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What contributes to your electricity bill?

It’s the month of May once again, and most of us are still highly encouraged to stay at home. With the scorching weather, we surely have higher electricity usage at home with the fans or ACs on, leading to higher electricity bills. Of course, receiving high electricity bills every month is daunting, especially during this pandemic. So, to understand our monthly bills further, let’s find out what contributes to our electricity bills.

A quick recap

To recall, the first summertime of the COVID-19 pandemic shocked most Filipinos upon receiving unusually high electricity bills.

The Manila Electric Company (Meralco) explained that March and April 2020 bills were estimated based on the past 3 months’ average daily consumption following the Distribution Services and Open Access Rules (DSOAR) issued by the Energy Regulatory Commission (ERC).

In May 2020, Meralco had explained why there’s a sudden increase in the electric bill of consumers for May. Nonetheless, in July 2020, Meralco apologizes for bill shock during the lockdown.

Now that it’s summer once again, the energy demand is much higher that could drive higher bills once more. Henceforward, let’s learn more about the certain factors that affect our bills.

Factors for high electricity bills

Increased electricity usage and consumption – Everyone’s at home, so appliances are switched on most of the time, especially fans and ACs. With more people at home using appliances (TV, electric fan, computer, game console, air conditioner, etc.) for longer periods, there would be higher electricity usage and consumption. Meanwhile, Meralco Powerlab estimates a 25% to 40% increase in electricity consumption during summer months, even without increasing usage.

Higher temperature and Heat Index – As of May 5, 2021, Earth Shaker PH has recorded a 42°C Heat Index at NAIA, Pasay City. Due to the hot weather, the appliances with compressors such as ACs and refrigerators work harder to cope up with the temperature. Thus, the hotter it is outside, the harder our ACs have to work to keep our homes at our preferred temperatures.

Rising electricity rates – Another factor your bill may be higher is because electricity could be more expensive. One of the keys to understanding your bill is to learn more about the electricity rates and charges.

Meralco and its charges

Meralco is one of the electric power distribution companies in the Philippines. While there are lots of charges that appear on our monthly Meralco bill, not everything goes to the company. In fact, as of April 2021, only 24.85% of the bill goes to Meralco. This is because the electric power distribution company is only responsible for gathering all the charges and simplifying them. Furthermore, a certain percentage goes to various entities in the power supply chain. To help you understand what each of these charges means and where they go, check out the guide below.

Generation Charge (50.16%) – Half of the charges go to Generation Charge. It is identified as the cost that goes to the generation companies that supply power. It comprises the cost of power purchased by Meralco from its suppliers = Independent Power Producers (IPPs), power producers with Power Supply Agreements (PSAs) with Meralco, power producers using Renewable Energy and the Wholesale Electricity Spot Market.

Transmission Charge (7.24%) – This charge is for the cost of delivery of electricity from power suppliers – usually located in other provinces or remote areas outside the distribution utility’s franchise area – to Meralco’s distribution system. This is paid to the National Grid Corporation of the Philippines (NGCP), the transmission service provider.

System Loss Charge (3.35%) – It is identified as the cost-recovery of power lost due to technical and non-technical system losses. Meralco mentioned that the maximum level of losses that may be recovered by private distribution utilities was set at 9.5% by Republic Act No. 7832, which was reduced to 8.5% starting 2010, as provided under ERC Resolution No.17, Series of 2008.

Distribution Charge (24.85%) – This is the only portion of the bill that goes to Meralco. It covers the cost of developing, constructing, operating, and maintaining the distribution system of the company, which delivers power from high-voltage transmission grids to commercial and industrial establishments and residential end-users.

Metering Charge – This is the charge for the cost of reading, operating, and maintaining power metering facilities and associated equipment, as well as other costs attributed to the provision of metering service.

Supply Charge – This is for the cost of rendering service to customers such as billing, collection, customer assistance, and other associated services.

Subsidies (0.95%) | Lifeline and Senior Citizen Subsidies – This is for the marginalized, low-income customers and senior citizens who consume up to 100 kWh in a month. They can get a discount of up to 5%, an amount which all other customers subsidize.

Government Taxes (10.14%) – Includes Local Franchise Tax, Value Added Tax, and Tax Recovery Adjustment Charge (TRAC).

