What is clear at this point is that the Filipino consumer appears totally at the mercy of the lone power distributor in the country’s economic hub
Metro Manila is the hub of economic activity in the country due to the heavy concentration of commercial and industrial firms in its 13 cities and one municipality.
This megacity of 14 million residents and just about any kind of business depends on the electricity provided by just one big private entity: the Manila Electric Company.
Meralco charges different rates for its residential and commercial customers.
While big commercial firms can afford to build their own small power plants using fossil fuels or renewable energy, the small ones must rely solely on Meralco for their power requirements.
Households depend almost entirely on Meralco for their electricity needs service.
It is estimated that a family of five sets aside from 15 to 20 percent of their regular expenses to keep their homes connected to the Meralco grid.
It has been said often enough that we have one of the highest electricity rates in Asia.
This is one compelling reason foreign investors would rather put their money elsewhere.
One study pointed this out: “Energy prices in the Philippines remain one of the most expensive compared to its Asian neighbors.
“An overall comparison among selected cities in Asia shows that Manila has the second highest overall residential electricity tariff next to Tokyo.”
The same study concluded: “Manila has the third highest generation cost and the highest grid cost in Asia based on residential electricity tariffs.
“These costs associated with producing energy combined with a 12 percent value-added tax make energy prices in the Philippines one of the most expensive in Southeast Asia.”
The findings of that study done in 2016 remain valid to this day, as Manila has one of the highest energy costs not only in Asia but in the world.
As a distribution utility, Meralco is clearly a beneficiary of high power rates.
While it says that only 17 percent of the total consumer bill goes to it, what is not immediately obvious is that it also charges between 11 to 12 percent of our total bill under the heading of “miscellaneous.”
The miscellaneous components of Meralco’s electric billing encompasses a broad range of costs—subsidy for poor households or what’s called the “lifeline rate subsidy,” senior system subsidy, system loss, and other incremental expenses that varies from month to month.
What is not clear to many is that Meralco’s share in consumer billing depends not just on what it charges as a distributor utility.
It is also an electricity generator through its power generation arm, MGen, a major electricity producer using mainly coal and a fraction of natural gas.
The generation charge takes up the lion’s share of between 45 to 55 percent of our monthly consumer bill.
And there’s also the allowable rate of return that Meralco currently enjoys, which now stands at 14 percent from 9 percent a few years ago.
Add up all of that and you can’ help but end up with one conclusion: “The higher the rates, the higher will be Meralco’s earnings.” Its current profits, according to estimates, exceed P20 billion annually.
Is it possible for Meralco to act against its own interests and push rates down? Maybe. Or maybe not.
What is clear at this point is that the Filipino consumer appears totally at the mercy of the lone power distributor in the country’s economic hub.
Congress passed the Electric Power Industry Reform Act or Epira many years ago to limit the ownership of generation assets by a single owner to only 30 percent of the generating capacity within a single grid.
The law was enacted to provide the principal regulatory framework for the Philippine electricity industry. It seeks to rationalize the industry and make power rates in the country affordable even to the masses.
But at the rate power rates are going through the roof, there’s apparently little that ordinary consumers can do but to grin and bear it.
Meralco’s broad scope of operations now covering a service area of 38 cities and towns within and outside Metro Manila allows the utility to practically ignore its mandate to provide reliable and affordable electricity service to consumers.
What it seems to have become is a monopoly that gives it the power to let electric rates to go up, up and away, and we cannot do anything about it.
(Email: ernhil@yahoo.com)