Consumers Can Better Support RE Development if Meralco Power Cost Reduced P3 per kwh

By David Celestra Tan, MSK

If Meralco and the concerned agencies of the government, the ERC, DOE, PEMC, JCPC, respond to the consumers aching call for reducing electricity rates by P3 per kwh in the Meralco area, the country and consumers can afford to support more FIT-ALL subsidies for renewable energies.

Currently the FIT-ALL subsidy is about P0.045 per kwh chargeable to all consumers of electricity nationwide. In the Meralco area, this would be a very well felt additional burden because residential and commercial consumers are already suffering from the highest electricity rates in Asia. This Fit-All charge will cover about 400mw of various renewable energies, Solar, wind, biomass, and mini-hydro.

There is a mad scramble among many investors, old and new, local and foreign, to launch their RE projects to take advantage of the Feed-In Tariff. Solar particularly seems very influential in getting a hearing of the DOE for a ten-fold increase of its initial target of 50mw to now 500mw.

Biomass and Wind are also racing against each other for higher fit allowances. All these are subsidies that will be added to the bill of the consumers. It can reach P0.50 per kwh the way things are going from the current P0.045 per kwh.

But then it is a charge well spent at least for cleaner energy and environment. The consumers might not mind and might easily afford even if it reaches P0.50 per kwh……but only if the excess and erroneous charges reaching P3.00 per kwh can be eliminated from the Meralco electric rates.

MSK’s campaign to reduce Meralco’s rate by this much is based on a line by line analysis of Meralco’s charges and identification of reasons why those items are bloated. The irony is 87% or 2.60 of the achievable P3.00 per kwh reduction are from pass-on charges on which Meralco is not making money . Fully half or P1.50 per kwh will come from changing the way its procures and manages its power generation supply. Only 13% or 0.40 per kwh will come from a reduction of Meralco’s undue revenue from the erroneous, and we believe illegal, PBR or performance based rate making. (Don’t you love those deceptively suiting names!)

Unless Meralco and its investors believe they are entitled to these erroneous charges, especially from their right to monopolize and self-negotiate generation charges, this rate rationalization will be a win-win and patriotic achievement for the country. Consumers can better afford more renewable energy projects.