the Manila Suburban Railway to operate this franchise.[4] In 1919 this company merged with the Manila Electric Company.[4] This extension was one of the most profitable of MERALCO's lines.[4]

By the 1920, MERALCO had a 170-strong fleet of streetcars, before switching over to buses later in that decade.

The company operated 52-miles of trams until World War II. The equipment and tracks of the system was severely damaged during the war and had to be removed.[6]

Power generation and distribution

By 1915, electricity generation and distribution became the main MERALCO's main income generator, overtaking its public transportation operations in terms of revenue. In 1919, it changed its official name to Manila Electric Company. By 1920, the company's power capacity had grown to 45 million kWh.

In 1925, MERALCO was acquired by the utility holding company Associated Gas and Electric (AGECO, reorganized as General Public Utilities Corporation or GPU in 1946), which had begun a massive expansion throughout the United States and Canada. With AGECO's financial backing, MERALCO began acquiring a number of existing utility companies in the Philippines, enabling the company to expand beyond Manila.

By 1930, MERALCO had completed construction of the Philippine's first hydroelectric power plant, the 23MW Botocan Hydro Station. At the time, this plant was one of the largest engineering projects in Asia and constituted the largest single private capital investment in the Philippines. The additional capacity allowed the company to begin hooking up customers throughout the metropolitan area.

Meralco office (Malolos City Cultural and Heritage house.)

To drive demand for more power, MERALCO also opened a retail store in order to sell electric home appliances.

World War II

During the Second World War, the Japanese occupying forces forcibly transferred all of MERALCO's assets and holdings to the Japanese-controlled Taiwan Power Company. By war's end, most of the former Meralco facilities had been destroyed.

After the war, MERALCO's autobus franchise was sold to Halili Transport.

The López group
Meralco (López) Building along Ortigas Avenue, Pasig, Metro Manila.

In 1962, Don Eugenio López, Sr. acquired MERALCO and making it wholly Filipino-owned. During 1962-72, he increased MERALCO's power generating capacity by five times with the building of additional power stations in the Manila area with two more planned in Rizal Province.

In 1972, President Ferdinand Marcos declared Martial Law and issued Presidential Decree № 40, which nationalized the country's electric generation and transmission.

López's eldest son, Eugenio, Jr. ("Geny"), was arrested in order to force the elder López to turn over his businesses to President Marcos. Geny was charged for allegedly conspiring to assassinate President Marcos. With his son imprisoned, López was forced to give up his holdings in several companies worth several hundred million dollars, but Geny was not released from prison.

Ownership of MERALCO was placed under a shell company called the Meralco Foundation, Inc., controlled by Marcos associates (in particular, his brother-in-law Benjamin Romualdez), under the newly created state-run National Power Corporation (Napocor). By 1978, all of the Philippines' major power plants were owned and operated by Napocor, including the Metro Manila plants that MERALCO had built beforehand in the 1960s. State control for the company, however, began in 1975, given the company's rising debt and financial problems during the decade. By the end of the Martial Law period in 1981, MERALCO expanded even further into Cavite and western parts of Laguna, Rizal and Quezon provinces, as well as parts of southern Bulacan.

State control of MERALCO lasted until the People Power Revolution in February 1986 toppled the Marcos dictatorship. President Corazon Aquino reverted company ownership to the López Group, without them paying for the state-funded improvements done during Martial Law. She also enacted an executive order that allowed the company to directly compete with Napocor.[7] On March 18, 1989, MERALCO unveiled its new corporate logo, which the company has been using up to the present.[8]

Entry of First Pacific and JG Summit groups

Between 2009 and 2012, the López Group would reduce its 33.4% holdings in MERALCO by selling most of its shares to the First Pacific Group.[9][10][11] By 2012, the López Group's holdings in MERALCO would be reduced to 3.95%.[12]

The First Pacific Group, through Beacon Electric Asset Holdings Inc. and Metro Pacific Investment Corporation, currently holds 45.46% share in MERALCO,[13] followed by the JG Summit Group with 29.56%,[14][15][16] for a combined 75.02% control of MERALCO.

Controversies

2008 legislative investigation on high power rates

Meralco is facing a Philippine legislative inquiry/investigation for alleged excessive pricing.[17] The government has considered a plan to take over Meralco, to reduce electricity bills. Meralco and National Transmission Corporation (TransCo) blamed each other for the high power rates.[18] Meralco also blames high power generation costs, high transmission costs and government taxes imposed on the electricity sector from power generation to distribution. Government Service Insurance System (GSIS) President Winston García, however, blamed Meralco's inefficiency, its "bloated bureaucracy" and its sourcing of power from independent power producers (IPPs) also owned by the López Family, and the need to amend the Electric Power Industry Reform Act (EPIRA) of 2001. Oscar López said that if the GSIS would buy the Meralco shares, they must buy in whole cash, while many businessmen also said that taking over Meralco is not the way to reduce electrical price, which depends on the national government and the President. The issue was also seen as a purposeful diversion from the then-ongoing ZTE NBN scandal and other government issues.[19] A perceived lack of general understanding regarding the issue of system loss, inherent in the business of utilities prompted Meralco's former holding company, First Philippine Holdings, to issue advertisements explaining systems loss.

