Meralco finds a way to profit from pandemic

By Ben Kritz June 11, 2020

https://www.manilatimes.net/2020/06/11/business/columnists-business/meralco-finds-a-way-to-profit-from-pandemic/730954/

Today I’m going to revisit a topic I first took up about two weeks ago (“Meralco creates chaos with billing scheme,” May 26). In that time, a number of Meralco customers have graciously supplied me with their billing data for the past several months, which, after careful analysis, has led to a couple of disturbing empirical conclusions.

The overall conclusion is that Meralco has, entirely legally, taken gross advantage of the situation created by the government-imposed enhanced community quarantine (ECQ) between March 16 and June 1 to greatly limit, if not completely eliminate, any revenue loss it may have incurred during the period.

Again, this was completely legal, a function of unnecessarily convoluted billing formulae that are ultimately authorized by the Energy Regulatory Commission. If Meralco is to be blamed for anything, it is, perhaps, that it has overplayed the “good guy” role while being
extremely selective in its consideration for its lockdown-affected customers.

Under the billing scheme Meralco implemented during the ECQ in Metro Manila and those parts of Luzon it serviced, a typical customer would have received a billing for March for an amount of electricity equal to the average of his or her usage for three months (December through February); a billing for April for an amount of electricity equal to the average of his or her usage for three months (January through March); and a normal billing for May based on an actual reading of the customer’s meter, minus the estimated amounts for March and April. In cases where meter reading was still not possible, the May bill would instead be a three-month average based on the customer’s usage from February through April.

The total amount of a customer’s bills with due dates from March 1 to May 31, according to information provided by Meralco to those customers whose meters were actually read for the May billing, will be divided into four or six monthly installments to be added to subsequent bills due from July 15 onward. The length of the installment period will be based on the customer’s February 2020 usage; those using 200 kilowatt-hours (kWh) or less will be given six months to pay the past due bills, while those who used 201 kWh or more will have four months to pay off the March, April and May bills.

What caused a great deal of public outcry toward the end of last month, when customers began receiving their May bills, was that these were shockingly high; some were as high as five times the amount of an average bill. Initially, without having a base of billing data (apart from my own) to determine the cause of this, it appeared that, for many customers, the bill amount for May was simply inaccurate, the result of miscalculation or erroneous readings of electric meters. With detailed or partial billing information being supplied by a number of customers, however, a close analysis revealed an even more insidious (insidious, because it’s legal) cause.

Like most utility bills anywhere, electricity rates in the Philippines are progressive; the more electricity you use, the more you pay for it on a per-kWh basis. The justifications for this are that the higher rates charged to users, presumably in a better financial position to pay them, help fund various subsidies for low-income customers and other social programs, and that higher rates encourage energy conservation, albeit in a decidedly unfriendly way. So, for example, an “average” Meralco customer, one who uses about 250 kWh a month, pays an average total of about P9.33/kWh, while a “low” user consuming half that amount of electricity monthly pays an average total of about P9.00/kWh.

What happened during the lockdown was that household electricity consumption did increase enormously, despite most customers’ disbelief that their May bills could be as large as they were. Stuck at home during some of the hottest weather of the year, people’s electricity use skyrocketed. Meralco did not, it seems, miscalculate anyone’s bill, except perhaps in a few rare cases; almost everyone who shared their billing data with me was able to verify that their own inspection of their meter confirmed the readings recorded by Meralco were accurate. What this did, then, was push many “low” and “average” electricity consumers into a “high” category, and subject them to much higher rates.

What is interesting — which is a polite way to say, extremely annoying — to note is that the higher electric rate is not spread out across the various bill inputs, such as generation, transmission and universal charges, but is mostly added to Meralco’s distribution charge.

For example, an “average” user saw a distribution charge on his February bill — the last one based on an actual meter reading before the lockdown — that amounted to 24.55 percent of his total bill; the higher rate on his May bill, however, drove the distribution charge proportion of his total bill to 30.07 percent. The bills of a random “low” user from the data set reflected an even bigger jump, from 22.5 percent to 31.65 percent.

I’ll cover in a subsequent column some of the other consumer-unfriendly revelations the bill data review revealed, as well as possible solutions to the obnoxiously high May Meralco bills
— which its seemingly accommodating “installment plan” doesn’t actually address — suggested by some thoughtful readers. For now, however, Congress should be urged to look into the matter, as an excessive burden on already stressed household budgets will ultimately work against the country’s efforts toward economic recovery.

*****

As far as that goes, I think I know in just whose wheelhouse an issue like this should land.
Sen. Christopher Lawrence “Bong” Go has made a career out of social amelioration in the past couple of years, in spite of the derision he receives for his unapologetic attachment to President Rodrigo Duterte. Like him or not, Go has effectively used his inside track to accomplish a great deal for people in terms of public health, calamity relief and livelihood development, and his results would probably be a lot more noticeable if he were not achieving them from within a legislative body that, in general, considers preening and public grandstanding actual work.

To illustrate just what sort of navel-gazing Go has to wade through to get anything done, he was recently taken to task for refusing to answer questions from other senators during a privilege speech, even though that is something other senators routinely do, being allowed by the Senate’s Rules and Precedence on Privilege Hour (it’s sections 3.3 and 3.4, if you want to look it up).

This kind of nonsense is counterproductive and takes time and attention away from real issues, which is maybe how companies like Meralco slip under the radar of oversight to wring their customers dry.