Most of us think that Meralco gets all the money we pay and blame them when our electric bill goes up. The truth is, only a portion is paid to Meralco.
Where your money goes
The money you pay does not all go to Meralco. There are other components that share with the amount charged to you. Also, Meralco does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the National Grid Corporation of the Philippines (NGCP).
54% GOES TO GENERATION COMPANIES
Generation charge is the largest component of the bill. It comprises the total of all costs charged by the different generation companies that provide Meralco with power supply. These include SMC Global Power, Aboitiz Power, DMCI, First Gen, AES, and EGCO. In special cases, this may include charges from the Wholesale Electricity Spot Market (WESM).
11% GOES TO NGCP
Transmission charges goes to National Grid Corporation of the Philippines. The power supply generated by the generation company will have to pass through the NGCP before distributing to the customers and therefore Meralco has to pay for the transmission services of NGCP.
18% GOES TO MERALCO
The only amount that Meralco receives for its services is the distribution charge. This is regulated by the Energy Regulatory Commission (ERC). The distribution charge decreased in 2014, became even lower in 2015, and has not changed since then.
12% GOES TO TAXES
The taxes collected by the government include Value Added Tax (VAT), Universal Charge and Local Franchise Tax
5% OTHER CHARGES
Other charges warranted by the government regulators to ensure the industry's viability are System Loss Charge, Subsidies and Feed-In Tariff Allowance (FiT-All).
Instead of each of these entities delivering bills to your doors and collecting payment, Meralco consolidates all charges in one electric bill. Then Meralco collects payment and pays the other companies and the government in behalf of its consumers.
