(The Philippine Star) | Updated December 11, 2012 - 12:00am
In our recent column giving a new look at rates charged by Meralco to electricity customers, we received a couple of reactions that we in turn forwarded to the dominant power distribution company for answers. We are featuring two of the received letters in this issue.
J. J. Acopio So from New York University sent this:
“I am a layman. I am sorry to say that I find it difficult to understand the IEC [International Energy Consultants] report. It is heavy reading stuff for ordinary citizens or consumers.
“I would like to add.
“To my knowledge, Taiwan and Japan have nuclear power plants; PH does not. I wonder if this factor was taken into consideration by the above-mentioned report. Incidentally, Taiwan Power is a government entity and enjoins government subsidy. This could probably be one of the reasons for Taiwan power rates to be relatively lower compared to PH.
“Looking back on the PH industrialization program, I was under the impression that certain industries like steel industry’s electric bills were government subsidized at the expense of the residential sector. Is this subsidy still true today?”
Meralco’s response
This column received the following response from Meralco.
“On the tariffs in Taiwan and Japan, the IEC study used the actual rates charged to customers based on prevailing rate schedules in January 2012. The assumption is that these rates have already considered the presence/use of nuclear-based generation in these jurisdictions.
“For Taipower, according to the IEC, the main subsidy mechanisms used to keep Taipower’s rates artificially low are: (i) provision to Taipower of fuel at subsidized prices, and (ii) loading Taipower with debt to finance the deficit in Taipower’s operations.
“In the past, NPC used to have a different rate schedule for directly-connected steel industries. Such rates, if below NPC’s cost-to-serve, would have been subsidized by other NPC customers, such as Meralco (and, therefore, Meralco’s customers-residential, commercial, and industrial). However, with the gradual removal of subsidies mandated by EPIRA and with the privatization of NPC’s assets/contracts, this system has been removed.
“The remaining support for industry is through the Ecozone Rate (funded currently through the Industry Competitiveness Fund) and the various Executive Orders issued by PGMA [President Gloria Macapagal Arroyo] (for such companies as Texas Instruments, etc., though we’re not certain if the programs for other companies like Hanjin and Samsung are being continued).”
Meter charges
Anna Gimenez from Citisecurities, Inc. sent the following:
“Since we are on the topic of Meralco’s charges, why are customers charged for meter based on total kilowatt consumption?
“The meter is there to record consumption. It is something not consumed by its very function. We have even deposited for this meter when it is installed. I believe meter charge should not be based on kilowatt used but only a fixed amount, if it is to be imposed.
“I hope you can shed light on this and ask ERC [Energy Regulatory Commission] why this has been allowed through the years.”
Meralco’s response
From Meralco, the following response was received:
“Conceptually, Ms. Gimenez is correct.
“Being a fixed cost, the meter charge can be reflected as a fixed monthly amount. This is how the metering charge is designed for non-residential (e.g., business) customers, as a fixed monthly amount. For General Power customers, the Metering Charge ranges from P400+ per month to P14,000+ per month, depending on a customer’s size (which in turn affects the kind of meter & IS system we need to deploy).
“In contrast, for residential customers, Meralco’s metering charge consists of a small fixed amount (P5) and a per kWh rate (P0.40+ per kWh, I think). Thus, higher consumption households pay a higher effective amount for the meter charge versus smaller consumption customers.
“Conceivably, the residential metering charge could be redesigned as a fixed uniform monthly amount. This will mean that, on one hand, high consumption customers will see a bill reduction. On the other hand, lower consumption customers will see their bills increase.”
I hope that both J.J. Acopio and Anna Gimenez had their questions/concerns adequately answered. Having worked with Oscar Reyes, who now heads Meralco, I know for a fact that he is fearless when it comes to finding answers to questions, even if they may mean challenging the current norms just so to be able to strike a “win-win” playing field for business and it customers.
So if you have more questions, keep them coming. source
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