One of the hottest issues in the Philippines today is the relatively high cost of electricity. So serious is the issue now that legislators are looking into the largest Philippine distributor of electricity, the MERALCO, and the allegations of overpricing and illegal charges.

Accordingly, Philippines has the highest electricity rate in Southeast Asia, second only to Japan. Ironically, why the fuss now when this has been the situation since long ago would certainly rouse one’s imagination of whether this is just another form of political posturing.

Supposedly alarmed at the rising cost of electricity, the Philippines passed the Electric Power Industry Reform Act (EPIRA) recently. Consequent to this is the establishment the Wholesale Electricity Spot Market (WESM) to pool power producers’ product together and sell them in the spot market for the distributors to buy at a lower price.

Yet passage of the EPIRA did not prevent the series of rate increases unilaterally imposed by the government-owned National Power Corporation (NPC). Neither did the establishment of WESM lower the cost of electricity. In fact, if the figures presented in the media are to be believed, the WESM power prices are relatively high.

Why then is MERALCO singled out in the blame for the high cost of electricity?

The government is in better position to know that the rates imposed by MERALCO, and any electric distribution utility for that matter, are controlled by the government through the Energy Regulatory Commission (ERC). These require the costly petitions and lengthy hearings before they are approved by the ERC and implemented by the distribution utility.

Of course included in the petition are the EPIRA-allowed recovery of system loss and administrative loss. And government added its own E-VAT.

These charges are incorporated on the rates of electricity that the poor consumers have to pay in their electric bills.

Is not the Philippine government itself responsible for the high cost of electricity it is now supposedly publicly denouncing?

The government required the unbundling of rates of distribution utilities. The government passed the EPIRA with the required compliance associated with it by the electric distribution utilities, the government allowed the establishment of the WESM. All of these measures are aimed supposedly to streamline, regulate and supervise the operation of electric distribution utilities and ultimately bring down the cost of electricity.

Did they?

If one counts the costs the distribution utilities spent in the compliance of these regulations in the form of costly petitions, lengthy and costly hearings, and very costly computer program revisions and/or installations notwithstanding the engagement of the services of costly consultants, supposedly experts on these fields, the bulk of the expenses is very considerable.

And note that these expenses are passed-on to the consumers as administrative costs of the distribution utilities!

Thus, instead of blaming MERALCO which is just implementing the ERC-approved rates, why not the government look at its own yard. A sincere action on this matter might just as well reveal that the high electricity cost may include the usual bureaucratic cost and the subtle corruption cost.