Meralco pushes back on EC rate comparisons

Meralco on Friday pushed back against comparisons being circulated in the media between its electricity rates and those of electric cooperatives (ECs), saying its pricing undergoes strict regulatory review and reflects the realities of sourcing reliable power for more than eight million customers.

In a statement, Meralco stressed that its distribution charge — unchanged for the past decade — is “one of the lowest among all distributors in the country, including ECs.” It said the rate falls in the bottom 30 percent among all distributors and that its latest Weighted Average Cost of Capital (WACC) is the lowest granted by the Energy Regulatory Commission (ERC) to any private distribution utility.

“Despite such comparatively low rate, Meralco consistently provides a high level of energy security, power reliability, and efficiency. More importantly, Meralco continues to consistently improve on these performance parameters year after year,” the company said.

Coal vs. gas sourcing

Meralco said part of the price gap stems from differences in where distributors get their power. ECs mainly buy cheaper electricity from coal plants, while Meralco sources from a mix of coal-fired, renewable, and gas-fired power plants.

It noted that ECs, because of their smaller customer base and demand, do not buy from gas-fired plants, while Meralco gets about half of its power from them. This, it said, is necessary to meet growing demand amid a moratorium on new coal-fired plants.

“Meralco needs to source power from gas-fired power plants to ensure sufficient and reliable power supply for its customers. This also supports the government policy to ensure grid security, helping mitigate (if not avoid) Red and Yellow alerts nationwide,” the statement read.

On c alls to match EC rates

The distributor also took aim at calls from some groups to peg its total rate to that of ECs, calling the push “misguided” and warning it would mean reversing key energy policies.

“The clamor by some misguided groups that Meralco’s total rate be at par with the rate of these 90 ECs that do not source power from gas-fired power plants actually represents a call for Congress to repeal the recently enacted Natural Gas law (RA No. 12120) and for the Department of Energy (DOE) to reverse its 2023 Power Development Plan…” the company said.

Such moves, it added, would “clearly set the country back” in achieving renewable energy targets of 35 percent by 2030 and 50 percent by 2040.
Meralco said its power procurement plan aligns with the government’s thrust to use gas as a transition fuel toward a greener energy mix. It also noted that the National Electrification Administration (NEA) has yet to conduct a Competitive Selection Process for ECs to use indigenous natural gas as ordered by the DOE.

“In sum, the increase in total power rates from 2024 to present cannot be attributed to Meralco or its distribution charge,” the statement said.

“We emphasize that Meralco fulfills its mandate and powers its entire franchise area without relying on taxpayers’ money and government funding. We remain committed to delivering service that balances affordability with long-term supply stability for our over 8 million customers; as well as to support the country’s growing economy,” it added.