Aidan Kenn Tan, 226122

ENVI 10.02-CE - AB

Counting the Cost

Electrical Bill Metering Information

Metering Information Presented (Sorted by Percentage)

Rate Component Percentage of Cost Amount (Php) Rate (Php/kWh)

Generation 58.33% 4,309.34 7.3790

Distribution 16.59% 1225.23 2.0941

(Meralco)

Government Taxes 10.55% 779.30 0.0059 + VAT

Transmission 6.74% 497.57 0.8520

System Loss 5.11% 377.26 0.6460

Universal Charges 1.76% 130.12 0.1783

Subsidies 0.93% 68.56 0.1173

 Total: 100% 7.387.38 12.65
Figure 1.0

Figure 1.1
1. Generation Charge
It is the biggest component of electrical bills, as it covers the actual cost of the electricity used
based on the prices charged by Meralco’s suppliers.
2. Distribution
It is the only portion of the bill that goes directly to Meralco. According to their website, it covers
development, construction, operation and maintenance costs.
3. Government Taxes
It is the VAT and Local Franchise Tax that goes directly to the Philippine Government.
4. Transmission Charge
It is the cost of delivery of electricity from Meralco’s power suppliers.
5. System Loss
It is the cost of power lost due to technical and non-technical system losses.
6. Universal Charges
It comprises the public policy charges imposed by the government.
7. Subsidies
It is the discounted amount paid by all other customers that are not part of the lifeline and senior
citizen brackets.

In total only about 17.5% of the total bill goes to Meralco.

Discussion:

Meralco’s breakdown of charges provided in their website, included most of the components of
their actual electricity bill. Only the Universal Charges and Government Taxes were not
discussed. Meralco also explained other general components such as metering charge and
supply charge, which are part of the total distribution charge. Metering charge is the cost of
reading, operating and maintaining metering facilities and equipment. On the other hand, supply
charge is the cost of rendering service to customers such as billing, collection and customer
assistance.
The component of the bill that takes up most is the generation charge. This is a component
that Meralco cannot control as it is an electric distribution company and they do not generate
their own power. This means that Meralco relies on the power generation companies for the
pricing. After the generation charge comes the distribution charge, which encompasses the
development, construction, operation and maintenance costs that directly goes into distribution.

With this comes controversies and issues about Meralco’s high generation and distribution
charges. In an article written by the ERC, it talked about the Show Cause Order that it filed
against Meralco for its violation of standards set in place during the periods of the Enhanced
Community Quarantine (ECQ) and Modified Enhanced Community Quarantine (MECQ). These
violations include not allowing customers to pay through installments and the estimation of
billings. Controversies like this are not something new, as in 2013 Sicat wrote about a major
issue regarding a sudden price increase set by Meralco. Customer bills would rise by P4.15
per kilowatt-hour of consumption. According to Meralco this was caused by the partial shutdown
of electrical suppliers such as the Malampaya gas field.

Figure 1.3
The formula for charging power generation is given the bracket of which the total amount of
kWh used up by the customer, which also varies when the use of electricity is for residential or
commercial purposes. This total kWh is then multiplied to the different rates (per kWh) such as
generation charges, transmission charges, system loss charges, etc. All of these are then
summed up. Other factors such as lifeline discount and special discounts can lower the prices.
On the other hand, VAT is also charged per kWh. Finally an energy tax is charged to residential
customers depending on the amount of kWh used whether it fits the first 650 kWh, where there
is no extra charge. The rates in this formula are subject to change per month.

Figure 1.4

Based on my research, the implications of these costs conflict with the objective of lowering
one’s personal electricity consumption for the sole purpose of saving money. Of course there
are environmental benefits for lowering one’s personal electricity consumption, but if we are
talking strictly about financial benefits, there are few. In December 2022, the generation
charge and distribution charge is around 7.8 pesos per kWh. Three months later the total is now
8.3 pesos per kWh. That is a 0.5 peso increase, just for these charges. To put this into
perspective, according to Metrobank, the average Philippine household consumes 200 kWh,
this means that there is an over 100 peso increase just for the two charges mentioned. This also
means that for the average household even if they reduce their consumption by 12 kWh by
March the bill they will pay is equal to the bill they paid in December.
 Figure 1.5

Figure 1.6

According to the image shown above, the month where my household’s electricity bill is the
highest is in March and December. The month where it is the lowest is in February. Figures 1.5
and 1.6 also show that the electrical consumption in my household really varies per month,
however it hovers around 450-600 kWh.

Factors that contribute to the variation in monthly electricity consumption.

Weather Conditions / Temperatures

The coldest months experienced in the Philippines are usually during December, January and
February. This could explain why March had the highest kWh consumption for the sample of 4
months. Electricity consumption is highest in tropical countries such as the Philippines because
of the increasing need to use air conditioners and electric fans to help ease the uncomfortability
caused by intense heat. With this, it is also important to note that air conditioners are notoriously
known for consuming excessive amounts of electricity and power. Despite this, December still
ranked one of the highest electrical consumption months, and this could be explained by the
next factor.

Special Seasons and Occasions

A factor that can inevitably affect electrical consumption are celebrations such as Christmas and
New Year’s. During months of special occasions people tend to use more electricity for lighting,
cooking, and entertainment. One example of this is the Christmas lights and decorations used
during the Christmas season. This explains the high consumption of electricity in the month of
December.

Vacation and Family Trips

Another factor that can affect electrical consumption is the family trips and vacations that the
usual households have. This could take away days of electrical consumption that otherwise
would be added to the total kWh as the energy consumption will be put into a different electrical
bill which is usually hotels and other households.

Overall, there are many factors that may affect the total energy consumption of a household per
month, some are inevitable while some are avoidable. Despite this, we should try our best to
lessen our energy consumption not only because of financial reasons but also because of
environmental reasons

Source Websites:
https://www.erc.gov.ph/ContentPage/61995
https://www.philstar.com/business/2022/12/13/2230376/meralco-issues-notice-claim-sppc
https://meralcomain.s3.ap-southeast-1.amazonaws.com/2023-03/03-2023_rate_schedule.pdf
https://econ.upd.edu.ph/perse/?p=3360
https://www.meralco.com.ph/residential/billing-payment/understanding-your-bill/breakdown-char
ges