FOR THE longest time, the Manila Electric Company (Meralco) has been lording over the energy sector — and from how it looks, the utility firm will outlast consumer advocate groups which filed class suits against them.
In the meantime, Meralco continues to rake in lucrative profits from eight million households. As of late, consumers from Metro Manila and adjoining provinces have been cursing Meralco for charging three times the amount corresponding consumption in view of pass-on charges including (but not limited to) system losses, government taxes, universal charges, FIT-All, GEA-All, lifeline, transmission and one reflected under the bill as “other charges.”
A few weeks ago, I had a little chit-chat with a classmate who has become an engineer specializing in energy. With an energy expert seated right in front, I took the liberty to ask him about the bill shocks.
Without blinking an eye, he said it’s Meralco’s way of bloating its revenue — without anyone suspecting they could.
“Check mo voltage ng kuryente nyo na galing sa Meralco. Dapat maglaro lang yan sa 220 to 230 volts. Pag mas mababa pa dyan, tataas talaga ang bill nyo kasi yung mga appliances nyo ang nagtatrabaho kasi nga hindi sapat yung boltahe.”
Having heard his explanation, I read back previous news articles regarding electricity supply. I stumbled on the red and yellow alerts hoisted by the National Grid Corporation of the Philippines (NGCP) when the operating margin is not enough to meet the transmission grid’s contingency requirements.
Then my friend butted in — “Walang kinalaman yun… supply is sufficient to meet demand, but reserves are thin. Kaya nga nagpapatupad ng rotational brownouts para ma-sustain yung required voltage na kailangan ng mga consumers.”
So I asked him again — what’s behind the bill shocks?
“Meralco’s insatiable greed.”
Meralco has denied prioritizing profit, adding that the company is a highly regulated entity and that rates are mandated and approved by the government.
Whoa! Is that an indirect admission that they’re raking in huge mark ups legally? To some extent, yes.
It is for the same reason that consumer advocates are pressing the Philippine Congress to repeal the Republic Act 9136, otherwise known as the Electric Power Industry Reform Act (EPIRA).
The contention surrounding Meralco’s pricing and corporate growth involves several complex, intertwining factors:
The Monopoly Factor: Meralco holds a government-granted monopoly franchise extending until 2053, serving a massive eight million customers across Metro Manila, Rizal, and surrounding provinces. Without market alternatives, consumers have no choice but to pay.
Corporate Profits vs. Public Burden: Meralco’s surging net profits is evidence of insatiable greed, especially when everyday consumers grapple with rate hikes and “bill shocks” during peak months. Consumer advocates have been protesting against power supply agreements (PSAs).
Government-Mandated Charges: Meralco reiterates that only a fraction of your bill goes directly to their distribution charges. The remainder is made up of government-mandated fees, including the 12% Value Added Tax (VAT), feed-in-tariff allowances for renewables, universal charges, and generation costs that go to power plant operators.
Refunds and Rebates: To ease public outrage and settle over-recovery claims, Meralco proposed large-scale refunds and rate reductions, such as multi-billion peso refunds mandated by legislative and regulatory bodies. Sadly, Meralco has yet to comply despite orders coming from the Energy Regulatory Commission.
System Loss Passes: A major point of contention is the inclusion of “System Loss” in consumer bills to recover the cost of power lost during transmission. Utility companies should shoulder this cost themselves.
You and your friend nailed them — Meralco and its cohorts in rate distortion.
Greed is perhaps best measured by Meralco’s reported annual earnings.
Last year in 2025 it was P51B — 51,000 Million Pesos.
In 2004 that was P3.2B, 3,200 Million Pesos.
On those metrics alone, greed seems pretty graphic.
How did this come about?
ERC scrapped RORB or return on rate base in 2004 and imposed PBR or Parusa sa Bayan Rates. From there Meralco earnings soared.
Comparative review of the rate regimes will take more than a few articles. But the outcomes especially for Meralco are quite revealing. P51B return on an P80B equity is nit chump change.
As for System Loss… it is a separate line item in the bill and therefore independent of any of the unbundled charges. Stand alone. Neither distribution, generation, nor transmission.
Note, though, that SL is the difference between the power Meralco bought from genco and the power it sold to its customers — presumably power lost in the wires in transmission and distribution, including power pilfered from the Meralco system. Technical and non-tech.
For the longest time, Meralco’s so-called ‘own use’ electricity– lights at its offices, presumably including too the Christmas lights at its grounds — was part of SL, until that cost was booked as operating expense.
Question is: whered does SL Go?
More to the point, if SL occurs in the distribution, why is it not part of distribution cost?
This is material.
If this is distribution cost, the SL cap under the anti pilferage law should be applied to the distribution charges only, where the loss occurred.
Under the law, a 9% cap is comforting. But when the cap is applied to the whole bill — including generation, taxes, subsidies, other charges — it is dissipated and less protective. Generation is 55% or more of total cost. Taxes is 13%. Subsidies 5%. Other charges even more.
Given what SL is. How could these have happened in these charges and services. Who can pilfer at the power plant? In high voltage transmission? In legislated subsidies and Taxes?
9% of 18% distribution charges versus 9% of total cost — peso SL cost dramatically plunges, Meralco becomes accountable for efficiency and security of its system.
There are numerous areas that need close and serious scrutiny.
On the present bill shock, let me share this thought.
If ERC did/does its job and set Meralco’s rate right, whatever is the impact of crisis driven rate distortions are mitigated.
A rate spiral in top of a bloated distribution rate must result in bill shock.
Meralco rate under rorb was P0.79 pkwh.
Under PBR it peaked at P1.64 pkwh, went down to P1.35 pkwh. Now proposed to increase to P2.34 pkwh.
Meralco’s rate trajectory is a study in regulatory failure.
Will gladly track with you.
Thank you for interest in the rate convulotions.