Meralco’s ‘fair’ rates rank below global average

MANILA ELECTRIC Co. (Meralco) said it has “fair and reasonable rates” as its business scale enables it to source the cheapest cost of electricity.

“Meralco, because ang laki niya (it is big), has the ability to source the cheapest cost of power,” Jose Ronald V. Valles, Meralco’s first vice-president and head of its regulatory management in a media briefing last week.

“A big distribution utility has better capability for the cheapest cost of electricity if the demand is big,” he added.

Citing its commissioned study with Australia-based International Energy Consultants (IEC), Mr. Valles said Meralco has fair and reasonable rates because it is huge.

In the study, the IEC said Meralco’s average tariff ranks 21^st out of 46 energy markets in the world and 3% below the global average.

“If subsidized markets are excluded, then Meralco’s tariff is 13% lower than the world average,” the IEC said.

The study said that electricity tariffs in the Philippines’ neighboring countries — particularly Thailand, Indonesia, Malaysia, Korea, Taiwan, and Vietnam — are more than 50% subsidized.

“Notwithstanding this increase, all of the components of the regulated tariff are judged fair and reasonable by IEC, based on comparisons with other markets and versus the underlying cost of electricity supply in Luzon,” the consultancy firm said.

For December, Meralco imposed a decrease of P0.7961 per kilowatt-hour (kWh) in electricity rates to P11.2584 per kWh from P12.0545 per kWh in November.

The lower rate was due to the reduction in generation charge of P0.6606 per kWh to P6.5332 per kWh.

“Kasi kapag mas malaki ’yung demand mo, mas malaki yung ni-re-require mo. Parang kapag pumunta ka sa Divisoria, bumili ka, by bulk, ’di ba mas makakatipid ka kaysa sa bumili ka ng tingi-tingi. Parang ganun din ’yung power (If you have a huge demand, you will require a bigger supply. Just like if you go to Divisoria, you buy in bulk, wouldn’t you save more instead of buying in retail?),” Mr. Valles said.

Mr. Valles said authorities should focus on “other utilities that do not deliver basic services.”

He said many local government units want Meralco to take over in their areas.

“So bakit hindi ’yun ang focus ng mga kinauukulan? Pag-aralan nila kung papaano natin ma-i-improve ’yun, hindi ’yung distribution utility na nag-pe-perform, nag-de-deliver ng basic services (So why don’t the authorities focus on nonperforming distribution utilities? They should study how we will be able to improve them, not the distribution utility that performs and delivers basic services), Mr. Valles said.

“The very basic reason why we maintain a high level of power reliability and quality is because Meralco has been infusing some of the capex (capital expenditure) every year. We put up new substations, we replace dilapidated facilities, we install cutting edge technologies — smart grid and all that,” Meralco Executive Vice-President and Chief Operating Officer Ronnie L. Aperocho said.

As of September, the power distributor said it had spent P21.1 billion for capex, of which P14.2 billion was used for network capex consisting of new connections, asset renewals, and load growth projects, among others.

Currently, Meralco is conducting the rebidding process for the procurement of its 1,800-megawatt (MW) and 1,200-MW power supply requirements.

Meralco is the main power distributor for Metro Manila and nearby areas, covering 39 cities and 72 municipalities.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.

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