The Manila Times June 14, 2020
This is in
response to the column “Rough Trade” by Ben Kritz, published by The Manila
Times. I would like to correct and clarify certain points in Mr. Kritz’s
column dated June 11, 2020.
On March 16, 2020, the
government-imposed enhanced community quarantine (ECQ) in Luzon, restricting
the movement of the population except for essential, work, and health
circumstances, in response to the growing pandemic of coronavirus disease 2019
(Covid-19) in the country. Meralco was among the companies that have been
affected, with only networks and service crews allowed to stand guard and
respond to emergencies 24/7.
Meter reading
operations were suspended, thus Meralco was forced to follow an Energy
Regulatory Commission’s (ERC) guideline for unforeseen
circumstances — which is to estimate billings [(Section 3.5.4 of the
Distribution Services and Open Access Rules (DSOAR)].
It was only in late
April and May that Meralco was finally able to dispatch meter readers to log
the consumption of customers for the ECQ months of March, April and May. The
resulting actual consumption for the ECQ months was reflected in the May bill,
which also included the adjustments from either underestimated or overestimated
March and April bills.
Now with this background
and full context behind the situation, Mr. Kritz claims Meralco is taking
advantage of the pandemic situation, allegedly causing low-consuming customers
to shift to being classified as higher-consuming customers because of the
underestimation of kWh (kilowatt hour) consumption done in March and April, and
the adjustments of those estimated months being added to the May total charge.
At this point, it
should be noted that the distribution charges of Meralco were approved by the
government regulator after undergoing public hearings. Even Mr. Kritz
does not dispute this. Also, Meralco’s monthly rate adjustments are
publicly available on the company’s website and social media platform. We also
do media rounds monthly to announce the rates at the start of each month.
Mr. Ben Kritz
selectively chose his points for argument’s sake, but left out crucial
possibilities. We understand the stress and anxiety this current global
pandemic may bring to consumers. Mr. Kritz, unfortunately, chooses only to
highlight how a consumer may be billed a higher distribution charge in May
because the consumption was lumped. What he fails to realize, however, is
that in such cases, the customer’s distribution charges in March and April
could very well have been higher if not for the underestimation in the March
and April bills. The underestimated consumption led to the use of
lower distribution charges.
Aside from ignoring
that it is very possible that the applicable distribution rates in March and
April could have been higher had consumption not been underestimated, Mr. Kritz
also did not consider that the overall power rate for May 2020 (P8.7468 per kWh
for a 200 kWh customer) actually went down by 25 centavos per kilowatt hour,
compared to April 2020 (P8.9951 per kwh). The May rate was also lower
than March 2020 (P8.8901 per kWh).
This negates the claim
that Meralco took advantage of the situation for higher yield.
This also means that
the customer in his “case study” actually enjoyed considerably lower overall
power rates for the bulk of his consumption. Whatever adjustments were added to
the May or June bill based on underestimation used lower overall power
rates. In any case, for their convenience, customers affected can
also pay the bills during the ECQ months on installment basis from four to six
months.
In sum, because of the
lockdown and the pandemic, it would be very difficult to go back in time, and
right now the discussion is purely theoretical. But there is a likelihood and
possibility that actual consumption during the estimated months would actually
be much higher in reality and thus would result [in] higher bills since overall
rates were more expensive in March and April compared to the much lower May
rates.
I would also like to
emphasize that, throughout the ECQ months, Meralco worked double-time to ensure
customers receive the lowest possible cost for the power that they consume.
Meralco invoked the
force majeure provision in its power supply agreements (PSAs) for the duration
of the ECQ, reducing fixed charges for generation capacity that would have been
charged by suppliers.
For the April billing,
Meralco force majeure claims amounted to P129 million. For the May billing,
force majeure savings amounted to P877 million and that translated to a
reduction of P0.3452 per kwh as passed on to its customers.
This June, the force
majeure claims totaled P614 million, equivalent to customer savings of P0.2208
per kWh, representing reduction in fixed costs from its baseload supply
contracts and avoided charges from the temporary suspension of the mid-merit
supply contracts recently approved by the ERC.
Without the force
majeure claims in June, generation charge and the total rate would have
increased by 18 centavos and 24 centavos, respectively, from last month’s rate.
For the past three months, the savings due to force majeure claims totaled
around P1.6 billion.
Meralco also executed
efforts to help its business partners recover faster, with the suspension of
the guaranteed minimum billing demand (GMBD) charge during the quarantine
period from March 16 to June 30.
The government has also
taken initiatives to ensure lower cost of power to provide relief during this
pandemic. The ERC suspended the collection of FIT-All for April and May billing
months in consideration of the ECQ. Collection of universal
charge-environmental charge amounting to P0.0025 per kWh was also suspended
beginning this June.
The good news for June
2020: Meralco announced a third straight month of generation rate reduction,
and a total rate decrease of more than one peso per kWh since the start of the
year. This month’s total rate — P8.7252 per kWh — is also significantly
lower than that of June 2019, which was P10.0918 per kWh. This month’s total
rate is also the lowest since February 2018.
For their convenience,
customers affected can also pay the bills during the ECQ months on installment
basis from four to six months. This is in compliance with the ERC advisories as
the regulator regarded it as a necessary reprieve.
The ERC mandated this
to all affected electricity distribution utilities and electric cooperatives in
the country that encountered similar difficulties and utilized a similar
approach to billing.
Meralco had been
challenged in its operations during these trying times, but the company is doing
its best to put customer welfare above all, while adhering to government
mandates.
Thank you for the opportunity to make the
clarifications.
Meralco Public Information Office
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