PECO Iloilo History

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Panay Electric Company (PECO), the sole power distributor in Iloilo City, has been serving Ilonggos since 1923. Here's the history of the company, as posted online.

HISTORY: PECO & ILOILO CITY

AN ENLIGHTENED PAST, A BRIGHT FUTURE

By the turn of this century, Iloilo was already a vibrant economic hub engaged in regional as well as

New PECO office building.

international trade. Due largely to its natural harbor and well-developed port, Iloilo became a major transhipment point of various agricultural products, particularly sugar. Trading was so brisk that the Bank of the Philippine Islands, one of the earliest banks in the country, established its first branch in Iloilo.

The establishment in 1902 of the Iloilo Light Company – one of the country’s pioneer power firm – gave a major boost to the already bustling economy. Available records fail to disclose the firm’s ownership but noted that it then had 47 subscribers, including St. Paul’s Hospital and the Palacio del Governador now more popularly known as the Provincial Capitol.

A few years after it started operations, the firm was taken over in 1908 by Bryan and Landon. Correspondence between then BPI President William F. Nolting and Geoff Graser of the Philippine Engineering Company, who took an interest in acquiring the firm, showed that by 1920 power subscribers had grown to a total of 4,200 consisting of 2,300 flat-rate and 1,900 metered customers. The firm’s monthly income was estimated at P16,000.

By this time, though, Bryan and Landon, which also had coal mining interest in Cebu and lumber concessions in Mindanao, was ready to sell the power firm together with its telephone company in Iloilo which then had 656 subscribers.

In the meantime, on February 22, 1921, Don Esteban de la Rama, a sugar baron after whom a street in this city was named, was granted a franchise “to install, operate, and maintain an electric light, heat, and power system in Iloilo”. The franchise, with a lifetime of 50 years, was embodied in Act 2983 issued by the Philippine Legislature.

Three months later, De la Rama organized Panay Electric Company. On May 14, 1921, PECO’s Article of Incorporation was submitted to the Bureau of Commerce and Industry. The company had a declared capitalization of P50,000 with P13,500subscribed and P3,400 paid up.

PECO’s incorporators at the time aside from De la Rama were: Jose Ma. Arroyo, a former senator and after whom the Arroyo Fountain in front of the capitol was named; lawyer Mariano Jalbuena, Emiliano Lizares, Jose Lopez-Vito, Modesto Ledesma, Marcos Alfaras, Jose Tiongco, Yap Seng, Eulogio Hernandez, Jose L. Jalbuena, Jose G. Paramos, and G.M. Saul. Named board of directors were De la Rama, Lopez-Vito, Alfaras, Paramos, Yap Seng, and Jalbuena who was also named corporate treasurer.

On April 6, 1922, PECO became a majority owner of the Iloilo Light Company after buying three-fourths of the company. It was not known when PECO fully took over the firm but on February 12, 1923, the 5th Philippine Legislature passed Act No.3035 amending Act No. 2983 and transferring the De la Rama franchise to PECO.

On February 12, 1923, the 5th Legislature passed Act 3035, granting Panay Electric Company the right to own, operate, and maintain an electric, light, heat, and power company in Iloilo.

On April 5, 1923 the PECO by laws were approved and three weeks later, PECO declared an increase in its Capital Stock from P50,000 to P500,000 with the entry of new investors and majority stock holders: W. Nolting (co-founder of Iloilo Light Company), Albert Sidler of PEC, H.E. Marchant, Leopoldo Kahn, and Gregorio Araneta.

On June 12, 1923, the Public Utility Commission issued the Certificate of Public Necessity and Convenience to generate and distribute electricity in the municipalities of Iloilo, Lapaz, Jaro, and Arevalo. One of the first consumers of Panay Electric was St. Paul’s Hospital, which had just been completed and occupied in 1916. Assumption Convent and The Provincial Capitol were also early customers.

On January 27, 1927, investors which owned more than 99% of the outstanding capital stock of Panay Electric sold its shares to Candelaria Ditching Cacho (popularly known as Lola Candi) who at that time was a business tycoon. Lola Candi’s plan was to purchase Panay Electric for her children. This converted Panay Electric Company into the first 100% Filipino owned private enterprise in Iloilo City. Lola Candi, who was widowed at a fairly young age with 12 children, managed to provide for her family by selling products to the ships that docked in Iloilo. She later expanded her businesses by exporting Ilonggo products to her sister in Manila and around the country. Her many businesses were so profitable that she was able to put her children through college and eventually purchase for them Panay Electric. Don Mariano M. Cacho, one of the children of Lola Candi, later became the General Manager of PECO. A civil engineer by profession, he also received several honorary degrees in Mechanical and Electrical engineering. He finished his civil engineering degree at the University of Santo Tomas, and his post-graduate studies at Cornell University in New York. He was involved in many public construction projects in Panay, and also built several of Iloilo’s historical houses and Assumption’s St. Anne’s Hall.

