MANILA Electric Co. (Meralco), the country’s largest power distributor, has the highest distribution charges in the country among distribution utilities which also serve key major cities like Cebu and Davao, the Freedom from Debt Coalition (FDC) said Wednesday.

Based on a comparative study done by the FDC, Meralco, which serves the Philippines’ largest economic region of Metro Manila and the highly industrialized Calabarzon provinces and distributes 70 percent of the country’s power consumption, charges residential and commercial customers P1.6615 a kilowatt-hour in distribution costs.

The FDC added that Meralco also charges P0.5271 for supply service and P0.2435 a kilowatt-hour for metering fees.

The FDC said that consumers in Cebu are being charged by Visayan Electric Co. (Veco) only P1.0773 a kilowatt-hour for distribution, P0.2712 a kilowatt-hour for supply services, and P0.1924 a kilowatt-hour for metering services.

Based on the total of these three revenue items that go to the distribution utility, Meralco’s charges are higher by 57.8 percent, or P0.89 a kilowatt-hour, than Veco.

The FDC, on the other hand, said that consumers in Davao are charged by the Davao Light and Power Co. only P1.2409 a kilowatt-hour for distribution, zero for supply services, and P0.2249 a kilowatt-hour for metering services, which shows that Meralco’s charges are 60 percent, or P0.9663 a kilowatt-hour, higher than Davao Light.

The FDC said the data came from the electric bills of consumers in those cities.

In a related development, the Energy Regulatory Commission (ERC) denounced the allegation that it approved all Meralco petitions for rate increase, saying that their records will show that all the rate adjustments implemented by Meralco as approved under ERC chairman Rodolfo B. Albano Jr.’s leadership were on the generation charge, which is a mere pass-through charge that does not go to the coffers of Meralco.

“There was never a single instance during my term that the ERC approved a Meralco distribution- rate increase,” the chief regulator clarified.

Albano said there was only one petition for distribution-rate increase filed by Meralco during his term, which was even later withdrawn.

A consumer’s electric bill consists of several charges, among them, generation and distribution.

The generation charge covers the distribution utility’s cost for the power it purchases from its suppliers, which is included in the monthly electric bill, with Meralco acting merely as a collection agent for the generation company.

Albano said that this may vary from month to month depending on the cost of electricity, which, in turn, may result in an upward or downward adjustment in the generation-charge portion of the electric bill.

“This adjustment had been previously allowed by law to be implemented automatically by the distribution utility.  During the time of the then ERB, this was known as the PPA [power purchase adjustment] mechanism,” he added.

A similar mechanism called the Automatic Generation Rate Adjustment was put in place in October 2004.  

The implementing rules and regulations amendments put in place by the Department of Energy and the Joint Congressional Power Commission on June 26, 2007, were meant to remove all doubts as to the validity of a process that had long been allowed by the law and had, in fact, been long used by the then ERB.   

The distribution charge, on the other hand, is what Meralco charges for the service of delivering electricity to the consumers, and adjustment in this charge can only be implemented by Meralco after due notice and hearing.  

Albano said that the rate-increase petitions still undergo the same hearing process which has been in place since the time of the then ERB, which the ERC merely continues to follow.  

“The ERC had always put the consumers at the forefront of its policy formulation and decision-making.  

“In fact, it was during my term that the public hearings were revolutionized through the introduction of expository hearings at the distribution utilities franchise area and the inclusion of a consumer hour,” Albano said.

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