Electric shocks

For the first time ever since I could remember, the Manila Electric Co. (Meralco) sent their monthly electric billing to their consumer households with a leaflet to explain where and why they charge higher rates. The leaflet is enclosed in the Meralco bill envelope for the month of June that I got recently.

The front side of the leaflet – written in Tagalog – contained an explanation about the 71-centavo per kilowatt-hour (kwh) increase for the June billing of Meralco’s residential customer. Meralco stated at the outset the higher billing largely consisted of the increase in the generation charge by 54 centavos per kwh.

Meralco explained that this increase in the generation charge was “caused by the increase in the rate of the Wholesale Electricity Spot Market (WESM) because of the unavailability of Sual and Pagbilao power plant, two of the biggest and cheapest source of electric power.” Sual power plant is run by San Miguel Energy while Pagbilao power plant is operated by Aboitiz Power, Meralco further cited.

By the way, Meralco is indirectly controlled by Hong Kong-based First Pacific Co. Ltd. and partly owned also by San Miguel Corp. (SMC). Aside from Sual, SMC also owns two major power plants in the country. In the first quarter this year, Meralco reported net income growth of P3.42 billion, or an increase of five percent from previous year’s level.

“The generation charge is being collected by Meralco for the power producers that sell at the WESM, independent power producers (IPPs), and the National Power Corp. (NPC),” Meralco pointed out. In short, Meralco was merely stressing the point the power utility firm is not earning any additional revenues but is merely the “collector” of the rate increase imposed by the power generators.

“We assure you that we are doing as much as we can to find the best sourcing strategy for more efficient energy supply,” Meralco assuaged their residential electricity customers.

At the back of the leaflet, it shows a graphic presentation of the components of the 71-centavo increase in the June month billing. At a glance, it gives their customers a quick and easier understanding where and how much the specific rate increases came from and shown with an arrow pointing up to indicate the rate increase in each component.

For June rate increase, the leaflet showed Meralco – as distributor of the electricity – did not impose any increase. The rest of the increase came from as follows: transmission (0.08 centavo per kwh); taxes (0.06 centavo per kwh); and, others (0.03 per kwh).

A footnote of the backside of the leaflet further explained that the generation charge is for residential rate based on 200 kwh consumption level. And from the three sources of generation, arrows pointing up to show the increases came from WESM and the IPPs while NPC arrow pointed down to denote the state-owned power firm, in fact, lowered its generation rate.

For further details, the leaflet stated, customers are advised to look at the billing summary for the itemized presentation of the charges other than the generation cost. Actually, the generation cost accounts for almost half of the total amount of our electricity bill each month. Only one-fourth, or 25 percent of the amount is the distribution charge that Meralco gets from its customers.

The next biggest item in our electric bill goes to government taxes, or about 10.2 percent. The other charges include transmission, systems loss, subsidies, and universal charges.

If you scan through the breakdown of the metering information at the backside of our Meralco billing statement, you would really get more shocked at the many other charges being added to us household electric consumers.

I have been complaining in my past columns about the taxes we have to pay to the government for electricity services that we did not even use. As electricity consumers, we have already accepted grudgingly the “take-for-pay” of the IPPS if only to avoid the recurrence of long hours of blackouts we suffered in the past. But do we have to pay for consumption tax of things not of our own making?

A case in point is the value added tax (VAT) charged to the systems loss that we pay every month. Whose fault is it if there are systems losses, whether by pilferage or negligence of the utility firm?

On top of that, we are also VAT charged on lifeline rate subsidy, cross subsidy charge and senior citizen subsidy. We Meralco consumers shoulder these subsidies for the “brownie points” that the government wants to earn for the so-called marginalized sector of the consumers. This is aside from the “missionary” electric service for the same marginalized sector under the “universal charges” we pay for in our Meralco monthly bill.

Now, for more shocking developments. The Energy Regulatory Commission (ERC) has approved Meralco’s petition for a maximum average price (MAP) of P1.6303 per kwh for distribution, supply and metering charges to its different customer classes. Meralco justified the higher MAP under the Performance Based Rate (PBR) mechanism to reflect the company’s performance incentive and that it would carry cost for under-recoveries for 2011.

This came as the National Power Corp. (Napocor), through its unit Power Sector Assets and Liabilities Management Corp. (PSALM), is also seeking approval from the ERC for 10.59 centavos per kwh rate increase.

The ERC conducts an annual review of the rates of all private distribution utilities, taking into consideration the power distributors’ performance against mandated technical and customer service standards.

Speaking of customer services, the National Grid Corp. of the Philippines (NGCP) earlier warned about reduced power generation for Luzon. In short, we could expect rotating blackouts not only in Metro Manila but also in other Meralco-franchised areas in Laguna, Cavite and Bulacan.

In his Facebook account, Star business columnist Boo Chanco posted this last Friday: “Failure to make sure we have adequate power punish the consumers twice – we get blackouts and we end up paying more because a shortage in supply means higher prices in our market driven power market.”

So whether we like it or not, we have no choice but to brace for more electric shocks when we get our Meralco bill for July. Coincidentally, it marks the start of the third year in office of P-Noy! –Marichu A. Villanueva (The Philippine Star)