An Open Letter to Meralco on MSK “Fake News”

David Celestra Tan, MSK
17 July 2020

Atty. Jose Ronald Valles, First VP and Head of Regulatory Affairs 
Mr. Joe Zaldarriaga, Public Information Manager
Meralco

Subject: 

Consumer Concerns on Meralco Charges and Discrepancies in its Power Purchases and Sales

Dear Sirs:

In the public search for answers and solutions to Meralco’s shocking electric bills for the COVID-19 lockdown months, the Matuwid na Singil sa Kuryente Consumer Alliance Inc. had looked at Meralco’s data and reports and had identified areas of concerns that we believe could explain the shocking electric bills.

We had similarly proposed to ERC and DOE a solution for the mitigation of the Meralco rates to partly unburden the suffering consumers at this time of the ongoing COVID-19 pandemic.

In the process of our search for explanations for Meralco’s billings, we also discovered, based on your own data and official reports, that there is a big disparity in the kwh energy sales you are reporting to ERC and to your stockholders as contained in your Annual Report.  Official data shows it’s not only in 2019 but in all the years back to 2015, the last year analyzed.

We have originally directed our queries and proposals to the ERC and we continue to hope that they will address the regulatory issues on our findings.  Meralco however had issued statements dismissing our disclosures and findings as “hakahaka lang” and fake news.

To set the record straight we hope Meralco will address the real issues and answer the following questions so we don’t muddle the discussion and confuse the public who deserve to know the truth:

1. Is it not correct that Meralco has different DSM (distribution, supply, and metering) rates as approved by the ERC for each customer groups. Small residential, Regular Residential, Commercial, Industrial, and streetlights?

2. Is it not correct that Meralco’s DSM rate for large industrial customers are in the range of P0.98 per kwh and much lower than the residential customers most of whom are charged in the range of P2.98 per kwh? Or at least industrial rate is much lower than residential customers? Your systems loss charge to residential customers in May 2020 was P0.38 per kwh compared to Industrial customers who are charged less than half at P0.14 per kwh.

3. Are these rates not disclosed in your monthly report to ERC and posted in your website?

4. Is it not true that close to a billion kwh of electricity in April and May were not consumed by the locked down industrial and large industrial customers and instead they were consumed by the quarantined residential customers? If not correct, can you disclose the changes in consumption of each customer class during the Covid-19 months of April, May, and June?

5. Is it not true that Meralco is gaining a higher revenue per kwh that run into billions a month due to higher Covid-19 usage by the residential customers who are charged at a rate of P2.98 per kwh for power that you used to supply to the industrial customers at P0.98 per kwh?

6. Do you deny that this will result to Meralco gaining more revenue than envisioned under the Allowed Revenue Requirement and MAP as approved by the ERC? Our various simulations show the excess Covid-19 revenues are running from P1 Billion to P1.5 billion a month at least.

7. Is it not true that Meralco discloses its monthly generation costs to the ERC and the consumers showing the total kwh it purchased for the month, its total costs, and the resulting pass on generation rate to the consumers?

8. If you check the total of these reports for the 12 months of 2019, Meralco’s generation purchase for that year was 33.565 Billion kwh at a cost of P174.859 billion. Is this not correct? We will be happy to provide you the tabulations from 2015 to 2019 should you need a reference.

9. Is it not true that in Meralco’s financial report in its Annual Report to stockholders for 2019 on page 5, your reported energy sales was 46.871 billion kwh at a purchased power cost of P241.032 billion.

10. Do you agree that there is a big disparity in the billions in these two Meralco statements and that, as a regulated distribution utility, Meralco’s generation cost is a pass on charge to the consumers and therefore Meralco should charge consumers only for the ACTUAL cost and quantity of power it purchased? 

More directly, if Meralco’s generation purchased in 2019 was 33.565 billion kwh, why should it bill its customers  a total 46.871 Billion kwh or 13.3 billion kwh more as shown in its financial statements?

Would it be fake news to ask if it is possible for Meralco to sell more energy than it is buying?

Meralco’s Rates and Billing practices 

These have become so confounding and punishing for the consumers. If only Meralco would be more forthcoming with truthful answers and really be more faithful to it’s franchise obligation to provide least cost power to the consumers, there will really be no need for consumer and cause oriented groups to standup to protect them. We are not only forced to try protect the consumers from over and unfair charges. We also have to help them understand what is hitting them.

