Meralco
Overview
 
The Manila Electric Company , also known as MERALCO or Meralco, is the Philippines' largest distributor of electrical power.

The word MERALCO, is an acronym for Manila Electric Railroad And Light COmpany, which was the company's original name from 1903 to 1919.

MERALCO is the Metro Manila
Metro Manila
Metropolitan Manila , the National Capital Region , or simply Metro Manila, is the metropolitan region encompassing the City of Manila and its surrounding areas in the Philippines...

's only electric power distributor and holds the power distribution franchise for some 22 cities and 89 municipalities, including the whole of Metro Manila
Metro Manila
Metropolitan Manila , the National Capital Region , or simply Metro Manila, is the metropolitan region encompassing the City of Manila and its surrounding areas in the Philippines...

 and Mega Manila
Mega Manila
Mega Manila is the term used for the regions of Central Luzon, CALABARZON, MIMAROPA and Metro Manila. It is frequently used in the press, advertising, television and radio...

 region.
Organized in 1892 and began generation in 1895, La Electricista was the first electric company that provides electricity to Manila during the late Spanish era.
Encyclopedia
The Manila Electric Company , also known as MERALCO or Meralco, is the Philippines' largest distributor of electrical power.

The word MERALCO, is an acronym for Manila Electric Railroad And Light COmpany, which was the company's original name from 1903 to 1919.

MERALCO is the Metro Manila
Metro Manila
Metropolitan Manila , the National Capital Region , or simply Metro Manila, is the metropolitan region encompassing the City of Manila and its surrounding areas in the Philippines...

's only electric power distributor and holds the power distribution franchise for some 22 cities and 89 municipalities, including the whole of Metro Manila
Metro Manila
Metropolitan Manila , the National Capital Region , or simply Metro Manila, is the metropolitan region encompassing the City of Manila and its surrounding areas in the Philippines...

 and Mega Manila
Mega Manila
Mega Manila is the term used for the regions of Central Luzon, CALABARZON, MIMAROPA and Metro Manila. It is frequently used in the press, advertising, television and radio...

 region.

History

Organized in 1892 and began generation in 1895, La Electricista was the first electric company that provides electricity to Manila during the late Spanish era. La Electricista had built a central power plant on Calle San Sebastian (now R. Hidalgo). On January 17, 1895, its streetlights were turned on for the first time. By 1903, it had about 3,000 electric light customers.

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 tram
Tram
A tram is a passenger rail vehicle which runs on tracks along public urban streets and also sometimes on separate rights of way. It may also run between cities and/or towns , and/or partially grade separated even in the cities...

ways, 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 streetcar
Tram
A tram is a passenger rail vehicle which runs on tracks along public urban streets and also sometimes on separate rights of way. It may also run between cities and/or towns , and/or partially grade separated even in the cities...

 system and eventually also the electric service. By 1906, Meralco's yearly power output capacity was around eight million kWh.

Public Transportation

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
Tram
A tram is a passenger rail vehicle which runs on tracks along public urban streets and also sometimes on separate rights of way. It may also run between cities and/or towns , and/or partially grade separated even in the cities...

 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.

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
FirstEnergy
FirstEnergy Corp. , is a diversified energy company headquartered in Akron, Ohio. Its subsidiaries and affiliates are involved in the generation, transmission, and distribution of electricity, as well as energy management and other energy-related services...

 or 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 its Manila city center base.

By 1930 MERALCO completed construction of the Philippine's first hydroelectric power plant, the 960-kilowatt 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
Metropolitan area
The term metropolitan area refers to a region consisting of a densely populated urban core and its less-populated surrounding territories, sharing industry, infrastructure, and housing. A metropolitan area usually encompasses multiple jurisdictions and municipalities: neighborhoods, townships,...

.

Retail Enterprises

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

World War II

During Greater East-Asia War, the Japanese Occupation Forces forcibly transferred all of Meralco's assets and holdings to the Japanese controlled Taiwan Power Company
Taiwan Power Company
The Taiwan Power Company is a state-owned electric power utility providing electric power to Taiwan and off-shore islands of Republic of China. In 1994 a measure which allowed independent power producers to provide up to 20 percent of Taiwan's electricity should have ended the monopoly.- See...

. By the end of the war, most of the former Meralco operations had been destroyed.

Post War Reconstruction (Nationalist Era)

After World War II, MERALCO's autobus franchise was sold to Halili Transport. In 1962, Don Eugenio López, Sr.
Eugenio Lopez, Sr.
Don Eugenio Lopez, Sr. was founder of the Manila Chronicle and Chronicle Broadcasting Network.-The Story:"I remember during World War II, when we were hiding from the Japanese in the mountains of Dingle in Iloilo, he contracted a husband and wife teacher team to keep us abreast of our studies...

 acquired MERALCO and it finally became Filipino-owned. In buying Meralco, Don Eugenio demonstrated his belief that Filipinos could manage businesses even better than Americans. During 1962-72, he increased MERALCO's power generating capacity five times.