> Local Franchise Tax – This is paid to local government units, following the provisions of Sections 15 and 137 of the Local Government Code. This is a pass-through charge for Meralco, paid and collected following ERC Regulations.

> Value Added Tax – This is a consumption tax imposed on the sale of electricity and related services through all stages of generation, transmission, distribution, and sale of electricity to the final consumer.


> Tax Recovery Adjustment Charge (TRAC) – This is an LGU-specific charge collected from customers of the different local government units where local franchise taxes, before rate unbundling, were already paid by Meralco but not yet recovered from customers. The billing of TRAC started in April 2021, per the ERC approval in its Decision under ERC Case No. 2011-045 RC.

Universal Charges (2.20%) – Covers Missionary Electrification Charge, Environmental Charge, and Stranded Contract Cost of NPC.

> Missionary Electrification Charge – This refers to the universal charge to fund the electrification of remote and unviable areas, as well as areas not connected to the transmission system.

> Environmental Charge – Identified as the universal charge that accrues to an environmental fund used solely for watershed rehabilitation and management.

> Stranded Contract Cost of NPC – This refers to the excess of the contracted cost of electricity under eligible IPP contracts of NPC over the actual selling price of the contracted energy output.

Feed-in-Tariff Allowance or FIT-ALL (1.09%) – It is an additional tariff, imposed on consumers of electric power, to be paid to renewable energy producers.

The mentioned charges above can be found at the back of our Meralco bills. As of April 2021, the prices of charges per kWh are as follows:

• Generation Charge – PHP 4.5370
• Transmission Charge – PHP 0.6553 
• System Loss Charge – PHP 0.3027
• Distribution Charge (Meralco)
– 0 to 200 kWh – PHP 1.0012
– 201 to 300 kWh – PHP 1.3183
– 301 to 400 kWh – PHP 1.6175
– Over 400 kWh – PHP 2.1387
• Metering Charge – PHP 0.3377 | Fixed Metering Charge (per customer) – PHP 5 
• Supply Charge – PHP 0.5085 | Fixed Supply Charge (per customer) – PHP 16.73
• Subsidies – Lifeline Rate Subsidy – PHP 0.0887 | Senior Citizen Subsidy – PHP -0.0002

Meter reading

The meter reading is the basis of your monthly Meralco bill. The electric meter of your household continuously records your electricity consumption in kilowatt-hours (kWh). A Meralco meter reader records the reading on your meter. However, to read your own meter and understand how the readings are reflected on your bill, check out the details below.

For digital meters, you may read the number in the digital display. For this case, the reading is 817 kWh.

On the other hand, Electromechanical Meters have four dials that record your electricity consumption. To read your electromechanical meter, look at the 4 dials (labeled A, B, C, and D in the picture below) in the meter.

Photo credits: Meralco

The meter reading can be seen at the back of your bill, under the “Metering Information” section. It shows your Meter Number, Pres Rdg (Present Reading), Prev Rdg (Previous Reading), Multiplier, and Registered.

The Registered indicates your registered kWh consumption for the month. It is obtained by the difference between your present reading and your previous reading times the multiplier. (Formula: Pres Rdg – Prev Rdg x Multiplier = Registered).

The Pres Rdg (568 kWh) on our April 2021 bill would be the Prev Rdg on our next bill. See the sample computation below.

• Pres Rdg – 817 kWh 
• Prev Rdg – 568 kWh
• Multiplier – 1.0
• Computation: 817 kWh568 kWh x 1.0 = 249 kWh

Therefore, as of the writing, our consumption is 249 kWh.

If you are conscious about your consumption, you may monitor it daily, weekly, or monthly.

Recent Meralco updates

Meralco has recently announced the extension of no disconnection during MECQ until May 14, 2021. Meanwhile, Meralco also revealed to continue its onsite meter reading, field verification, and bill deliveries to ensure that the company avoids bill estimations.

Should you have concerns, you may reach Meralco through email: [email protected], Facebook, and Twitter, or call the hotline 16211. Otherwise, you may also message the text lines through 09209716211 (Smart), 09257716211 (Sun), or 09175516211 (Globe).

Sources: Meralco, Meralco FAQs, Earth Shaker PH

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