koryente (updated)

so why is gloria so viciously picking on meralco these days?

can it be that out of the goodness of her heart she just wants to give us relief from high electricity prices, kawawa naman kasi tayo?

or is it just another diversionary tactic to keep jun lozada irrelevant now that she’s had to chill kuno on the rice shortage or else send rice prices skyhigh?

or she could just be doing it to initimidate the lopezes whose broadcasting network is not only critical of her administration but also poised to back a noli de castro presidency in 2010?

i’d say all of the above except the first, the one about the goodness of her heart wishing us cheaper electric bills.

correct me if i’m wrong, but according to my last bill only 25% goes to meralco (for distribution and subsidies). the bulk of it, the 75%, goes to government: 47% to napocor (for generation), 9.6% to transco (for transmission) and 10.3% to taxes for gma’s coffers.

hindi lang meralco ang puwedeng magbaba ng presyo, ang gobyerno rin, unang una na si gloria, by lifting the vat and other taxes. she should set the example and shame napocor and meralco into doing the same, doing the right thing, give us all a break.

otherwise tila tuloy ang senate investigation. for a clearer sense of what they’ll be talking about, here’s katrina’s quickie primer ripped off her personal blog:

Our Meralco bill is made up of the following: 1. Generation Charges, 2. Distribution Charges, 3. Subsidies, 4. Government Charges, and 5. Universal Charges. Under each of these five sections fall various other fees that are broken down at the back of our bills (their technical term for that is “unbundling”) as per the order of the Energy Regulatory Commission (ERC) after the PPA-brouhaha of 2004. Of these 5 things we pay for, Generation, Distribution and Government Taxes are the largest in any bill.

Meralco says it’s the Napocor’s and Independent Power Producers’ fault, for pricing electricity too high producing bloated Generation Charges; they also blame government for the Government Taxes. Government meanwhile blames Meralco for their high Distribution fees. But also there’s much on the bill that are glossed over given the fact that all they’ve talked about – the politicians, media, the capitalists – are the big(ger) fees. In fact, our money also goes to those smaller fees, and when you imagine how many of us pay it, then you know that much money’s collected from these as well.

1. Generation Charge – is the cost of power from Napocor and the Independent Power Producers. Meralco says this is a “pass on” or “pass-through” charge and none of it goes back to them as distributors; all of this goes straight to Napocor raw. Under this section falls the following:
1a. Prev Mos Adj on Gen Cost, an explanation for which I have yet to find.
1b. Transmission Charge – cost of bringing power from Napocor and IPP generators to distribution utilities like Meralco. This charge, according to Meralco, goes straight to Transco or the National Transmission Corporation.
1c. System Loss Charge – this is the cost of power losses that are due to technical or non-technical reasons. So everything from dissipated power by transformers to pilferage – as in pagnanakaw ng kuryente – we are being charged for. This is a scheme approved by the Energy Regulatory Commission, put into law by Republic Act 7832.

The basis for all these charges that fall under the Generation Charge, is your kwh consumed for the month. So let’s say, as with us, you consume 543 kwh for the past month, then that will be the basis of the amount you will have to pay even for the System Loss Charge. Which is really something that we shouldn’t be paying dahil hindi naman natin ginamit ang electricity na yon; actually, nagbabayad tayo para sa electricity na hindi nagamit ninuman.

Now this set-up has been blamed on the onerous contracts between Napocor and IPPs and distributors like Meralco. These contracts have a take-or-pay provision: which means consumers pay for electricity regardless of whether it is produced or delivered to them. Who to blame for this? Fidel Ramos himself, who approved – even railroaded – many of these contracts in 1991, as he freaked out about the power shortage then. (The PCIJ has an excellent piece on these contracts at http://www.pcij.org/stories/2002/ramos.html).

2. Distribution Charges – is the cost of having Meralco distribute electricity to us. This goes to what they say is the building, operations and maintenance of Meralco and their grids. This also fluctuates with the peso-dollar exchange rate. If we are to believe Meralco, that all they get is about 20% off the total amount of our electric bills (this is what they say on their website), then this distribution fee is all they get. Along with this fee (which changes every month), you also pay for the following:
2a. Metering Charge – This is the cost of reading, operations, and maintenance of our electricity and electric meters.
2b. Supply Charge – This is for the services that Meralco provides its customers: billing, collection, customer assistance, among others.

Again, all of these charged by Meralco are dependent on the amount of kwh we consume for the month. Which in itself is problematic. Kapag nagdagdag tayo ng appliance sa bahay, ibig sabihin ba non ay mas nagagamit natin ang customer o billing o collection services nila? Gaano rin ba kahirap mag-maintain ng metro? Gaano kadalas nila itong palitan, if at all? E kapag nanakawan nga tayo ng metro, magbabayad pa rin tayo para palitan ito diba? Dibale sana kung tumataas ang suweldo ng empleyado ng Meralco kapag tumataas ang konsumo natin ng kuryente, at therefore tumataas ang Metering at Supply Charges. E kumusta naman ang contractualization natin ng manggagawa diyan?

3. Subsidies – under this falls only one thing: the Lifeline Rate Subsidy, which is defined by the EPIRA as “the subsidized rate given to low-income captive market end-users who cannot afford to pay at full cost”. Ano daw? Apparently this is based on the idea of socialized pricing. Section 73 says that the Lifeline Rate “a socialized pricing mechanism <…> for the marginalized end-users shall be set by the ERC, which shall be exempted from the cross subsidy phase-out under this Act for a period often (10) years, unless extended by law. The level of consumption and the rate shall be determined by the ERC after due notice and hearing.”

