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Electricity prices under Aquino the highest ever

If  containing electricity prices—which not only affects the country’s investment attractiveness but also the lower and middle classes’ well-being—were a gauge of stewardship, President Aquino’s administration is a failure.

There may or may not be a cartel in our electricity sector. If there is, it certainly has run wild under this administration.

Never has there been a generation cost of P9.11 per kilowatt-hour (kwh). This is what Meralco claims it paid for the power it purchased in November, because it had to buy a lot from the Wholesale Electricity Spot Market (WESM), which caused the shocking jump in consumers’ electricity bills for December.

That’s 60 percent higher than the P5.67/kwh generation charge in October. To mute public protest over the impact of a P9.11/kwh generation cost, the Energy Regulatory Commission ordered Meralco to instead recover P7.66 in December and the rest in January and February.

Meralco claims that it had to buy power from the WESM as its regular power providers couldn’t deliver the required electricity due to their maintenance shutdown. Because the Malampaya facility also shut down for maintenance, other firms also didn’t have the natural-gas fuel to run their generators to produce power for Meralco. (What Meralco doesn’t reveal though is whether the firms its major owners own supplied it with the expensive power through the WESM.)

An analogy would be if cable Internet service providers shut down, and you had to rely on the more expensive cell-phone-based 3G or LTE to connect with the Internet. And the analogy is perfect since both Globe and Smart have cable Internet as well as broadband services. If this ever happened, and you had to pay P1,000 a day to get online, wouldn’t you suspect a cartel conspiracy?

But I doubt very much though if Congress or Justice Secretary Lilia de Lima would really find cartelized collusion, as they have announced they would.

The generation cost accounts for an average of 51 to 57 percent of your bill, depending on how much kilowatt-hours you consume. The rest consist mainly of the charges for transmission (from the generator to Meralco) and distribution (Meralco to you), some VAT, and other strange charges. Five to seven percent of your bill is euphemistically called “system losses” which represents the cost of the electricity lost due to Meralco’s engineering boo-boos and to the poor who are unable to buy electricity and just pilfer it.

Check for yourself how much your hit will be in the following table, based on information on Meralco’s website. From my own bills though, the firm’s figures are usually are underestimated. Add 15 percent to the Meralco figures so you’d know how much to save to pay your electricity bill this month.

bills nov and dec

A spike in generation costs had occurred once before, in April 2010, and for exactly the same reasons. But the increase amounted to only P6.8/kwh, one third less than the current jump.

But that precisely reflects this administration’s impotency in containing electricity costs. Or rather, is it too helpful to the magnates who control the electricity industry?

While electricity supply in the country has increased from 62 terrawatt hours in 2007 to 73 TWh this year, Meralco’s monthly generation cost — which, on the average accounts for 52.3 percent of a consumer’s bill — averaged P4.64/kwh from July 2007 (the oldest data available at the firm’s website) to June 2010, or under President Gloria Arroyo’s watch.

final 4 for powerIn contrast, Meralco’s monthly generation cost during Aquino’s term so far averaged P5.49/kwh or 18 percent more. This cost is not only entirely passed on to consumers. Because it bloats the base on which such charges as transmission, distribution, and even taxes ware calculated, consumers’ final bills are increased much more.

The line chart below clearly shows that during Arroyo’s term, generation costs had, except for a few instances, hovered much lower than the comparable months during Aquino’s administration.

final3 power

What does this difference in generation costs mean for us? A lot of pesos, as is evident in the following table, which again since it is a Meralco table, an underestimation.

bills arroyo and aquino

It isn’t cheap even for us in the low-middle classes to have an inutile government.