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A House deputy minority leader is wondering why the Manila Electric Company (Meralco)--with its sheer size and economies of scale--can't offer low power rates the way small electric cooperatives can. 

“The economies of scale normally lead to lower cost as the customer pays growth," Philreca Party-list Rep. Presley De Jesus said.

“Because of your size, because Meralco is so big, the economies of scale should be when you purchase big and your demand is big, your rates should be lower,” he said. 

Philreca stands for Philippine Rural Electric Cooperative Association Inc. It is part of the so-called "power bloc" in the House of Representatives. 

"We in the power bloc, this is what we’re focused on, the energy sector, so in economies of scale, just for comparison, we have electric cooperatives offering residential rates as low as P6.50 per kilowatt hour,” said De Jesus.

He cited Pelco II, Casureco I, Perelco, Surceco I and Neco 1 as electric coops that offer low power rates. De Jesus said power rates from these coops range from P6.50 to P8 per kilowatt hour (kwh). 

According to Meralco itself, it charges P12 per kwh in residential rates to its estimated 7.7 million subscribers--mostly from Metro Manila--as of 2023.

In 2022, Meralco subscribers consumed at least 48,000 gigawatt hours. One gigawatt is equivalent to 1,000 megawatts.

"With a wider customer base, we should be seeing a downward trend in electricity rates,” reckoned De Jesus.

The party-list solon said he sees something unusual in Meralco’s higher rates, which the Energy Regulatory Commission (ERC) should investigate.

"As the biggest distribution utility in the Philippines, [Meralco] is facing several inquiries regarding franchise and whether you are being faithful to the mandate attached to its grant," he noted.

But according to a study of the International Energy Consultants (IEC), the rates of the local power distribution giant remain "fair and reasonable". 

In its cross-country comparison of 46 energy markets, including two American states, the IEC said Meralco’s average tariff in 2022 ranked 21st and 3 percent below the global average. It added that if subsidized markets were excluded, the power distributor’s tariff would even be 13 percent lower than the world average. 

The study also emphasized that electricity tariffs of the Philippines’ neighbor countries, particularly Thailand, Indonesia, Malaysia, Korea, Taiwan and Vietnam, were more than 50 percent subsidized. 

The IEC study further showed that over the past five years, Meralco’s tariff increased by 24 percent—about the same level of 23 percent increase globally—due to higher generation charge, a pass-through cost, which in turn was a result of fuel price increases particularly imported coal and domestic gas. 

“Notwithstanding this increase, all of the components of the regulated tariff are judged fair and reasonable by IEC, based on comparisons with other markets versus the underlying cost of electricity supply in Luzon,” IEC said. 

“Considering that the Luzon power market is unsubsidized, and the majority of the electricity is produced using imported fuel, Meralco appears to have done a very good job of minimizing tariff increases,” it added.