The difference between earning profits and profiteering

To the ordinary consumer, it is almost impossible to fathom why a public utility company like the Manila Electric Co. (Meralco) continues to increase its rates year after year, even as it earns billions in profits per annum.

In the first quarter of this year, for example, the power distribution company saw profits surge by 40 percent, to an all-time high of P13.2 billion.

Yet this month, the company will increase its rates by P0.32 per kilowatt-hour, ostensibly due to the higher generation charge spurred by the rise in prices at the Wholesale Electricity Spot Market last month.

How much of the P0.32 is the generation charge? How much will stay with Meralco for serving as the electricity producers’ collection agent?

It goes without saying that nobody is happy with the new round of increases, particularly the hard-pressed consumers in Metro Manila who feel that they are being had.

Ask the typical consumer of he or she is happy with the service provided by the power company. Most will say no, they are not, and they will base this negative view on past experience. It seems that every time a storm or even a strong rain hits the metropolis, power outages become the norm. And when power is lost in a community, it seems like it takes Meralco forever to restore what everyone needs, which is a steady and reliable stream of electricity.

Jumpers

Perhaps the biggest and most valid complaint against Meralco that the power company has never fully addressed is why honest consumers are made to pay for systems losses resulting from the dishonesty of other consumers.

Everyone knows what “jumpers” are and most everyone knows of someone who uses them.

Consumers who use jumpers do not pay the right amount, if they pay at all. But since someone has to pay for the lost current, Meralco in all its wisdom has decided that everyone else should pay for what a few dishonest consumers steal.

The high rates charged by Meralco are partially the result of their own inefficiencies. The company has all the power at its disposal to insure that the problem of systems loss is not only minimized, but eradicated.

Despite this power, the company appears to be content in apprehending the occasional power thief, but generally allowing consumers to pay for the systems loss.

Highest in the region

Because of its gross inefficiency, Meralco charges Metro Manila consumers the highest rates in the region. The company expects everyone to just grin and bear the situation, conveniently ignoring the ill effects the high rates have on the economy.

How can the government ask foreign investors to bring their business to the Philippines when the power needed for plants, offices and homes are much lower elsewhere?

With the country’s cost of labor as well as power among the highest in the region, a full-blown economic take off will have to remain a dream. What growth the Philippines is experiencing now is nothing to the potential for massive economic expansion that can only happen if the National Capital Region has a reliable and affordable source of power.

Sad to say, Meralco has been found wanting in this department.

No one is saying that a private company like Meralco should not earn reasonable profits. All businesses, big or small, exist to generate profits. It may seem churlish on our part, but surely the millions of pesos that the company spends on its Meralco Bolts team in the Philippine Basketball Association could be better spent in increasing the company’s operational efficiency in the field?

Consumers already know that Meralco’s collection efficiency is well established. They have men in the field who are ready, willing, and able to cut the power from homes which are late in settling their bills. Never mind that the consumers have been religiously paying their Meralco bill month after month, year after year.

Yet the men in the field cannot be blamed for what is essentially the company’s heartless and unforgiving policy. Their cut-first, ask-questions-later policy is another reason that Meralco is among the least liked among the country’s utility companies.

A happy few

With Meralco’s billions of pesos in annual profits, they may have the happiest stockholders in the planet. But they also have the unhappiest consumers of all.

There is a difference between generating honorable profits as against profiteering at the expense of the people. It need not be said that the Philippines is still a poor country, and our per capita income is well below the average in the region.

Given that Meralco acts as nothing more than a greedy monopoly, we have to ask: Is the government so powerless against the owners, executives and management of the company that it does nothing but raise its arms in surrender?

Drastically reducing the rates that Meralco charges may drastically reduce the company’s profits. Instead of billions, the “poor” power company may have to settle for a few hundred millions instead. Of course the company would never consider such a drastic move.

Provide affordable power to Metro Manila consumers? What a silly idea.

Herein is the tragedy of the company that was founded as the Manila Electric Railroad and Light Company in 1903. It has been in existence for more than a hundred years, yet it cannot claim to be a true partner in national development. Not with the way it overcharges its customers, operates inefficiently, and cares for nothing but profits without providing the best service possible. –Manila Times