No more exclusive franchises?

The Supreme Court might have rendered a momentous decision last year but no one noticed.

- BOO CHANCO

The headline of the press release issued Aug. 1, 2024 by the Supreme Court is as simple as it gets: "SC: Exclusive Franchises are Prohibited by the Constitution."

The SC, in a decision written by Associate Justice Rodil Zalameda, ruled that exclusive franchises are not constitutionally protected. The Court emphasized that public utilities must serve the public interest, and competition could improve services and lower electricity rates.

In so ruling, the SC dismissed a petition filed by three Iloilo electric cooperatives, Iloilo Electric Cooperative Inc. I, II and III (ILECOs) challenging the validity of Republic Act (RA) 11918. The law expanded the franchise of another electricity provider, MORE Electric and Power Corp. (MORE), to areas within ILECOs' franchise. The cooperatives claim to have exclusive franchises in their areas.

The SC ruled that electric cooperatives do not have a constitutional right to an exclusive franchise within their coverage areas. The SC pointed out that "a franchise, as a privilege granted by the state, is not the exclusive private property of the franchisee. Thus, it must yield to serve the common good, as determined by Congress."

In the present case, the SC pointed out, "Congress enacted RA 11918 to make electricity more affordable for the people of Iloilo province. Congress determined that expanding MORE's franchise would promote healthy competition since MORE was capable of offering lower energy rates."

Indeed, it is a good decision for the people of the affected areas who are presently suffering from bad service and high rates from the cooperatives. The better funded MORE should be able to improve the service through efficient management. It should also be able to reduce the rates paid by consumers.