This is in reference to the article “Power rates: Up, up and away” of Mr. Ernesto M. Hilario which was published in the Manila Standard on Dec. 29, 2023.
While Meralco does charge varying rates for different customer segments, this structure of power rates is followed not just by Meralco but by all private distribution utilities and electric cooperatives in the country.
It also bears emphasis that the distribution sector in the Philippines where Meralco belongs is highly regulated.
The information on the share of electricity in a typical household’s expenses mentioned by Mr. Hilario should also be further explained and verified.
According to the 2018 Family Income and Expenditures Survey of the Philippine Statistics Authority posted on its website, water, electricity, gas, and others (not just electricity) accounted for only at 8.8 percent of expenditures of families in NCR.
On Mr. Hilario’s claim that we have one of the highest electricity rates in Asia, it should be noted that a very recent study by the Australia-based International Energy Consultants which was widely publicized contextualized and assessed Philippine power rates.
IEC highlighted in the study that many of the Philippines’ neighboring countries appear to have cheaper electricity because their governments subsidize more than 50 percent of their tariffs.
It concluded that “Meralco’s regulated customers are currently paying a fair and reasonable price for electricity.”
Meralco does not benefit from what Mr. Hilario claims as “miscellaneous bill components.”
These charges are non-revenue components and Meralco does not in any way earn from these charges. Taxes, universal charges, and feed-in tariff allowance are all remitted to the government.
Additionally, these are broken down in detail in Meralco’s electricity bills.
The article also mentioned MGen and while the power generation unit does have a portfolio of power generation plants using coal and natural gas, Meralco only buys a small portion of its energy supply from it.
We source supply largely from contracts with power generation companies, which we have always been transparent about. Meralco has been proactively conducting competitive selection process (CSP) to ensure that it gets the least-cost power for its customers, consistent to its mandate.
Mr. Hilario loosely mentioned the allowable rate of return, saying it “now stands at 14 percent from 9 percent a few years ago.”
He may be referring to the Weighted Average Cost of Capital (WACC) which Meralco has already clarified as an industry-WACC that applies to all private distribution utilities in the same category and not specific to Meralco.
To further clarify, Meralco does not yet have a determined WACC since there has been no complete rate reset process since 2013.
I hope this clarifies certain points raised by Mr. Hilario.
Please feel free to reach out to us in order to verify certain conclusions so we can help in providing the proper context.
Given the importance of accuracy in information, it has been a personal advocacy to pursue information, education and transparency to enlighten all our customers and the public on the very technical nature of the energy industry.
Joe R. Zaldarriaga
Vice President and Head of Corporate Communication
Meralco