Meralco Rates Analyzed. The Truth in Numbers

David Celestra Tan, MSK
May 30, 2020

Consumer Groups including Bayan Muna and P2P are up in arms about the complaints of many Meralco consumers that their power bill jumped 2 to 4 times in just one month in May. The DOE and ERC asked Meralco to explain. Several bills have been filed in Congress mainly by the Makabayan group and Senate Energy Committee Chairman Win Gatchalian calling for an investigation of Meralco rate increase.

Meralco had admitted that most consumers bills for March and April were estimated based on the average consumption of the customer for the three months December to February due to its inability to do meter reading under Covid-19 ECQ.

Meralco’ spokesman Zaldarriaga was quoted as saying that some March and all April bills were estimated based on the consumers’ 3-month average daily consumption, which follows the rules issued by the ERC.
“The 3 months that were used as basis – December 2019, January 2020, and February 2020 – were considered low consumption months as these were significantly cooler months compared to the summer months of March, April, and May,” Zaldarriaga said.

For May however, Meralco claimed to have done some reading and saw significant increases in the actual kwh consumption of customers in March and April due to the stay at home and work at home restrictions and consequent longer use of air conditioners, lights, and appliances. Meralco apparently tried to bill all those in the May billing, many of them seeing a 300% increase in their bill, thus the brouhaha.
In April, Meralco also claimed that due to the significant reduction of power demand resulting from Covid-19 pandemic, it has declared force majeure and asked its Power Generator suppliers not to impose minimum off-take agreements. Thus they claim the generation charge for April from May was reduced P0.0237 per kwh. (Is that all?)

Rate or Billing Increase

Meralco was boasting that its rate decreased by 0.2438 per kwh in May but consumers are claiming that their bill increased by 2 to 4 times. Both actually may be not wrong because they are talking about two different things.

Based on the data available, Meralco’s kwh rate apparently decreased from 9.6276 per kwh in April to P9.3793 per kwh in May for those consuming more than 400kwh for the month. The big increase therefore must be due to the increase in energy (kwh) being billed, either due to the increase in actual consumption by the consumer or the effort of Meralco to recover its under billing resulting from its estimation of billings without actual meter reading.

Meralco by the way likes to use the rate for small consumers of under 200 kwh a month which is P8.7468 evidently to make it look like their residential rate is that low compared to the next step up at 400kwh which is a 7% jump at 9.3793 per kwh . Their rates ascends to P10.181 per kwh for those consuming 5,000 kwh, maybe mansions and commercial establishments.

Stroll in the Park Meter Reading

Actually even in the pre-Covid-19 days, Meralco is suspected by many consumers to be just estimating and averaging the monthly bill and actually not reading the meters all the time. Years ago a neighbor invited me to watch the Meralco meter reader walk down our street and observed how he was reading our meters. We watched in amazement as he just strolled through the street, appear to look at the meters about six (6) meters away for just 2 seconds and jot something in his notebook (paper not electronic). We joked that he must have bionic eyes.
And Meralco has bionic billing.

Truth in the Numbers

1. Monthly rate variations mostly due to Generation Rate fluctuations.

We looked at Meralco’s rates for the last eight (8) months from October 2019 to May 2020. There appear to be no major unusual seasonal variations in the consumer rates. The monthly changes mirrored the variations in the generation rates charges of Meralco during the eight (8) month period.

2. Reference consumptions from December, January, and February
Meralco asserted in their defense that in estimating the monthly energy bill for March and April, they actually used the average consumptions of energy of the customer for the 3 month period of December to February. They gratuitously said the average consumption for those months are lower because they are cooler months, implying that they are doing the Meralco consumers a favor.

What they are not saying is that in the succeeding months they would be doing the meter reading and will adjust and collect the differential billing. This is what they did In April and May recent.

Using the 400kwh consumption, the average rate for December to February is about P10.08 per kwh. For April it is P9.6276 per kwh, the difference reflecting mainly the reduction in the generation charge.

The generation charge for the 3 month period was about P4.87 per kwh compared to P4.6385 in April 2020 and P4.3848 per kwh in May.

