ILECO 1-MORE Power deal: Joint venture or takeover?

Is the proposed arrangement between Iloilo Electric Cooperative  (ILECO 1) and MORE Power really a joint venture—or is it effectively a takeover of the cooperative’s distribution assets?

For ILECO 1 employees, the distinction is more than semantics.

It could determine whether hundreds of workers keep their jobs, whether the cooperative remains an independent distribution utility, and whether consumers will still have the opportunity to choose their electricity provider through competition.

These questions surfaced after MORE Power presented its proposal to ILECO 1 department heads during a meeting on July 16.

‘INDI JOINT VENTURE’

Kay Frialda, president of the ILECO 1 Employees Association, became emotional as she recounted what was presented to the employees.

According to her, MORE Power president Roel Castro explained that the proposal was not a joint venture, but would involve a 100-percent takeover of ILECO 1’s distribution assets.

MORE Power has referred to the proposed arrangement as a System Integration Operation Agreement.

Under the proposal described by Frialda, MORE Power would acquire ILECO 1’s distribution assets and assume their operation.

That raises a fundamental question:

If one company acquires the cooperative’s distribution assets and assumes operational control, what distinguishes the arrangement from an acquisition or takeover?

The answer matters because the legal structure of the transaction determines the regulatory approvals required, the rights of the cooperative and its member-consumers, and potentially the future of its workforce.

THE WORKERS LEFT IN UNCERTAINTY

For ILECO 1 employees, the most immediate concern is their livelihood.

Frialda said employees may receive their retirement benefits and other entitlements, but there is no assurance that they will be rehired by MORE Power.

That uncertainty weighs heavily on workers whose careers have been built around electricity distribution.

Among those most vulnerable are line personnel and other employees with highly specialized training.

Frialda fears their situation could mirror what happened at the Central Negros Electric Cooperative Inc. (CENECO), where only a limited number of employees reportedly returned to work following the transition of distribution operations to private management.

For specialized workers, she said, finding another job outside the power industry may not be easy.

Their skills were developed specifically for maintaining and operating an electric distribution system.

“Indi kami pagpabay-an.”

That, essentially, is what the employees are now hoping for as they wait for the ILECO 1 board to decide the cooperative’s future.

But why not compete?

Frialda said employees are not simply asking MORE Power to stay out.

They are asking for a chance to compete.

ILECO 1 workers are being encouraged to improve their skills and services to demonstrate that the cooperative can meet industry standards.

Frialda believes consumers should ultimately be given the choice.

She called for ILECO 1 to be allowed to demonstrate the “beauty of competition” and let consumers decide which service provider offers better reliability, efficiency, affordability and service.

The issue takes on added significance following the Supreme Court’s ruling that has been interpreted as allowing competition in areas previously served exclusively by electric cooperatives.

But competition and acquisition are not necessarily the same thing.

Allowing another distributor to compete for consumers is one matter. Transferring the incumbent cooperative’s distribution assets to that competitor is another.

That distinction deserves scrutiny.

THE GARIN CONNECTION

The proposed expansion of MORE Power’s reach into areas served by ILECO 1 also has a significant political dimension.

The Garin connection is not merely political speculation.

Congresswoman Janette Garin has actively pursued legislation seeking to expand MORE Power’s franchise into areas currently served by ILECO 1.

At the same time, her sister-in-law, Department of Energy Secretary Sharon Garin, has publicly praised MORE Power’s operations and its partnership with the mayors in the first district who are connected with the Garins or bloodline of the said surname.

The relationship is therefore a matter of public record, not simply political rumor.

But there is an important distinction.

What remains to be established is whether Secretary Garin has personally intervened in or endorsed any proposal to acquire ILECO 1’s distribution assets.

That question should be answered through documents, official communications and direct statements not assumptions based solely on family relationships.

The same scrutiny should apply to any alleged involvement by other political officials.

Who initiated the proposal?

Who facilitated discussions?

Who stands to benefit?

And what government agencies have been consulted or asked to approve the arrangement?

Those are questions that can be answered by following the paper trail.

IS IT LEGAL?

There is also a critical distinction between asking whether a transaction is legally possible and whether it is morally or economically justified.

ILECO 1 is an electric cooperative, not simply a private company whose assets can automatically be sold to another corporation.

Its assets, member-consumers, governance structure and regulatory obligations must all be considered.

Among the questions that need clear answers are:

• Does the ILECO 1 board have the authority to approve the proposed transfer?
• What approvals are required from the National Electrification Administration?
• What role will the Energy Regulatory Commission play?
• Will other regulatory agencies have to approve the transaction?
• How will ILECO 1’s distribution assets be valued?
• Who benefits financially from the transfer?
• What happens to the employees?
• What protections will be given to member-consumers?
• Will consumers have meaningful competition if MORE Power acquires the cooperative’s distribution assets?
• If ILECO 1 remains financially and operationally viable, why should its assets be transferred rather than allowing it to compete?

These questions cannot be answered simply by calling the arrangement a “System Integration Operation Agreement.”

The actual provisions of the agreement, and the legal authority behind it, must be examined.

‘LET THE CONSUMERS DECIDE’

For Frialda and the employees, the issue ultimately comes down to competition.

They believe ILECO 1 should be allowed to prove that it can improve.

Workers are being encouraged to strengthen their skills, improve service delivery and prepare the cooperative to compete.

The employees are not asking for protection from competition.

They are asking for the opportunity to compete.

A technical working group has already been formed by ILECO I management to study MORE Power’s proposal.

As that review continues, the employees remain uncertain about their future.

The bigger question, however, extends beyond their jobs.

If MORE Power eventually acquires ILECO 1’s distribution assets, will consumers actually gain competition, or will they simply witness the transfer of one distribution system from a cooperative to a private utility?

And if the latter is the outcome, the public deserves answers to three basic questions:

Is it legal?

Is it fair to the cooperative and its consumers?

And what happens to the people who built the system in the first place?

For the employees of ILECO 1, the answer should not simply be about who owns the wires.

It should also be about who gets left behind.IMT