The empire strikes back

AS I hoped it would do, utility giant Manila Electric Co. (Meralco) produced a witty riposte to my column of last Thursday (“Meralco finds a way to profit from pandemic,” June 11) with a detailed letter to the editor this past Sunday imaginatively titled “Meralco denies ‘taking advantage’ of consumers during pandemic.” I appreciate the effort led by Meralco’s long-time DJ, the charming and thoughtful Joe Zaldarriaga, to further enlighten the public and provide me with the opportunity to poke more holes in its veneer of public sensitivity.

As everyone is by now aware, the extenuating circumstances of the enhanced community quarantine ( ECQ) imposed on Metro Manila and Luzon in midMarch obliged Meralco to resort to estimating customer bills for March and April, until it was able to dispatch its meter readers in May. The meter readings in May, which reflected actual rather than estimated consumption, resulted in most customers receiving a huge electric bill. To ease this unexpected burden on consumers, Meralco has provided an installment scheme by which customers can pay off their March to May bills in either four or six months, depending on their level of usage indicated by their last pre-ECQ bill (i.e., February).

What Meralco took particular exception to was my contention — a conclusion reached by analysis of the line- by- line billing details supplied by 45 different customers — that although Meralco has not done anything contrary to applicable regulations, it has taken advantage of the situation created by the progressive nature of power rates, that is, that customers who use more electricity pay more or a per-unit basis. Thus, customers whose average bills over a long period of time (specifically, the 13 months for which tracking information is provided to them on their Meralco bills) puts them in a category where they are paying a lower per kilowatt-hour rate have suddenly found themselves not only paying for a much higher volume of electricity, but a much higher rate for it.

Meralco makes two specific counter-arguments at this point, which I will address separately.

First, “Mr. Kritz, unfortunately, chooses only to highlight how a consumer may be billed a higher distribution charge in May because the consumption was lumped. What he fails to realize, however, is that in such cases, the customer’s distribution charges in March and April could very well have been higher if not for the underestimation in the March and April bills.” And second, “The underestimated consumption led to the use of lower distribution charges.”

If Meralco wishes to argue that it underestimated customer consumption in March and April, I would recommend that it produce data to back that assertion, because other publicly available data, specifically National Grid Corporation of the Philippines ( NGCP) capacity and demand data provided to the Department of Energy ( DoE), suggests that might not be the case. For the Luzon grid, of which Meralco is the biggest user, average generating capacity (the data is provided on a weekly basis) for the month of March was 12,499 megawatts (MW), while average system load ( demand) was 9,373 MW, or just slightly less than 75 percent of capacity. The ECQ in Metro Manila and Luzon began in midmonth, on March 16. In April, when the ECQ was in place for the full month, average capacity was 11,524 MW while average demand dropped to 7,996 MW, or just over 69 percent of capacity. By May, capacity and demand had increased again to 12,946

MW and 11,007 MW, the latter representing about 85 percent of available capacity.

For comparison, electricity demand on the Luzon grid in April and May 2019 several times exceeded available capacity, leading to a series of “yellow” and “red” alerts issued by the NGCP and resulting in a number of rotating outages.

To be fair, that is not conclusive evidence Meralco underestimated March and April demand this year — although it is strongly circumstantial — but regardless, the assertion that “The underestimated consumption led to the use of lower distribution charges” is, to put it charitably, more than a bit disingenuous. As the March and April bills were estimated based on customers’ past usage, the distribution charges were not “lower,” but were within a normal range for those customers.

Meralco does point out that there were modest reductions in power rates in April and May — about 25 centavos per kilowatt hour, which would be expected given the significant drop in demand indicated by the NGCP data — and asserts that a typical customer “actually enjoyed considerably lower overall power rates for the bulk of his consumption. Whatever adjustments were added to the May or June bill

based on underestimation used lower overall power rates.”

That is a red herring; the base rate may indeed be slightly lower, but the rate scale for increasing consumption has not changed, and therefore, most customers are still paying proportionally higher bills.

There are a couple of other issues that ought to be discussed as well such as the regressive billing of system loss and feed-in tariff charges ( i. e., customers with smaller consumption pay proportionally more for these), but these are things that Meralco has less control over and are better placed in an examination of the Energy Regulation Commission’s (ERC) questionable rate-setting decisions.

That assessment needs to be made very soon, because as I pointed out in the original column, nothing Meralco has done with respect to the bloated May billings is beyond what it is permitted to do by ERC regulations and guidelines, and so the blame for oppressive power bills must at least be shared by the ERC, if not laid entirely at their feet (which I would hazard a guess is probably something Meralco would prefer). Where Meralco has done a disservice to consumers, however, is in looking at the circumstances caused by the ECQ as an outlier from only its own, and not its customers’ perspective. Indeed, most customers’ electricity usage did increase by an unusual amount during the ECQ period, an unsurprising result of being stuck at home during rather hot weather. However, this was, hopefully, a one-off occurrence; as lockdown restrictions ease and people return to more normal routines, their electricity consumption will also return to its normal pattern.

With that in mind, rather than using the rate scale that applies during “normal” times to its customers’ inflated May bills, Meralco should have considered applying the rate applicable to each customer’s average usage over a longer period, say, six to 12 months. That would likely require ERC approval, but one would assume that under the circumstances, the regulators would have little objection to an adjustment that provides the substantial relief that an installment plan does not.