3. Meralco’s Claims

a. One of Meralco’s hypothesis is that the power demand in the reference cooler months of December, January, and February is lower than the hotter summer months which we all believe seemed plausible.

The Meralco data however show that it is not necessarily true.

Meralco’s average power purchases for those three months averaged 2.6926 Billion kwh a month. Meralco’s power purchases however for April and May were 2.558 billion and 2.541 billion kwh. This decrease instead of increase in these summer months seem can be attributed to the overall reduction in electricity consumption due to the Covid-19 lockdowns. But Meralco data show otherwise.

b. Interesting Numbers

1) If many consumers used more electricity during the lockdown periods of mid-March to May 2020, how come the overall power purchases of Meralco is lower in the summer instead of higher? It is possible that the increase in consumer usage was offset by the decrease in the usage by commercial and industrial customers during the lockdowns.?

2) On year to year comparison

Meralco purchased 2.570 billion kwh in January of 2019. In January 2020 it purchased 2.637 Billion, a 2.6% increase. Here is the interesting part. In March when the lockdowns started in the middle of the month, Meralco purchased 2.597 Billion kwh compared to 2.472 billion a year before or a 5% increase. In April last month, at the height of the lockdown they still bought 2.558 billion kwh compared to 2.503 billion in same month in 2019 or a growth of 2.2%.

3) In 2020, Meralco’s purchased power volume in January compared to April went down 3%. In 2019, their purchases in April also decreased 2.6% compared to January. This is contrary to the claim that we consume less power in the cooler month of January vs the hotter month of April.

c. More Interesting Numbers

4) Meralco’s purchases of power, which is an indication of consumer volume, in the Christmas season of October to December 2019 averaged 2.852 Billion kwh compared to the summer month of April 2020 of only 2.558 billion.

5) Similarly, in 2018 and 2019, the Meralco purchases of power for the Christmas season of October to December was 2.798 Billion kwh. In the following summer of 2019, it averaged only 2.50 Billion kwh.

The National Capital Region that is served by Meralco seem to historically consume more electricity during the Christmas season than in the following summer. And it is not any different this year of the lockdown.

In fact, overall consumption this summer still represented increases of 2.6 to 3% over the same months last year 2019.

4. What could these numbers mean?

a. Meralco’s claim that there is less consumption in the cooler months of December, January, and February than the summer months of March, April, May in both 2019 and 2020 is not supported by the actual numbers.

b. Further, Filipinos consume more electricity in the Christmas Season of October to December than in the following summer.

c. Electricity sales of Meralco increased even during the Covid-19 lockdown period. The Stay at Home and Work at home population appear to have consumed more electricity to off-set the reduction in the consumption of closed businesses and establishments like schools and churches.

d. It appears that Meralco consumers probably got carried away with their electricity consumption because of government pronouncements calling on distribution utilities not to bill customers, suspend disconnections, and later to spread out the bill in four monthly installments. Or they believed that the government will extend calamity assistance on their electric bills. Now they are in shock.

e. Clearly, Meralco actually had not suffered in sales during the pandemic. Except they need to collect it from consumers who are both shocked by the increase in their consumption and their loss of ability to pay after losing their jobs. To Meralco, their offer to spread the bill over four months is still sales. They will still have a wonderful Christmas, something we cannot say about tens of millions of Filipino workers, small businessmen, and families whose usual remittances from OCW’s will stop.

f. These are the macro numbers. We don’t know how Meralco would be billing every single one of its more than 5 million metered consumers. The devil could be in the details.

Meralco’s representation of their power demand suits their “our bill is fair and transparent” narrative and hoodwinking. And we expect that Meralco will be able to astutely explain away the shocking jump in the May billing even in the Senate Hearings. However, they would have more explaining to do in their generation rates and distribution charges.

Readers who wish to have a copy of our spread sheet for the Meralco numbers can send a request to the email address below.

Next: Meralco’s Generation rates

Matuwid na Singil sa Kuryente Consumer Alliance Inc.
matuwid.org
david.mskorg@yahoo.com.ph