A consumer advocate, Butch Junia, wrote the Manila Electric Company about the misleading and inaccurate billing of electricity.
“This has been going on since March 2021. Look closely at your bill,” he wrote on his Facebook page.
Junia, who heads the PhilConsumersForum, said he was shocked seeing his June to July bill where the distribution charge of Meralco was a measly 4.36 percent of total bill, which normally is 20 percent depending on the consumption. He wondered about the “phenomenal cost reduction” or if Meralco uncharacteristically was generous in sharing efficiency gains.
Instead of giving the amount as cash refund directly to the consumer, Meralco just deducted it from the distribution charge (or offsetting), thus it did not lose anything but gained the satisfaction of customers without doing anything. It spared itself from giving cash outs—which could have been added to the family’s disposable income for food and other needs. The more food the families buy, the more taxes can go to the government.
Junia said on closer scrutiny he found that the bill revealed an apparent ploy to mislead Meralco customers—which had been going on under the nose of the Energy Regulatory Commission since March 2021—when the unverified refunds true-up started.
Citing his bill, he said, the actual bill of Meralco was P3,327.15 after the P502.45 refund/ offset is properly accounted as Distribution charge and added to the P2,824.70 bill total. The true-up is a refund to consumers for overcharges over the last 10 years and was used to pay Meralco’s distribution charges under an offset.
Meralco’s rate on this account is not P10.12/kwh as erroneously claimed in the bill as his consumption was 279 kwh. Total bill was P2,824.70: Generation, 67.11 percent - P1,895.77; Transmission, 8.45 percent - P238.60; System Loss, 5.87 percent - P165.73; Distribution (MERALCO), 4.36 percent - P123.18; Subsidies, 0.70 percent - P19.70; government taxes, 10.58 percent - P298.80; Universal Charges, 1.96 percent - P55.49; FIT All, 0.97 percent - P27.43.
“Incredibly and unbelievably, Meralco charge was lower than government taxes, transmission and systems loss. As it turned out, total charge of MERALCO was actually P625.63: Distribution charge, P367.81; Fixed Meter charge, P5.00; Metering, P94.22/kwh; Fixed Supply charge, P16.73; supply P141.87/kwh, or 22.14 percent of the bill,” he said.
Meralco arrived at its claim of P123.18 or 4.36 percent by deducting from the actual Distribution charges of P625.63 the four (4) refunds or true- ups amounting to P502.45. He explained that the true-up as proxy for rate reset is still being litigated by the ERC
Recent surveys showed that the average annual family income of Filipino families was P267,000 and the average family expenditure was P215,000 in 2021. This could have meant an annual savings of P52,000 but these savings are eaten up by the high cost of utilities, principally electricity and fuel.
The average electricity rate per kilowatt hour of Meralco in 2019-2021 was P8.24/kwh.
Unfortunately, Meralco’s inaccurate data misrepresenting its actual performance could have lulled some consumers into a false sense of confidence in Meralco’s overall performance.
Concerns
As mandated, ERC should address: 1) Is refund managed and accounted for properly? Meralco claims its distribution charge is only P123.18 -- where, how and in what manner was the P502.45 refund/true-up booked and settled; 2) Is the refund coming from Meralco owners, the beneficiaries of long-drawn-out overcharges? If paid out of cash flow under offset, how are owners paying for it? Under Performance Based Regulation consumers pay for distribution services in advance as part of Annual Revenue Requirements 3) what is the actual amount of refund due? Consumers were not allowed to question current and past rates used as basis for the refund.
Former ERC Commissioner Alfredo Non posited a refund of about P100 billion from WACC over recoveries alone. Also, Operating Expenses could not be verified because ERC took the side of Meralco and disallowed questions on those charges.
The refund is long overdue, the amount not fully determined. Rates have been interim for seven years now; last rate reset was over 10 years ago.
Sadly, ERC as regulator is an abject failure.
Pressure must be brought to bear on ERC to do a fair job for consumers. And the new administration is well-positioned to turn on precisely that kind of pressure.