By Elinando B. Cinco
This month has been particularly difficult for the Philippines. We are still reeling from the aftermath of the shocking attack on Resorts World Manila, enduring through the ongoing crisis in conflict areas like Marawi, and trudging through Metro Manila’s traffic, that only seems to get worse and worse as time passes by.
Photos online showing hordes of commuters stuck in place waiting for the MRT may be the perfect metaphor for the ordinary Filipino citizen of today and what he or she may be feeling every single day – complete and utter helplessness.
But let us not be dragged down by this influx of negative events. There is still reason to rejoice. There is indeed light at the end of the tunnel, and quite timely as this light is brought to us by none other than our country’s largest electricity distribution utility.
This June, Meralco’s customers were greeted by good news yet again by the distribution utility regarding lower power rates. After a P0.29 per kwh reduction in May, Meralco announced yet another big decrease for June 2017, amounting to P1.43 per kwh for a typical residential household.
This means that from last month’s overall rate of P9.60 per kwh, we are now enjoying a relatively low rate of P8.17 per kwh. This is in fact one of the lowest power rates consumers have enjoyed in a long time: The second lowest since December, 2009, to be exact.
And for an average household, this means that you will be able to save around P285 in your monthly electric bill.
The big decrease in overall rates this month was brought about by two major factors: Lower generation charge by the power suppliers and, more importantly, a significant refund by the distribution utility for over-recovery on pass-through charges.
Meralco filed the petition for this refund with the Energy Regulatory Commission (ERC) to reflect their over-recoveries from pass-through charges from January, 2014, to December, 2016.
If you look at your bill, pass-through charges would be items like Generation, Transmission, and System Loss charges. The petition by Meralco was approved by ERC last May 11, 2017, and, thus, was implemented as soon as possible.
Now, it has been reported that the refundable amount totaled P6.927 billion, and that is quite a staggering amount at first glance, in terms of over-recovery. But with the go-signal given by the ERC, Meralco proceeded immediately in implementing the refund amounting to P0.79 per kwh, excluding taxes, every month for three months starting June, 2017, until August, 2017.
Not only is this a big refund, but it also helps that it will be implemented quickly and very conveniently. The refund will automatically be credited to the customer’s bill starting June, 2017, and it will not appear on the bill as a separate item but instead, it will be embedded in the respective pass-through charges mentioned earlier.
This good news is quite fitting for this month of June for two reasons: Last year’s inauguration of President Duterte in the same month, and the beginning of EPIRA in June, 16 long years ago. In lieu of these anniversaries, together with this decrease in rates, we can perhaps view our political and economic situation in a positive light, brought about by good governance and effective law-making.
Yes, it was actually 16 years ago that Congress enacted the Electric Power Industry Reform Act (EPIRA), Republic Act No. 9136 that aimed to achieve reliable and competitively priced electricity.
Through EPIRA, the lawmakers’ goal was to foster competition in the industry to make producing and distributing power more cost-effective and efficient. The ultimate goal, of course, would be that electricity prices should go down as an effect of EPIRA.
As mentioned earlier, it is a testament to EPIRA’s effectiveness, and very fitting that this June, the anniversary month of EPIRA, we saw a record decrease in electricity rates.
And looking at rates this year, it has been reported that current retail rates approximate that of around eight years back, which is proof that the market is working as it should be.
Frequency and duration of outages are at record lows, as there is more innovation in the power industry. All the while, strong load growth is being supported by private sector investments.
It should be noted that one of EPIRA’s introductions when it first began was the Wholesale Electricity Spot Market (WESM), and we can see that 16 years after its start, we are reaping the benefits. WESM is after all a venue for market competition to set fair and competitive power prices.
Overall generation charge decreased this June by P1.0253 per kwh, from P4.8839 per kwh in May to P3.8586 per kwh for this month. Contributing to the decrease is the P1.25 per kh decrease in power sourced from WESM.
The decrease in cost of power supplied through the Wholesale Electricity Spot Market (WESM) was due to fewer plant outages despite higher power demand in Luzon. Sixteen years into its existence, we can truly see that EPIRA continues to protect the everyday Filipino customer and provide him and her with reliable and reasonably priced electricity, while allowing the market to work freely.
This month’s rate reduction is not only advantageous for your Juan de la Cruz. The decrease is also good news for small-to-medium enterprises, and even for the bigger manufacturers, especially those producing non-perishable products. These businesses can maximize the low rates for the next three months by loading up on production so that they can reap operational savings.
The time for businesses and manufacturers to strike is now. More output, more profit, and perhaps even bigger savings in the long run can spell a very good and profitable year for our big businesses.
As mentioned earlier, we are also looking back at one year of President Duterte’s administration. One of President’s main thrusts is to “Build, Build, Build.” But before we can fully achieve the dream of building a better Philippines, there must be secure and cheap electricity to power the actual building.
And seeing where we are today, amidst record low power rates, we can for once relax and appreciate the government’s efforts into securing reliable power for the further development of the country.
The President and his administration have very promising and massive infrastructure and economics programs. These, paired with the Chief Executive’s desire for increased competitiveness and ease of doing business, and a huge leap in technology development show us how important power is for our country’s progress.
So whether you look at it as a single consumer, or from a bigger, more macro perspective, it appears we are on the right track when it comes to power. We should now commit to trusting the process, letting the market work freely, and ensuring that all stakeholders are acting for the best interests of the Filipino people.
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