Ano daw ulit yon? We are apparently subsidizing the electricity of consumers who use 100kwh or less every month. What happens is because we pay this fee, Lifeline Rate Users (the marginalized end-users as the law calls them) get 20 to 50 percent discounts every month off their Meralco bills. As of January 2008, Lifeline Rate Users number 1.55 million consumers, or 36.5 percent of Meralco customers.

This is, in effect, a (forced) donation from those of us who consume more than 100kwh of electricity every month, to those who consume less than that every month. Eto ang maganda: Meralco ang nagmamaganda in the end. Because they’re the ones who seem to be generous, giving all these discounts to those who consume the least electricity. Meanwhile we are left with no choice but to do this, even when we’re not sure where our money goes, and whether or not our subsidies really do affect those of us who can’t afford to pay for electricity. It’s so easy after all to just give out discounts – isn’t that the nature of capitalist enterprises if only to seem like they’re being kinder to consumers?

Who’s to blame for this one? GMA and her EPIRA which put it on our bills, to Meralco’s joy.

4. Universal Charges which is really only made up of the Missionary or Missionary Electrification and Environmental Charges.
4a. This is collected from all end-users with the goal of making electricity available to unprofitable parts of the country. So, based on our kwh consumption of electricity every month, we are being made to pay for the “total electrification of the country” according to the EPIRA or the Electric Power Industry Reform Act. This we can blame on Gloria Macapagal-Arroyo who rushed it soon after she came into office.
4b. This goes straight to the Power Sector Assets and Liabilities Management Corporation (PSALM) which is owned and controlled by government and created by RA 9136. This means that this is also a pass-on or pass-through charge. None of it goes to Meralco raw.

This may seem negligible, yes? Parang ang liit-liit ng P20.25 kumpara sa dalawang libo mahigit na singil para sa Distribution Charges na napupunta sa Napocor. But other than the fact na, uh, dapat yata hindi natin ‘to binabayaran buwan-buwan (kailan ito matatapos? kailan matutupad ang pangarap na “total electrification” ng Pilipinas? or better yet, alam ba nating doon napupunta ang pera natin?), take a look at how much they collected of the Universal Charges alone for March 2007: P138,264,690.45. Ano daw ‘yon? P138 million pesos? E bakit parati pa rin tayong nakakapanood ng dokyu sa i-witness tungkol sa mga lugar na hindi inaabot ng kuryente, at kung saan kailangang magbasa sa kandila ng mga pobreng estudyante?

5. Government Taxes – is self explanatory. What is not is everything that falls under it. And you will be surprised at what it is we’re being taxed for: it’s everything!
5a. Local Franchise Tax – any private utility company is required to pay this back to government. 2% of gross revenues goes to the national government as national franchise tax, and 0.05% to 0.75% goes to the local government in the form of the local franchise tax.
5b. Value Added Tax – which should be in the plural given the various other things that are taxed:
1. Generation Charge – 10.4% tax
2. Prev Mos Adj on Gen Cost – 9.32% tax
3. Transmission Charge – 10.69% tax
4. System Loss Charge – 10.49% tax
5. Distribution Rev and Subs – 12% tax

In effect, we are being taxed for most of our bill: the Generation Charge that goes to Napocor/IPPs, the Transmission Charge that goes to Transco, and the Distribution Charge that goes to Meralco. We also pay for the electricity that is unused, undelivered, or unproduced by the IPPs (as per those terrible Ramos era contracts). Eto and pinaka-punchline: we also pay taxes for the Lifeline Rate Subsidy AND the Local Franchise Tax. Both of these fall under “Subs” beside Distribution Rev. So nag-donate na nga tayo para sa electricity ng mahihirap, pinapagbayad pa tayo ng taxes; at taxed ulit ang Franchise Tax na binabayaran natin.

Pero eto na talaga ang pinaka, pinaka punchline sa lahat. Minus the Universal Charges (kase siguro nakakahiya namang i-tax pa tayo para sa page-electrify ng buong bayan through the Missionary fee), we are taxed by government again. Isa pang 10% tax ang pinapataw sa buong bill natin, over and above the individual taxes we paid under Government Taxes.

This is a pass-through charge, which means none of it goes to Meralco. Winner lang ang gobyerno. “


  1. Regarding subsidy, Lifeline users are actually paying less than the amount that Napocor is charging Meralco which Meralco in turn passes in full to the non-Lifeline consumers. Very noble, di ba? We share our resources to those who have less.

    But there is also a mechanism called T.O.U. for businesses and heavy residential users which cuts the price in half during off peak hours. For residential users, a 12-month monthly average of 2000 KWh is required to qualify for Time-Of-Use Rates. Those living in the big subdivisions in Makati can easily fall into this classification bracket. The very rich can now enjoy full airconditioning of their houses, light their gardens and swimming pools, buy big chest freezers for their foodstuff, and watch their 70-inch LCD panels with 7.1 surround sound overnight since the price of electricity is cheaper overall.

    Lifeline subsidy for the poor, T.O.U. for the rich. How about us middle class? Nothing. We just subsidize the poor, the rich and businesses.

  2. MY ACTUAL MERALCO BILL:April 14 t0 May 24 2008

    Billing summary

    system loss:7.8%
    universal charges:0.3%

    Meralco is passing on the costs of its SYSTEM LOSS to its customers!

    I strongly believe that consumers should only be required to pay for actual consumption, while industry players should shoulder the risk costs in every business venture.

  3. Andrew

    Well, you know how Ate Glo is. She can do any and every diversionary tactic that our poor, third-world minds can conceive. She’s the one in charge of the country, so she can do what her facial mole wishes. Ang hindi na lang n’ya pwede magic-in eh ang manalo s’ya sa Binibining Pilipinas, much less ang makapasok sa initial screening… noh? :P