As I See It
Read your electric bill and ask questions
By Neal Cruz
Philippine Daily Inquirer
First Posted 22:07:00 05/13/2008
If you will look at your electric bill closely, you will note that the biggest item is the “generation charge,” 53.2 percent of the total (that’s the electricity you actually consume); the second biggest is the “distribution charge,” 15.1 percent, (that’s what Manila Electric Co., or Meralco, is charging to bring the electricity to your home); third biggest is the “transmission charge,” 10.9 percent (that’s what Transco is charging to bring the electricity from the power plants to Meralco); fourth is “government taxes,” 10.2 percent (that’s the cut that the government takes for itself).
The fifth biggest item is “system loss.” That’s the electricity that is lost in the travel of the power from the power plants to Meralco to the users. Meralco computes it by subtracting the kilowatt hours for which it collects payments from the kilowatt hours it gets from Transco. The difference is the “system loss.” This electricity is lost through pilferage, stolen by dishonest customers with the use of “jumpers” (an electric wire that is connected to a supply line, bypasses the meter, and then reconnected to another line inside the house; the electricity consumed is therefore not registered in the meter) and other gadgets that slow down the meter, etc. It is also lost through illegal connections from the source to the user without any meter (the method often used by squatters), and by deliberate recording of consumption less than what the meter recorded.
The first way of losing electricity is natural, not man-made. When electricity travels through electric lines, especially for long distances, some of it is lost in the air because of friction. This is the real system loss. This loss can be lessened by more efficiency in transmission and distribution, through the use of better conducting materials.
The system loss charged by Meralco is not only these transmission and distribution losses but also the power stolen by dishonest customers and charged to the honest customers. Thus, the honest customers pay for the electricity they did not use but was used dishonestly by others. The honest customers are punished for the dishonesty of the others. The dishonest get away with their crime.
The distributor should ordinarily bear the burden of this loss. It is a part of doing business. And it is due to its own inefficiency. Had it gone after pilferers and prosecuted them more efficiently, the losses would be eliminated. But Meralco passes them on to their paying customers. So Meralco actually doesn’t lose anything. Therefore, it sees no urgent need to stop pilferage. Meralco itself claims it spends billions of pesos to stop power theft—but which it also passes on to its customers by adding it to its “operation costs,” before taxes and net profit. So to save on costs, Meralco doesn’t really overexert itself to prevent pilferage.
Meralco, by the way, was also caught by the Supreme Court illegally adding the income taxes it paid to the government to its “operating costs,” thus expanding the base from which the maximum 12 percent net profit for franchised utilities mandated by law is based. Meralco thus collected more than the 12 percent maximum legal profit.
Meralco has also been ordered twice by the Supreme Court to refund billions of pesos it had over-collected from its customers.
Back to system loss and your electric bill. You will note that there are two “system loss” charges, not only one, one under the heading “generation” (it should be listed under “distribution” because it is lost during the distribution of electricity to consumers; but by listing it under “generation” it supposedly does not go to Meralco) and the other under the heading “government taxes.” The law limits “system loss” charged to 9 percent (Meralco actually collects, according to its bill, 8.9 percent). By dividing the “system loss” under two headings, however, Meralco can actually collect more than the 9-percent limit.
You will also note that there are two “transmission charges” and under them another “system loss charge.” This loss is the electricity lost transmitting the juice from the power plants to the distributor’s lines. Now, if the customers are being made to pay for the cost of transmitting the electricity from the power plants to the distributor (not yet to their homes), why are they being made to pay for the electricity lost during the process of transmission? The loss is a natural part of transmission. The customer is already made to pay for the cost of transmission, why is he being made to pay again for power lost during transmission? Isn’t this double jeopardy? Shouldn’t the loss be to the account of Transco instead?
You will note, too, that there is also a “metering charge” under which are three items: a “retail cust chrg” (presumably the cost of the meter itself which you pay to Meralco before the meter is even installed in your home), a “metering system chrg” (presumably the cost of recording your consumption by the meter and the cost of reading your meter by the Meralco meter reader) and a “supply charge” (I don’t know what this is for).
Now, you already paid in full for that meter, why is it still being charged to you every month? If you use it for 10 years, imagine what you will have paid for that single meter you already paid for in full when you applied for a line connection. And why are you being charged for the work of that meter and the meter reader employed by Meralco?
Business is full of risks. You either make a profit or you lose your shirt. But as a capitalist and as a business, Meralco doesn’t risk anything and doesn’t lose anything. It passes on all the losses and operating costs to its customers and pockets all the profits, plenty of it. Can you think of a better arrangement than that?
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