High demand, low supply led to bloated Meralco bills

By ELLSON A. QUISMORIO
May 18, 2010, 5:13pm

A confluence of events led to the “shocking increase” of electricity bills last April, the country’s largest power distributor, Manila Electric Company (Meralco), said Tuesday.

“April was a particularly bad month,” Jose “Ping” de Jesus, Meralco president, said candidly, referring to the sharp rise in electricity bills, especially in residences where increases of up to 60 percent became commonplace.

Larry Fernandez of Meralco’s Regulatory Management Office showed in a slideshow presentation at the Manila Bulletin on Tuesday how “bad” April was for consumers.

“Historically, power consumption at residences and commercial establishments go up between March and April,” said Fernandez, while pointing out that the differences between the intensely hot summer months, which saw dams and rivers all over the country dry up, were quite “record-breaking.”

“Residences posted a 14.3 percent increase in consumption while commercial went up by 7.2 percent. Aside from this, generation charge was at its highest ever of P6.77 per kilowatt hour (KwH),” Fernandez said.

Generation charge is part of the electricity bill that reflects the cost of power that Meralco buys from its suppliers.

These suppliers consist of the National Power Corporation (NPC), Independent Power Producers (IPP), and the Wholesale Electricity Spot  Market (WESM).

In short, power demand shot up while power supply dwindled. “When the demand is high, the price of the commodity naturally increases,”  Fernandez explained.

Meralco’s task is to distribute electricity to the end-users of the power supply chain – the consumers. “What goes to Meralco is only 15 to 25 percent of what you pay in your bill,” De Jesus said.

Other events that played into the ballooning of bills was that Meralco was forced use more expensive fuel sources when the Camago-Malampaya power plant shut down between February 10 and March 13.

Also, distribution-related adjustments that were suspended in January were resumed in April, Fernandez said.

Ivanna dela Peña, vice president and head of the Regulatory Management Office and Utility Economics, said the public condemnation of last month’s bills was understandable.

“It’s a Meralco bill, so we get all the flak,” she quipped.

But the worse may be over. According to De Jesus, generation charge for the month of May will see a decrease of P1.26 per Kwh. “It’s already being implemented,” he said.

Fernandez said that the drop in generation charge for May is also traditional, like the bloated rates of March to April. “Right now we don’t see any more problems.”