In 1929, the 8th Legislature passed Act 3665, granting Panay Electric Co. a new 50 year franchise, and expanding its service area to Sta. Barbara, Pavia, and Oton.

When World War II broke out, Don Mariano took his family into hiding in Baguio to avoid being conscripted by the Japanese to run Panay Electric for them. The Japanese Military Government operated the plant during occupation until after liberation about March 1945. In retreating, they sabotaged the electric plant, blew out the 600 hp Krupp engine, and destroyed the power house. After making some repairs, the US Army operated the plant for several months. On November 15, 1945, they returned the power plant to Panay Electric. 80% of the distribution lines were also destroyed in the war, while the engines salvaged after liberation, could generate only 60% of their rated capacities. Meanwhile, the number of customers increased tremendously due to the influx to the city because of the uncertainty of peace and order in the countryside.

In 1949, long-term loans payable to the Cacho family were converted to stocks, because the money that had been set aside for payment was used for the rehabilitation of machineries, lines and equipment damaged in World War II. This was a sacrifice on the part of the stockholders because they had also incurred personal losses during the war. Don Mariano also opted not to repair his mansion (what is now Don Benito Lopez Hospital and Lopez Arcade) in Jaro, which was bombed by the Americans since it was used as a base when the Japanese overrun Iloilo. Don Mariano sold the property for PECO’s sake and moved into the top floor of the Cacho Building in JM Basa St. This conversion of loans to shares was the first of many stock offerings issued to increase the capital invested in Panay Electric and improve service by modernizing equipment and systems.

In 1962, the Philippine government devalued the peso and its value dropped 50%. There was a big spike in the prices of diesel fuel, imported spare parts, etc. In spite of this, the PECO system was redesigned to increase safety and reliability. The voltage was increased from 2400 to 4160. The company continued to replace older equipment and added new generating capacity with the help of loans and reinvestment. In 1967, Jose Maria “Rusty” Escay Cacho (son of Don Mariano), was requested by the Cacho family to take over PECO operations due to his exceptional leadership skills in the corporate world during the successful experience he had with Shell. His outstanding qualities of leadership could be traced back to his routes, he lead the Ateneo Blue Eagles to back to back championships as team captain in basketball while earning honors upon graduation during his college days. He then attained his masteral degree in Louisiana State University and went back home to work for Shell Petroleum Corporation. His work in Shell didn’t go unnoticed and was soon handling Panay Electric Company as Financial Manager; he then proposed and executed a 10-year expansion program to reverse the company’s financial situation. The methods and work ethics he practiced on a day to day basis to revive PECO and train his employees are still remembered to this date. He quickly became President and Chief Executive Officer, although more popularly known as GM for his all around performance.

In 1968, Republic Act 5360 repealed all previous franchise acts. PECO was issued a new 25-year franchise, it’s first under the independent Philippine Republic.

Under Martial Law, Presidential Decree 810 required distribution companies to source most of their electricity from the National Power Corporation. PECO was allowed to run its generators only for back-up purposes. In 1974 ILECO I cooperative started servicing the southern towns of Iloilo. PECO then had to provide technical and financial support to ILECO I when it was first set up. By 1981, the towns of Sta. Barbara and Pavia, which had formerly been under PECO, were absorbed into ILECO I.

In the late 70’s Panay Electric Co. started investing in a computerized system. First the IBM System 34 mini-computer was used; later this was upgraded to the System 36, then the AS 400, then now the PECO Applications Program that is run by a Windows based program which is supported by an IBM XD 400 server. Together with the Coca-Cola company, PECO was one of the first companies in Iloilo to embrace new technological advancements. At that time, PECO shouldered most of the expense for the new computer system by doing the billing for ILECO and the PASSI Sugar Central.

In 1993, Panay Electric’s 1968 franchise expired. It was issued a new 25-year franchise. In 1996, First Philippine Holdings acquired a 30% stake in PECO. The company entered into a purchase agreement with the Panay Power Corporation to source most of its energy from the 72 megawatt diesel generating plant. There was a power crisis in the country at the time, and PPC’s power was cheaper and more reliable than that of NPC during those days. The PPC plant was the first in the country to utilize DESOX, an air purifying system to minimize pollution from the diesel plant.

