Power Bully

My MERALCO bill states that my electric consumption for April fell 3.6%, but I will be paying 5% more compared to last month. MERALCO says it has to make adjustments in its generation and transmission charges.

Yeah right. Somebody has to put MERALCO on a leash. The ERC seems to be at the beck and call of the distribution company, approving most of its rate hike petitions. It took the Commission on Audit and the Supreme Court to stop the company from over-charging its customers.

It has again filed for another rate hike for the debt it owes the NAPOCOR. Unfortunately, this debt was borne out of the company's stupidity: it engaged in a contract with NAPOCOR wherein it committed to buy a minimum volume of generated power. Meaning, should it fail to buy the minimum volume, it is still obligated to pay NAPOCOR the balance of the unused portion. And MERALCO wants its consumers to shoulder that. Amazing.

The explanation is simple: MERALCO's sister companies engaged in power generation, such as the Independent Power Producers (IPP) Sta. Rita and San Lorenzo plants (owned by First Gen, another Lopez-owned company) have to earn something, right? And so, MERALCO only buys 50% of its requirements from the cheaper NAPOCOR generated power, and the rest from other major IPPs, especially from its sister companies. In fact, power prices from these affiliated IPPs are much, much higher (around PhP4.00++kw/h) than NAPOCOR's (only around PhP2.00++).

So if only MERALCO buys all of its power requirements from NAPOCOR, my electric bill is supposed to be much lower. Retail electricity rates in the Visayas and Mindanao areas, which also source most of their power requirements from NAPOCOR, are way below than in Metro Manila and Luzon areas where MERALCO holds a complete monopoly in distribution.

Not surprisingly, the Philippines has the second most expensive power rates in Asia, next only to Japan.

I am for a full deregulation of the power sector. That is the only way to disband the price-setting behavior of the distribution monopoly, MERALCO. We need a power industry that is based on price-based competition, incentive-based regulation and open access to transmission and distribution facilities. We also need an ERC that will not succumb to pressures from MERALCO.