1. Like when Meralco thought nothing of increasing the generation rate by 90% in December 2013 amounting to P4.15 per kwh in one month with ERC approval and it took a timely Supreme Court petition of Bayan Muna to stop it.
2. Like when Meralco and its sister company Meralco PowerGen fast tracked within 40 days the negotiation of seven (7) midnight power supply contracts that would corner 80% of the energy requirements of Meralco for the next 20 years at negotiated prices and it took the Supreme Court action of Alyansa para sa Bagong Pilipinas and Bayan Muna to reverse.
3. Like when Meralco habitually passes on the higher costs of distillate fuel that run into billions whenever Malampaya shuts down and MSK and Bayan Muna discovered that Meralco was not even bothering to check for accuracy and truthfulness of their generators billings.
4. Like when Meralco claimed to be voluntarily reducing their distribution rate by P0.18 per kwh in July 2015 and MSK discovered that your authority to charge the additional under recovery actually expired that June 2015. Instead of a magnanimous reduction it would actually be illegal for Meralco to continue charging the extra P0.18 per kwh.
5. Like when you are continuing, despite a clear Supreme Court rebuke, to evidently manage the CSP for your power requirements so only your partners and sister companies can bid and win. We are bothered because we, the consumers, are the ones you will make pay for them rates.

We are consistently proven right because our advocacies are based on solid data, are guided by our deep knowledge of the EPIRA Law, and fervored by the purity of our commitment to consumer welfare.

The Covid-19 Meralco Conundrum

In this Covid-19 period, we feel that it is callous and irresponsible for Meralco to dump convenient estimated billings that are three times their normal bill on the already suffering Filipinos.  But you notice we did not say that.

We did say however that while Meralco is claiming credit for a P0.35 per kwh reduction in generation rates for March, April, and May through a “force majeure” declaration to their power generators, the prices of coal actually dropped 20% and LNG 10% during this period. We did say the rate reduction should be much more and that is based on verifiable fuel prices. 

We realize that these are inconvenient truths. Kindly be assured however that it is not the life’s mission of MSK to smear the name of Meralco. As our name implies, we only care about “matuwid na singil”. Our studies and monitoring are based on the official reports of the ERC, Meralco, and the DOE. If we see things that are disadvantageous and unfair to the consumers, it is our duty to inform the public, ask questions, or to undertake the needed petitions to protect the public.

Consumer abuse is both an intent and an act.

We consumers and consumer groups see the act and feel the hurt of abuse and we cry in pain. It cannot be faked. Meralco it seems is only arguing that it is not their intent to abuse. Stil, Meralco laughs all the way to the bank and the consumers cannot even go to the bank. 

It is sad that it has fallen upon the shoulders of the consumer groups to explain the pain you inflict and in the case of MSK to show fair solutions that we can only hope the DOE and ERC will consider. 

Instead of calling us fake and threatening us with a lawsuit, we wish you will just answer the simple questions.

1. Are you not gaining windfall profits that will exceed your ARR when the industrial energy with a normal rate of P0.98 per kwh is instead consumed by the quarantined residential customers who you will charge P2.98 per kwh for the same power?
2. How are you able to bill customers 46.871 Billion kwh of power in 2019 but evidently bought only 33.565 billion kwh of generation energy? What magical technology do you have? Are you allowed by the regulatory rules to have this disparity? How is this fair to the consumers?

We are sure you have your own versions of the truth. Let us hear it. And if needed let us debate it in the right forum at the ERC.

If Meralco wants to be adored by its customers, treat us right and be faithful to your franchise obligation with genuine efforts to provide least cost power. Not by hoodwinking and obfuscation.   

We did not ask Meralco these questions originally because we knew that you will always point to the ERC if there are things you cannot or do not want to answer.

We believe these are serious concerns that can involve billions of unnecessary charges to consumers. We hope you will not conveniently deny us the right to know what we are paying for by dismissing it as “hakahaka lang” or fake news.

We are seeking the truth and solutions. If you have a different truth we will be happy to have them. All in the pursuit of “matuwid na singil”.

We are looking forward.

Very truly yours,

Matuwid na Singil sa Kuryente Consumer Alliance Inc.

David Celestra Tan
Co-Convenor
David.mskorg@yahoo.com.ph