“How Meralco gets away with the prohibitive rates … deserves a closer look.”
An abrupt increase in fuel prices creates a chain reaction that shrinks the wallets of every man and woman.
It also strikes a nerve when it directly raises the cost of electricity. Monthly household budgets suddenly contract once higher electricity rates take a bigger share of the expenditure.
Manila Electric Co. (Meralco), the biggest private power distributor in the Philippines, takes the flak when fuel price adjustments take place.
For one, Meralco’s rates are considered one of the highest in Asia. That notoriety makes its consumers suspect that something is amiss in the electricity distributor.
Meralco, in addition, is a monopoly and regulators like the Energy Regulatory Commission (ERC) and the Department of Energy (DOE) should monitor closely its operations to protect the interest of consumers.
How Meralco gets away with the prohibitive rates it charges to consumers deserves a closer look.
Metro Manila’s eight million Meralco consumers are paying P14.35 per kWh for their April consumption, among the highest residential electricity rates in Asia. Smaller provincial cooperatives with a fraction of Meralco’s resources, in contrast, charge their their customers at P9 to P12 per kWh.
Meralco has planned another rate increase for the May billing. Fortunately, it opted for a cost adjustment that would cut by more than half the projected increase in generation charges for consumers in May.
Meralco had initially sought an increase in generation charges of around ₱1.0277 per kilowatt-hour (kWh). Meralco, instead, proposed the early implementation of adjustments under its ERC-approved Power Supply Agreements (PSAs).
The mechanism allows certain cost adjustments from power suppliers to be reflected immediately, reducing the amount to be charged to consumers for the May 2026 billing period.
According to Meralco, the measure could bring down the projected increase in generation charges from ₱1.0277/kWh to around ₱0.4350/kWh.
Meralco must be buying electricity supply at costly amounts. About 52 percent of Meralco’s power comes from imported liquefied natural gas (LNG) and 34.9 percent from coal. Both power sources are purchased in US dollars.
The Institute for Climate and Sustainable Cities noted the transition of First Gen Sta. Rita from Malampaya gas to regasified LNG pushed its generation costs from P6 per kWh in 2023 to P8 per kWh in 2025. Meralco accommodated the shift when it renewed the PSA in January 2025.
The higher charge represents a 33-percent increase that is absorbed entirely by consumers through pass-through mechanisms, meaning Meralco’s exposure was zero.
Meralco managed to calculate electricity rates in its favor despite the Electric Power Industry Reform Act of 2001 (Republic Act No. 9136), or Epira.
Epira was designed to prevent a distribution utility from becoming its own captive power supplier.
Section 45 of the law allows up to 50 percent of supply to come from affiliated companies. Meralco is close to that ceiling, purchasing its power from San Buenaventura Power, the First Gas plants and the MTerra Solar project, all traceable to unit Meralco PowerGen Corp.
As one energy analyst puts it, when the buyer and seller are the same family, competitive pricing is a formality, not a function.
Bayan Muna Representative Neri Colmenares noted that Meralco can renegotiate its contracts to peso-denominated terms, breaking the direct transmission of currency risk to consumers.
Meralco declined the suggestion while the ERC did not require it.
The DOE has flagged the competition risks publicly but stopped short of structural intervention. Congress renewed Meralco’s franchise in April 2025 for 25 more years or until 2053, without mandating a single correction to the cross-ownership problem.
The regulated monopoly bargain is simple: in exchange for an exclusive franchise, the utility must serve the public interest.
The public interest in this case, measured against what provincial cooperatives are delivering at lower cost with less scale, has not been served.
A comprehensive audit of Meralco’s PSAs is not a radical proposal. It is the minimum that eight million captive consumers are owed.
The ERC and DOE have the tools but the two regulators are not ready to wield their powers.
E-mail: rayenano@yahoo.com
