The Manila Electric Co.’s (Meralco) power rates ranked third highest rate in Asia, fourth in Asia Pacific and 16th worldwide this year on the back of power generation cost reduction over a four-year period.
IEC’s 2012 report identified Meralco rates as the second highest in Asia, following Japan. It also had the ninth highest rate in the world.
Australia-based International Energy Consultants (IEC) recently published a report and said the distribution utility’s average rates, not including taxes, went down 28 percent from January 2012 to January 2016. This is in comparison with the average decline of 19 percent in 44 countries that were included in the survey.
“It’s still the third [in Asia]. But if we include Australia, Meralco [rates] are fourth. But I might note, of the other Asian countries we looked at, all of them are subsidized,” IEC managing director John Morris said in a briefing.
The 2016 IEC study identified lower fuel costs as the major drivers of lower fuel prices this year.
Meralco’s lower distribution charges and lower system losses paved way for its consumers to save P30 billion in power costs.
Morris said the lower rate in 2016 will allow the Philippines’ electricity rates to be at closer parity with other surveyed markets.
“Rates have come down. You’re paying about the average around the world but most will say it’s still too high,” he said.
An average Meralco customer pays 4.5 percent of their disposable income on electricity, compared to the world average of 3.9 percent.
“[But] this is an excellent outcome for consumers considering that the Luzon power market is unsubsidized and the majority of electricity is produced using imported fuel,” Morris said.
Other countries like Thailand, Indonesia, Malaysia, Korea and Taiwan have power rates subsidized by their governments.
“Until subsidies are removed in other countries, it’s going to be hard to move further down,” Morris said.
“It is critical that regulators and legislators focus on facilitating investment in generation to meet rapid growth and promote competition at a retail level so that wholesale electricity cost reductions are fully passed through to consumers,” Morris said.