The Manila Electric Company (MERALCO, ticker symbol MER) high billing during the Enhanced Community Quarantine (ECQ) months has led to the government’s scrutiny for the removal of universal charges which are pass-on to consumers and causing higher electric billing monthly, with or without ECQ.
Meralco will initially be required to submit documents including purchases from suppliers such as the power producers and the National Grid Corporation, this in order to explain on the complaints on high billing, Energy Regulatory Commission (ERC) Chairperson Agnes VST Devanadera told this Thursday (May 21) Senate Hearing.
The former solicitor general, Devanadera, clarified that Meralco would initially comply with the requirement of the ERC to address the clamor of consumers to explain on the high billing this May and to allow the so-called lifeline customers or those consuming below 200 kilowatt hours (kWh) to pay on a staggered basis for six months relating to the bills covering the ECQ.
Devanadera said that the universal charge, which is a monthly pass-on charge to Meralco customers that they have to shoulder the costs including subsidizing missionary electrifications and environmental fees, will be looked into as a possible option to alleviate the burden of Meralco consumers on paying high cost of electricity.
This statement from the ERC chair was given in the same Senate Hearing summoning the government heads of energy sector to explain on the Meralco high billing during ECQ with Senator Sherwin T. Gatchalian posing queries on the matter.
It will be recalled that in previous years, various studies had been released on the need for the removal of universal charges in order to bring down the high cost of electricity in the country or at Php 10 kWh, which is the highest in South East Asia.
Department of Energy (DOE) Alfonso T. Cusi told the Senate hearing that Meralco will be explaining on the questioned high bills during the ECQ as well as the new rule its imposed on consumers paying the convenience fee of P47 for online payment.
Both the ERC and DOE committed before the Senate that the rules of Meralco on collection will be subject of scrutiny including the possible removal of universal charges.
Cusi said that he wrote to Meralco asking on the imposition of convenience fee of P47, which was widely complained among customers of this distribution utility firm.
Gatchalian said that the rate-making of Meralco and the various electric cooperatives in the country will have to be subject of inquiry and fact-finding “so that this will not happen again” referring to the unexplained and arbitrary billing charges.
Devanadera said that the removal of universal charges will be looked into as the solution to alleviating the burden of electricity consumers paying high cost of power.
A study obtained by The Market Monitor revealed that universal charge includes subsidizing missionary electrification in rural areas which are not connected to the grid. In 2019, the Universal Charge for Missionary Electrification (UCME) had a planned cost of P14.6 billion representing the diesel fuel cost of the so-called special power units group or SPUG providing missionary electrification services and with fuel cost being subsidized by Meralco consumers through the Universal Charges monthly billing fees.
The report said: “The country’s electricity challenges are an outgrowth of its geography: the Philippines consists of more than 7,000 islands, many of which are small and have traditionally relied on generators fuelled by imported diesel. The true cost of generation by diesel ranges from Php 10 per kWh (US$ 0.20) to Php 165 per kWh (US$3.30),5 while approved subsidized rates range from Php 4.8 per kWh (US$0.09) to Php 5.6 per kWh (US$0.11). In 2017, the projected budget for diesel fuel alone to small islands supplied by the Small Power Utilities Group (SPUG) under the National Power Corporation (NPC) and other power providers (known as new power provider/NPP), was Php 10.32 billion (US$ 206.4 million).”
“NPC SPUG price differentials between the true cost of diesel and the approved subsidized rate, with consumers paying the difference. These islands frequently experience rolling blackouts and unplanned power outages because of grid instability, inadequate generation capacity, and unaffordable rates. In many cases, limited market size makes 24/7 service impossible to justify with some operating only between 8 and 16 hours per day. But even worse, this unreliable service is heavily subsidized through what is known as the Universal Charge for Missionary Electrification (UCME) with a planned cost of Php 14.66 billion (US$ 293.2 million)8 in 2019. The total amount expected to be paid by SPUG consumers is Php 6.67 billion (US$133.4 million) while the expected amount paid for by consumers outside SPUG areas in 2019 will be Php 7.99 billion (US$158 million). In other words, consumers – residential, commercial or industrial – in the Philippines main grids and other small island grids, are being forced to subsidize failing electricity systems.”