Scrutinize earnings of power generation firms

The Manila Electric Co. and other power distribution utilities are the usual whipping boys whenever there is a spike in our electric bills.

This is of course understandable. After all, it is Meralco that sends us the bill and we make the payment to it. Therefore, we blame Meralco for the high prices of electricity.

Meralco has taken pains to explain repeatedly that it only gets a fraction of what is charged to the electricity consumers. It says that most of what is charged in the electric bill are “pass-through” charges which Meralco remits to the power generation companies and to the government for the tax component.

Power distribution utilities like Meralco are again expected to repeat their mantra that “we are just collection agents” when consumers raise a howl again. Electricity bills will reflect a steep increase because of the effects of El Niño, which saw declined use of hydroelectric-generating plants, the cheaper source of electricity.

We looked at our most recent electric bill and indeed what Meralco is saying is true. The bulk of the charges are for other entities. Indeed it is mainly a collection agency.

The breakdown and percentage of our electric bill is as follows: generation —51.5 percent; transmission—6.5 percent; systems loss—6.9 percent; distribution (Meralco) 21.7 percent; subsidies—1.2 percent; government taxes—11.3 percent; universal charges—0.9 percent.

We are sure that it was intentional on the part of Meralco to print “Distribution (Meralco)” in the billing summary in bold letters to help call attention to the fact that its own charges is only 21.7 percent of the amount reflected in the bill.

The charge for generation is listed first so it is also clear that more than half of the bill goes to power generation companies such as National Power Corp. (Napocor), the Independent Power Producers and the Wholesale Electricity Spot Market.

When we see our next electricity bill and we protest the astronomical increases in the bill perhaps we should pressure the power generation companies—Napocor, the IPPs and WESM—to explain the increases.

We should not concentrate our outrage on Meralco and allow the power generation companies to get away without being made to account for the charges they are passing on to us consumers.

We can expect to see a substantial increase in power generation charges because of the minimal use of hydroelectric power and more use of bunker, diesel and coal in the past month. We should hear a detailed explanation from the power generation companies about these increases in generation cost.

There are reports about overpricing of the cost of coal and that most of our coal requirements are purchased on an “emergency” basis. Napocor and the IPPs using coal should explain to us if this is true or not.

WESM should also give an explanation of its charges. The public deserves to know how much profit WESM is making.

It would also be interesting to know if any of the IPPs are still charging the cost of electricity that they are not producing or distributing under the highly questionable ”take or pay” provisions of the contract they got from the government at a time when the country was trying to recover from the energy crisis of the Aquino Administration.

We are already in a critical supply power situation and we should already be taking whatever electricity has been contracted for with the IPPs some of which charged us for electricity they did not even produce.

What we need is a scrutiny of the power generation charges to make sure that what is being charged to consumers is reasonable.

Perhaps now that the Department of Energy is under a new regime, we can expect a clearer picture of the power generation charges. –Alvin Capino, Manila Standard Today

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