Meralco

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Manila Electric Company
Type Public
Traded as PSEMER and MERB
Industry Power distributor
Founded January 17, 1895
Headquarters Pasig City, Philippines
Key people Manuel V. Pangilinan, Chairman
Oscar S. Reyes President, CEO
Dennis Joseph C. Capili,MBA , Operations Manager
Website www.meralco.com.ph


The Manila Electric Company (PSEMER and MERB), also known as MERALCO or Meralco, is the Philippines' largest distributor of electrical power. 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.

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

History[edit]

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.

American rule[edit]

On October 20, 1902, 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 won the bidding by default as he was the sole bidder and on March 24, 1903, was granted the original basic franchise of Meralco.

In 1904, Meralco acquired both the Compañía de los Tranvías de Filipinas, a firm that operated public transportation and ran Manila's horse-drawn and steam-operated tramways, and added La Electricista. Construction on the electric tramway began that same year. In addition to acquiring La Electricista's Calle San Sebastian power plant, Meralco built its own steam generating plant on Isla Provisora which powered the tram system and eventually also the electric service. By 1906, Meralco's yearly power output capacity was around eight million kWh.

Public transportation[edit]

Meralco built up a strong public transportation business in the decades leading up to World War II, building a 170-strong fleet of streetcars into the 1920s, before switching over to buses later in that decade.

The company operated a 52-mile tram transport from 1903 to World War II. The equipment and tracks of the system was severely damaged during the war and had to be removed.[4]

Power generation and distribution[edit]

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 or AGECO (reorganized as General Public Utilities Corporation or GPU in 1946), which had begun a massive expansion throughout the United States and the Dominion of 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.[citation needed] At the time, this plant was one of the largest engineering projects in Asia[citation needed] and constituted the largest single private capital investment in the Philippines.[citation needed] 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.[citation needed]

World War II[edit]

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.

Third Republic[edit]

After the war, Meralco's autobus franchise was sold to Halili Transport. In 1962, Don Eugenio López, Sr. acquired Meralco and finally making it wholly Filipino-owned. In buying Meralco, Don Eugenio demonstrated his belief that Filipinos could manage businesses even better than the occupying Americans. During 1962-72, he increased Meralco's power generating capacity five times with the building of additional power stations in the Manila area with two more planned in Rizal Province.

Martial Law era[edit]

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

The eldest Don Eugenio's children were forcibly arrested by government agents to persuade him to turn over his business empire to the regime; Eugenio Jr. ("Geny") was charged with conspiring to assassinate the President. With his son held hostage, Don Eugenio was forced to give up his holdings in a group of companies worth several hundred million dollars, but Geny was not released from prison.

Ownership of the company was stripped from the López Family by decree, and placed under a shell company called the Meralco Foundation, Inc., controlled by cronies under the newly created state-run Napocor. By 1978, all of the Philippines' major power plants, including most notably those previously owned by Meralco, were owned and operated by Napocor.

Post-EDSA[edit]

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

State control of Meralco lasted until after the People Power Revolution in February 1986, which toppled the Marcos dictatorship. President Corazon Aquino reverted company ownership to the López Family, 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.[5]

2008 legislative investigation on high power rates[edit]

Meralco is facing a Philippine legislative inquiry/investigation for alleged excessive pricing.[6] 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.[7] 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 Electronic Power Industry Reform Act 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.[8] 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[edit]

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."[9] 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%.[10] 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.[11]

Dismissal of syndicated estafa case[edit]

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.[12]

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.[13]

Service area[edit]

Meralco's franchise area.

Ownership[edit]

as of December 31, 2013 [14]

Sell-offs and acquisitions[edit]

San Miguel acquisition of GSIS stake[edit]

In October 2008, food and beverage conglomerate San Miguel Corporation acquired GSIS's entire 27 percent stake in Meralco at ₱90 per share or a total of ₱26 billion.

Sports teams[edit]

References[edit]

  1. ^ Martinez, Glenn. "Old street names of Manila". Traveller on foot. Wordpress. 
  2. ^ "Manila then and now". Blog. Ivan Lakwatsero. Retrieved 20 December 2013. 
  3. ^ "Calle San Sebastian - Old photos". Flickr. Retrieved 20 December 2013. 
  4. ^ Lexis Nexis (1974). Mass Transit. PTN Pub. Co. p. 58. Retrieved 2008-06-15. 
  5. ^ Bello, Walden; Marissa De Guzman; Mary Lou Malig; Herbert Docena (2005). The Anti-development State: The Political Economy of Permanent Crisis in the Philippines. Zed Books. p. 293. ISBN 1-84277-631-2. Retrieved 2008-06-15. 
  6. ^ GMA NEWS.TV, House panel begins probe into high power rates
  7. ^ Abs-Cbn Interactive, Meralco, Napocor point fingers on high power rates
  8. ^ Abs-Cbn Interactive, High power rates blamed on Meralco, gov't, IPPs
  9. ^ gmanews.tv, DOJ charges Meralco with syndicated estafa
  10. ^ DOJ files estafa raps vs Meralco
  11. ^ newsinfo.inquirer.net, DoJ files syndicated fraud raps vs Meralco execs
  12. ^ "Instilling a culture of peace among Muslim, Christian kids". BusinessMirror. 
  13. ^ http://balita.ph/2008/10/15/meralco-exec-expresses-elation-for-dismissal-of-estafa-case-filed-by-doj/
  14. ^ [1]