A RAGING feud is going on in Metro Manila between major stockholder Government Service Insurance System (GSIS) and Manila Electric Co. (MERALCO), concerning high power rates being charged to consumers where even the President has now intervened.

The final showdown between the major parties will come tomorrow when stockholders hold their annual meeting. Will the Lopezes hold on to continue running MERALCO or will Winston Garcia of GSIS succeed to wrest control of the giant power firm?

Manila power rates are claimed to be the most expensive in Asia. With what our local power firm, Panay Electric Company (PECO) is charging us here, we disagree and say that Iloilo City has the most expensive power rate in Asia, not Metro Manila!

Now, why do we pay higher electric power rates in Iloilo? The reason is that multiple charges are levied by PECO to consumers. Maybe they should explain.

There are four groups of charges passed on by PECO to customers:

PECO-RELATED CHARGES

1. Distribution Charge – If we compare the business to selling rice, this refers to the cost of bringing the rice to the consumers. Well, this is reasonable.
2. Supply Charge – This we cannot understand, because when you distribute, you also supply. Maybe PECO should explain why by just using another term for delivering their kind of service, they will charge another fee.
3. Metering Charge – This PECO must explain. It is PECO’s obligation to measure the product they are selling and certainly provide itself with the measuring device to do that and not the buyer. But why charge the cost of the electric meter to the consumer?
4. Retail Customer Charge – This charge is discriminatory because it is an additional burden to small consumers of the product.

SUPPLIER-RELATED CHARGES

1. Generation Charge – PECO now sources its power supply from Panay Power Corporation (PPC) and the National Power Corporation (NPC), unlike before when they, themselves, produce the electricity.
2. Transmission Charge – This is the cost of supplying or delivering the product to the dealer, in this case, PECO. Why should PECO charge this to consumers when they are being billed, too, for the distribution charge?
3. Systems Loss Charge – This charge is hard to justify. Let us say that the product being delivered is rice. The rice was wasted on the truck because the sack was slashed or torn, or maybe, whole sacks were stolen in transit.
   Imagine, being charged for loss when it is not the consumer’s fault!

SUBSIDIES

1. Under this item, we have Interclass Cross Subsidy and Lifeline Rate Subsidy. We do know what these charges are and why they are charged to consumers.

TAXES AND UNIVERSAL CHARGES

1. VAT on Generation – Clearly, these are taxes payable by the producer of the power in supplying electricity to PECO. PPC and NPC that generate the electric power are giant companies and can well afford to pay the taxes, compared to small electricity users.
2. VAT on Transmission and on Distribution – Transmitting and distributing achieve the same effect of bringing power to the consumers. There should be only one VAT charge for both.
3. The Franchise Tax – This certainly should be paid by PECO because it is the franchisor, as well as the missionary and environmental fees.
   After MERALCO, we wish the President will also look into the excessive rates of electric franchisees outside Metro Manila to moderate their charges, especially in the countryside where the majority of our people live and now suffering from increased prices of everything.

One Response to “Power rates should be looked into”

• 1
  habagatcentral
  May 30th, 2008 14:22

  Thanks for the article, however I wish this could be brought up to national attention. I think we had enough of the “highest electricity rates in the country.”

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