Syndicated estafa and bribery case

The Department of Justice (Philippines) filed syndicated (fraud) charges against Meralco in its August 22, 2008 31-page resolution, filed with the Pasig Regional Trial Court. The May 29 National Association of Electricity Consumers for Reform (Nasecore) complaint accused Meralco of "illegally declaring as income ₱889 million in consumers’ money, which represents interest from meter and bill deposits consumers had been paying since 1995."[20] No bail was recommended for all the accused, 2006 officers of Meralco, to wit: Meralco chairman and CEO Manuel Lopez, executive vice president and chief financial officer Daniel Tagaza, first Vice-resident and treasurer Rafael Andrada, vice president and corporate auditor and compliance officer Helen De Guzman, vice president and assistant comptroller Antonio Valera, and senior assistant vice president and assistant treasurer Manolo Fernando; 2006 Meralco directors Arthur Defensor Jr., Gregory Domingo, Octavio Victor Espiritu, Christian Monsod, Federico Puno, Washington Sycip, Emilio Vicens, Francisco Viray and former Prime Minister Cesar Virata.

Nasecore's complaint accusing Meralco of "illegally declaring as income 889 million pesos in consumers’ money, which represents interest from meter and bill deposits consumers had been paying since 1995," was immediately refuted by the accused company as the alleged ₱889 million only stemmed from a generally accepted accounting principle of reversing Meralco's earlier provision for meter deposit interests which, earlier set at 10% per annum was deemed too high and was set to the recommended 6%.[21] Meralco also questioned how a syndicated estafa case can arise when it has already announced and committed that it will be refunding to customers who paid meter deposit principals plus interest months ahead of the ERC prescribed schedule and has allocated enough funds for the said refund.

Meralco is also involved in the GSIS-Meralco bribery case.[22]

Dismissal of syndicated estafa case

On October 6, 2008, the Pasig City Regional Trial Court Branch 71 dismissed the syndicated estafa case filed against the Meralco board of directors, for the prosecution failed to establish all the elements of syndicated estafa.

Presiding Judge Franco Falcon, pointed out in the ruling that the board is not the kind described by the law as being formed to perpetrate an illegal act for the board of directors were elected by stockholders. The court explained, “Therefore, the accused can never be charged of taking part in the commission of syndicated estafa not only because they are not part of a syndicate as contemplated by law in PD 1689, but more so, because there was absolutely no estafa committed.”

According to Philippine law, to constitute syndicated estafa, the subject money or property must be received by the offenders. The money represents the accrued interests on the bill and meter deposits, which were paid by Meralco customers, not directly to the board, but to the various Meralco business centers where the customers transacted. Meralco expressed elation over the dismissal.[23]

Service area
Meralco's franchise area.

Meralco serves Metro Manila, where it is the sole electricity distributor, as well as some nearby provinces, like Bulacan, Cavite, Laguna, Batangas, Rizal, and Quezon. Bulacan, Cavite, and Rizal are solely served by Meralco, but on some provinces, it only serves some parts, like in Laguna, Batangas, and Quezon, where most or some areas are served by electric cooperatives. In Laguna and Quezon, most part of those provinces are served by the company, but other areas, mostly rural municipalities, are served by electric cooperatives. In Batangas, only Santo Tomas, the First Philippine Industrial Park and First Industrial Township SEZ both in Tanauan, Batangas City, San Pascual and parts of Laurel (Barangays of Niyugan and Dayap Itaas) and Calaca (parts of Barangay Cahil) which facing Tagaytay–Nasugbu Highway are served by Meralco, and the rest of the province are franchise areas of electric cooperatives.