Martial Law Period

In 1972 President Ferdinand Marcos
Ferdinand Marcos
Ferdinand Emmanuel Edralin Marcos, Sr. was a Filipino leader and an authoritarian President of the Philippines from 1965 to 1986. He was a lawyer, member of the Philippine House of Representatives and a member of the Philippine Senate...

 both instituted martial law in the Philippines and issued Presidential Decree No. 40 which forcibly nationalized the country's electric generation and transmission.

Don Eugenio Lopez, Sr.
Eugenio Lopez, Sr.
Don Eugenio Lopez, Sr. was founder of the Manila Chronicle and Chronicle Broadcasting Network.-The Story:"I remember during World War II, when we were hiding from the Japanese in the mountains of Dingle in Iloilo, he contracted a husband and wife teacher team to keep us abreast of our studies...

, who owned Meralco at the time, had both his sons kidnapped by the government who were released to force Don Eugenio to hand over his business empire. The regime arrested his son Eugenio Lopez, Jr.
Eugenio Lopez, Jr.
Eugenio Lopez, Jr. , popularly known as Geny and Kapitan, was the Chairman Emeritus of ABS-CBN Broadcasting Corporation.-Early life and career:...

 (better known as Geny) on trumped-up charges of 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.

By decree, the ownership of the company was stripped away from the López family and placed under a shell company called the Meralco Foundation, Inc., controlled by crony under the newly-created, government controlled Napocor
National Power Corporation
The National Power Corporation , also known as the NPC or Napocor, is a state-owned company that serves as the largest provider and generator of electricity in the Philippines...

.

By 1978 all of the Philippines' major power plants, including most notably those previously owned by MERALCO, were owned and operated by NAPOCOR. Control of the Meralco corporation itself was seized by the Marcos Dictatorship, but was returned to its prior owners after the People Power Revolution by President Corazon Aquino
Corazon Aquino
Maria Corazon Sumulong Cojuangco-Aquino was the 11th President of the Philippines and the first woman to hold that office in Philippine history. She is best remembered for leading the 1986 People Power Revolution, which toppled Ferdinand Marcos and restored democracy in the Philippines...

 in a silver platter without the Lopez family paying for improvements done during Martial Law. She also enacted an executive order that allowed the company to directly compete with NAPOCOR.

2008 Legislative investigation on high power rates

Meralco is facing a Philippine legislative inquiry/investigation for alleged excessive pricing. The government has considered a plan to take over Meralco, to reduce electricity bills. Meralco and National Transmission Corporation
National Transmission Corporation
The National Transmission Corporation is a Philippine government corporation created in 2001 by the Electric Power Industry Reform Act currently operating the nation's power grid...

 (Transco) blamed each other for the high power rates. 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 (Philippines)
Government Service Insurance System (Philippines)
The Government Service Insurance System is a government-owned and -controlled corporation in the Republic of the Philippines. Created by Commonwealth Act No...

 President Winston Garcia, however, blamed Meralco's inefficiency, its "bloated bureaucracy" and its sourcing of power from independent power producers (IPPs) also owned by the Lopezes, and the need to amend the Electronic Power Industry Reform Act of 2001. Oscar Lopez, said that if GSIS would buy the shares of Meralco, they must buy in whole cash. Many businessmen also say that taking over Meralco is not the way to reduce electrical price. It depends on the government and the president. As other people say, this issue is only to hide the ZTE NBN scandal
Philippine National Broadband Network controversy
The Philippine National Broadband Network controversy involved allegations of corruption in the awarding of a US$329 million construction contract to Chinese telecommunications firm ZTE for the proposed government-managed National Broadband Network .The contract with ZTE was signed on April 20,...

 and other more issues. 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)
Department of Justice (Philippines)
The Department of Justice , abbreviated as DOJ, is the executive department of the Philippine government responsible for upholding the rule of law in the Philippines...

, in its August 22, 2008 31-page resolution, filed with the Pasig Regional Trial Court Court, syndicated (fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...

) charges against Meralco. The May 29 National Association of Electricity Consumers for Reform (Nasecore) complaint accused Meralco of "illegally declaring as income P 889 million in consumers’ money, which represents interest from meter and bill deposits consumers had been paying since 1995." 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 president 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 Cesar Virata
Cesar Virata
Cesar Enrique Aguinaldo Virata is a former Prime Minister of the Philippines from 1981-1986 under the Interim Batasang Pambansa and the Regular Batasang Pambansa. One of the Philippines' business leaders and leading technocrats, he served as Finance Minister from 1970 during the Marcos regime and...

.

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 P889 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%. 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
GSIS-Meralco bribery case
The GSIS-Meralco bribery case is a political controversy and pending legal case being heard by the Supreme Court of the Philippines. This complex case began with a complaint filed by the GSIS with the Securities and Exchange Commission of the Philippines questioning the unvalidated proxy votes...

.

Dismissal of syndicated estafa case

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

Presiding Judge Franco Falcon, in the ruling, pointed out 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.

