Meralco rates 9th highest in the world

Manila, Philippines -  A new research study by the independent energy think-tank International Energy Consultants (IEC) has determined that average electric rates in the Meralco franchise area are now ninth highest among 44 selected distributors across the globe.

If it is of any consolation, the IEC has also found that electricity rates in Metro Manila are now lower than Kanzai in Japan, but twice or close to three times more expensive than the subsidized rates in the rest of the ASEAN region.

As of this year, highest average electric rates are charged in the island-state of Hawaii in the US followed by Italy, Malta, Cyprus, Germany, Denmark and the Netherlands.

Meralco rates came in ninth while Singapore landed on 10th place.

Indonesia, Taiwan, South Korea, Thailand and Malaysia were found among the 10 places where electricity was cheapest. The research group found that rates were heavily subsidized in these Asian countries, while Meralco rates reflected the full cost of electric power in the region, all things considered.

Broken down to the three different classes of electric users, home owners in Metro Manila who pay an average of 24.85 US cents per kilowatt/hour pay the 17th highest rates in the world and pay 13 percent more than the average electric consumer.

Industrial consumers in the Meralco franchise are, on the other hand, pay the seventh highest globally and 26 percent more than the average industrial consumers the world over.

Trying to get to the bottom of high electric rates in Luzon, the IEC found that the cost of generating and delivering power in the area is intrinsically high primarily due to dependence on imported fossil fuel coal and oil. Domestically sourced natural gas, it further pointed out, is also pegged in price to international gas.

A total of 80 percent of power plants in the Luzon grid are fuelled with imported coal and domestic gas whose buying prices are pegged at international prices of gas.

IEC researchers likewise found that the cost of financing the development of Luzon power plants were higher than the global average, while transmission costs in Luzon are made higher because consumers in the area subsidize the higher cost of transmission in the Visayas

The distribution rates of Meralco which takes about 16 percent of total charges, is comparable to the rest of the world and maybe fair, IEC noted. IEC was commissioned by Meralco to do the study. Taxes that end up in the coffers of government represent 10 percent of rates.