A Meralco service truck
City/MunicipalityProvince/Metropolitan Area
CaloocanMetro Manila
Las PiñasMetro Manila
MakatiMetro Manila
MalabonMetro Manila
MandaluyongMetro Manila
ManilaMetro Manila
MarikinaMetro Manila
MuntinlupaMetro Manila
NavotasMetro Manila
ParañaqueMetro Manila
PasayMetro Manila
PasigMetro Manila
PaterosMetro Manila
Quezon CityMetro Manila
San JuanMetro Manila
TaguigMetro Manila
ValenzuelaMetro Manila
AngatBulacan
BalagtasBulacan
BocaueBulacan
BulacanBulacan
BustosBulacan
CalumpitBulacan
GuiguintoBulacan
HagonoyBulacan
MalolosBulacan
MarilaoBulacan
MeycauayanBulacan
NorzagarayBulacan
ObandoBulacan
PandiBulacan
PaombongBulacan
PlaridelBulacan
PulilanBulacan
San IldefonsoBulacan
San Jose Del MonteBulacan
San MiguelBulacan
San RafaelBulacan
Santa MariaBulacan
BatangasBatangas
San PascualBatangas
Santo TomasBatangas
AlfonsoCavite
AmadeoCavite
BacoorCavite
CarmonaCavite
CaviteCavite
DasmariñasCavite
General Emilio AguinaldoCavite
General Mariano AlvarezCavite
General TriasCavite
ImusCavite
IndangCavite
KawitCavite
MagallanesCavite
MaragondonCavite
MendezCavite
NaicCavite
NoveletaCavite
RosarioCavite
SilangCavite
TagaytayCavite
TanzaCavite
TernateCavite
Trece MartiresCavite
AlaminosLaguna
BayLaguna
CabuyaoLaguna
CalambaLaguna
CalauanLaguna
LiliwLaguna
Los BañosLaguna
LuisianaLaguna
MagdalenaLaguna
MajayjayLaguna
NagcarlanLaguna
PilaLaguna
RizalLaguna
San PabloLaguna
San PedroLaguna
Santa CruzLaguna
Santa RosaLaguna
VictoriaLaguna
CandelariaQuezon
DoloresQuezon
LucbanQuezon
LucenaQuezon
MaubanQuezon
PagbilaoQuezon
SampalocQuezon
San AntonioQuezon
SariayaQuezon
TayabasQuezon
TiaongQuezon
AngonoRizal
AntipoloRizal
BarasRizal
BinangonanRizal
CaintaRizal
CardonaRizal
JalajalaRizal
MorongRizal
PilillaRizal
RodriguezRizal
San MateoRizal
TanayRizal
TaytayRizal
TeresaRizal

Ownership

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References
  1. Martinez, Glenn. "Old street names of Manila". Traveller on foot. Wordpress.
  2. Ivan. "Manila then and now". Blog. Ivan Lakwatsero. Retrieved December 20, 2013.
  3. "Calle San Sebastian - Old photos". Flickr. August 22, 2009. Retrieved December 20, 2013.
  4. Satre, Gary L. (June 1998). "The Metro Manila LRT System— A Historical Perspective" (PDF) (16). Japan Railway & Transport Review. Archived from the original (PDF) on May 5, 2006. Retrieved November 18, 2015.
  5. "ELECTRICAL SERVICE IN THE PHILIPPINES; A 40,000 Horsepower Central Station Now Serves Manila and Suburbs. NEW PLAN BUILT IN 1905 Demand for Electric Lighting Grew Rapidly--6,000 Lamps in Streets Now. Pioneers on the Payroll. Nipa Hut Dwellers". New York Times. February 5, 1928. Retrieved April 25, 2017.
  6. Lexis Nexis (1974). Mass Transit. PTN Pub. Co. p. 58. Retrieved June 15, 2008.
  7. Bello, Walden; De Guzman, Marissa; Malig, Mary Lou; Docena, Herbert (2005). The Anti-development State: The Political Economy of Permanent Crisis in the Philippines. Zed Books. p. 293. ISBN 1-84277-631-2. Retrieved June 15, 2008.
  8. "New Meralco logo unveiled". Manila Standard. Kagitingang Publications, Inc. March 20, 1989. p. 12. Retrieved June 24, 2020.
  9. "Lopez says wants out of Meralco". Reuters. May 8, 2008. Retrieved July 18, 2020.
  10. "PLDT buys 20% Lopez stake in Meralco". The Philippine Star. March 14, 2009. Retrieved July 18, 2020.
  11. "Metro Pacific, Piltel to form holding firm for Meralco shares". GMA News. February 8, 2010. Retrieved July 18, 2020.
  12. dela Pena, Zinnia (February 1, 2012). "Lopez completes sale of 2.66% Meralco stake". The Philippine Star. Retrieved July 18, 2020.
  13. "PLDT buys 20% Lopez stake in Meralco". The Philippine Star. March 14, 2009. Retrieved July 18, 2020.
  14. Dumlao, Doris (September 30, 2013). "Gokongwei buys 27% stake in Meralco". Philippine Daily Inquirer. Retrieved July 18, 2020.
  15. Dumlao, Doris (October 1, 2013). "JG Summit pays P72B for Meralco". Philippine Daily Inquirer. Retrieved July 18, 2020.
  16. Gonzales, Iris (June 22, 2017). "JG Summit raises stake in Meralco". The Philippine Star. Retrieved July 18, 2020.
  17. "House panel begins probe into high power rates". GMA News Online. May 13, 2008.
  18. "Napocor, Meralco eye higher power rates". ABS-CBN News. June 21, 2010.
  19. Dizon, David (May 13, 2008). "High power rates blamed on Meralco, gov't, IPPs". ABS-CBN News.
  20. "DOJ charges Meralco with syndicated estafa". GMA News Online. August 22, 2008.
  21. Frialde, Mike (August 23, 2008). "DOJ files estafa raps vs Meralco". Philstar.
  22. Torres, Tetch (August 22, 2008). "DoJ files syndicated fraud raps vs Meralco execs". Inquirer.net. Archived from the original on September 16, 2008.
  23. http://balita.ph/2008/10/15/meralco-exec-expresses-elation-for-dismissal-of-estafa-case-filed-by-doj/%5B%5D
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