San Miguel Acquisition of GSIS Stake

Food and beverage conglomerate San Miguel Corporation
San Miguel Corporation
Established in 1890 as a brewery, San Miguel Corporation is Southeast Asia's largest publicly listed food, beverage and packaging company with over 17,000 employees in over 100 major facilities throughout the Asia-Pacific....

 acquired GSIS's entire 27 percent stake in Meralco at P90 per share or a total of P26 billion (excluding interest) on October 27, 2008.

Upon SMC's entry into Meralco, SMC was entitled to different company positions. SMC President Ramon Ang replaced Felipe Alfonso as Meralco vice-chairman. The board also announced the appointment of Jose de Jesus, former president and CEO of the Manila North Tollways Corp. (MNTC), as the new Meralco president and COO, replacing Jesus Francisco.

De Jesus was quoted that under his wing, Meralco will further improve its service for its customers. “The company will focus on searching for opportunities of improving service to Meralco’s millions of customers and bring [the company] closer to and understood by them.”

SMC was also able to secure four board seats in the Meralco board, replacing the seats that were once held by GSIS directors. The new directors included Eduardo Cojuangco, Jr.
Eduardo Cojuangco, Jr.
Eduardo Murphy Cojuangco, Jr. , also known as Danding Cojuangco, is the chairman of San Miguel Corporation, the largest food and beverage corporation in the Philippines and Southeast Asia, former Philippine ambassador, and former governor of Tarlac. In 2005, his personal wealth was estimated at...

, Aurora Babes Calderon and former Justice Minister Estelito Mendoza. They replaced GSIS nominees Winston Garcia, Bernardino Abes, Jeremy Parulan, and Daisy Arce.

Sell-off of Some Shares to PLDT

On March 13, 2009, the Lopez Family agreed to sell 20 percent of Meralco to the telecommunications giant PLDT
Philippine Long Distance Telephone Company
The Philippine Long Distance Telephone Company commonly known as PLDT, is the largest telecommunications company in the Philippines. PLDT is also the largest company in the Philippines, ranked 1138th in the April 2009 update, and 1080th in the April 2010 update, of Forbes' Global 2000 list...

 for about 20 billion pesos. This move is to attempt to block the hostile takeover of the largest power distributor by San Miguel Corporation. This means that the Lopez family whose majority stake in Meralco once formed the nucleus of the group’s power empire will retain only 13.4 percent once the transaction is completed within the third quarter of 2009.

On November 6, 2009, only half of the shares were sold to PLDT, and the other half to MPIC both are affiliates of Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...

-listed First Pacific
First Pacific
First Pacific Company Limited is a Hong Kong-based investment and management company with operations located in Asia. It involves telecommunications, consumer food products and infrastructure. Its chairman is Anthoni Salim , an Indonesian Chinese entrepreneur....

, this after a takeover war between PLDT and TriRatna Holdings Corp. ,which is majority owned by Henry Sy, Jr. son of mall magnate Henry Sy
Henry Sy
Henry Sy is a Chinese Filipino businessman and the founder of SM Group and chairman of SM Prime Holdings, the largest retailer and shopping mall operator in the Philippines. He earned his Associate of Arts degree in Commercial Studies at Far Eastern University in 1950...

.

Acquisition of Sta Lucia Realty franchise in the PBA

On August 9, 2010, the Philippine Basketball Association
Philippine Basketball Association
The Philippine Basketball Association , is a men's professional basketball league in the Philippines composed of 10 company-branded franchised teams. It is the first and oldest professional basketball league in Asia and the second oldest in the world after the NBA...

 board of Governors approve the sale of the franchise to Meralco worth 50 million pesos.

Ownership

  • San Miguel Corporation
    San Miguel Corporation
    Established in 1890 as a brewery, San Miguel Corporation is Southeast Asia's largest publicly listed food, beverage and packaging company with over 17,000 employees in over 100 major facilities throughout the Asia-Pacific....

     and affiliates: 43%
  • Beacon Electric Asset Holdings, Inc. (50/50 JV between PLDT Communications and Energy Ventures, Inc. and Metro Pacific Investments Corporation, both affiliates of First Pacific
    First Pacific
    First Pacific Company Limited is a Hong Kong-based investment and management company with operations located in Asia. It involves telecommunications, consumer food products and infrastructure. Its chairman is Anthoni Salim , an Indonesian Chinese entrepreneur....

    ): 34.8%
  • First Philippine Holdings Corporation
    First Philippine Holdings Corporation
    First Philippine Holdings Corporation is a holding company whose core business is power generation and distribution with strategic investments in manufacturing and property...

    : owns 6.7% stake of the company after selling its 26.6% stake to Pangilinan's MPIC and Pilipino Telephone Corporation|Piltel]].
  • PLDT Communications and Energy Ventures, Inc. (formerly called Pilipino Telephone Corporation or Piltel, which is 100% owned by Smart Communications, which in turn is 100% owned by PLDT): 6.1%
  • Public Stock: 8.9%

See also

  • John F. Cotton Corporate Wellness Center
    John F. Cotton Corporate Wellness Center
    The John F. Cotton Corporate Wellness Center or John F. Cotton Hospital Center for Corporation Wellness, formerly known only as the John F...

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