In the year 1998, PECO constructed the 69 kV loop system connecting all its substations through a network of 69 kV lines with full flexibility to route power through various connection schemes. The loop system is being supplied by two lines from its power suppliers in Brgy. Ingore Lapaz. The loop enables PECO to switch power from one line to another in the event of maintenance with minimal power interruptions. The same loop was upgraded from 60 to 80 footer wooden poles to that of concrete and steel in later years.

PECO’s computerization and modernization continued, with the use of mapping technologies, portable digital meter readers, etc. . In 2006, Jose Maria “Rusty” Cacho retired as president and CEO after 39 years of admirable service to PECO, he remained Chairman of the Board until his passing on May of 2007. Rusty’s younger brother, Mariano Escay Cacho Jr, then took over as Chairman of the Board. Luis Miguel Ayesa Cacho (Rusty’s son) then took his place as President and Chief Executive Officer (P-CEO) of PECO. Luis Miguel’s work in PECO started in the computer department as a teen, in order to aid in programming due to his advanced computer literacy. He graduated from the Ateneo De Manila University and then took his masters at Santa Clara University in California. He returned back home during the 80’s as Electronic Data Processing Manager and worked his way up to Executive Vice President of Operations until he had to take over as P-CEO in 2006. With much technological advancement in the crucial turn of the next century, Luis Miguel was the man for the job, as he not only possessed the intellectual capacity but the knowledge on the advancements in information technology for PECO to eventually be at par with the modern world of today.

In 2007, the demand in Iloilo City was growing rapidly and the existing contract with PPC for 72 MW of power is no longer enough to cover its requirements. PECO decided to sign a Transition Supply Contract (TSC) with the national power corporation for a capacity of 15 MW. At the same time, a Transmission Supply Agreement (TSA) was signed with TransCo (Now NGCP). This helped address the supply shortages brought about by the required preventive maintenance of the Diesel Plants and covered growth in demand at that time. The same contract also allowed PECO to reduce its rates considering the lower generation rate offered by the government run NPC.

In 2010, the NPC contract expired and it was no longer possible for PECO to renew / extend its contract with the GOCC. To secure its power requirement, PECO signed another contract with the newly constructed PEDC coal fired power plant and amended its 72 MW contract with PPC. The new quantities contracted were 65 MW for the cheaper priced coal plant and 15 MW of the 72 MW diesel contract was retained. This addressed the looming power crisis in terms of supply in the city and stabilized supply starting November of the same year. To Cater to its increasing demand, PECO decided to implement two major capital expenditures in 2010 namely the 50/62.5 MVA Substation in Baldoza, Lapaz with a total budget of around 107 Million and the 2.5 km 69 kV sub-transmission line from Baldoza to the new PEDC power plant. PECO is now the proud owner of the biggest distribution utility substation in Panay which is complete with SCADA capabilities. Its total substation capacity was also increased to 140 MW due to its feature with an allowance or excess capability of 50 MW for load growth.

In 2011, PECO’s Performance Based Rate application was approved by the Energy Regulatory Commission (ERC) and it paved the way for the following projects which are currently being constructed, implemented, or scheduled for processing as of this date.

The reconfiguration of the PECO distribution system by introducing tie-up lines to establish a ring distribution network configuration from the existing radial configuration
Installation of Automatic Re-Closers in PECO’s primary feeders
Introduction of additional trouble shooting teams and vehicles
Installation of Elevated Metering Centers on areas identified as pilferage hotspots in Iloilo City
Reconductoring of distribution lines and replacement of remaining wooden poles
Replacement of obsolescent Meters to improve accuracy in billing and reduce non-technical losses contributed by these meters
Purchase of vehicles for offices
Construction of the new PECO building to be located within the Power Plant in General Luna, Iloilo City.
Construction of a new 50 MVA Substation in the Mandurriao District

PECO has also outsourced for a call center in 2012, this is for entertaining consumers more efficiently who have power interruptions within their area. The PECO website was also launched in 2012 to better inform consumers about the various services and operations of the company. In 2013, PECO plans on furthering its technological advancement to better serve its consumers, by investing on a Blade Server to convert the tower server to a data center. The server will have 2 processors with a 2.0 GHz core, a 32 Gig memory, an 8 terabyte capacity Hard Drive, and a storage array of 16 terabytes.

With all of these improvements for the various areas of operations on the go, PECO has a bright future ahead and will continue to serve the consumers of Iloilo as it grows together with the city.

PECO office has now transferred to their new building still located in General Luna Street, Iloilo City.

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