Signs of Life and Hope for Meralco Consumers

Matuwid na Singil sa Kuryente Consumer Alliance, Inc.
21 June 2015

Meralco had been highly publicizing recently rate reductions in its average generation rates and in its distribution rates. My Meralco bill shows a generation rate of P 4.4556 per kwh compared to P5.50 six months ago, a more than P1 per kwh reduction. They have asked the ERC to allow a reduction of P0.18 per kwh in its distribution rates. Meralco consumers are of course thankful for any rate reductions specially during this school opening months.

What these rate reductions mean is if Meralco works hard enough and adopts a mantra to truly treat its captive consumers fairly as they should as a public service utility, they can really bring down power cost and not nonchalantly dismiss increases in generation and transmission rates to be beyond their control. For the most part the reduction in generation rates are results of opportune drops in the world oil and coal prices. Even natural gas is in a state of glut and prices have dropped.

Generation rates are within Meralco’s control. They can honestly and vigilantly watch the downtime allowances and the pass-on fuel consumption of their power generation contractors, only paying for capacity if they are truly within their downtime limits especially those that got sweetheart contracts. Shepherding their maintenance schedules to assure availability during critical demand periods. Managing their availment of the WESM spot market prices and themselves assuring their own contractors do not engage in supply and price manipulation. They can monitor the purchasing of substitute fuel by its natural gas generators.

Most importantly Meralco must open their generation market to open competitive bidding. For now it seems they are determined to negotiate 3,000mw of their new power supply requirements through its affiliate Meralco PowerGen which will be the majority stockholders of the generation companies. Meralco negotiated a 460mw expansion of the coal plant Mauban at a rate of P4.30 per kwh. Comparatively eight electric cooperatives in Northern Luzon consolidated their requirement of 105mw and held an open bidding. They got a rate of P3.78 per kwh, P0.52 per kwh less or approximately P1.5 billion a year.

Meralco must excuse its captive consumers if we are not overjoyed by these temporary reductions that can go back up when no one is looking. What consumers are looking for are long term reductions through systemic reforms and corrections of anti-consumer rate making methodologies.

It will take only plant shutdowns and upheaval in energy prices to make all these price reductions disappear.

Many suspect that all these “do good” programs are intended to disarm the public and not pay attention while they are negotiating their 3,000 mw power supply contracts with its own sister companies. Metro Pacific openly announces in its corporate website that it intends to fully take advantage of the opportunities in the generation sector, an “in your face” defiance of the words and spirit of the Epira Laws call for competition and anti-market domination. No one in government seems to care about the clear monopolization of the generation sector.

My electric bill still show a 10% systems loss when it should not be higher than 8.5%. PBR is unfair because it gives them a return on investments they only forecasted and not actually incurred as required by law. Meralco highly publicizes at consumer expense its various rate reduction and energy efficiency programs for large commercial and industrial users. Let us not make no mistake. Those wonderful programs are not really undertaken because they care about these consumers. They have do it to prevent their large consumers from exercising their “open access” options as “contestable markets”, consumers who can go somewhere else for their power supply.

The true measure of Meralco’s commitment to fair and reasonable rates is to undertake programs that will permanently reduce its rates to captive consumers (residential and commercial customers) from which it gets 60% of its revenue. This it can achieve only by agreeing to opening its generation market and to the correction of the various anti-consumer rate methodologies.

For now we can only be content with signs of life and hope at Meralco for the consumers. However, we have been waiting for a long time and things are getting worse.