Meralco Monopoly

Actually, Abigail Ho had a pretty good follow-up article in the Inquirer today, I thought.

I am completely unconnected to the Meralco-Government deal. That's probably good; I can comment on it without conflict. But I also haven't even seen the letter sent by Meralco to GMA. So let me be clear, I'm not exactly in the loop on this.

Here's the setup: The "end of Meralco monopoly" referred to in this article was actually promulgated in the EPIRA law (Electric Power Industry Reform Act) enacted in 2001. And it's only a partial lifting of their monopoly - they retain, for a good while, a monopoly on most of the services they are providing today.

Today, all distrubution utilities have a monopoly on virtually all elecctric service within their franchise area. That is, no one else can supply you electricity but the local distribution utlility. They provide the wires for delivering the electricity to your door. They procure and provide the electricity itself (from bulk suppliers or generating plants) and they do all the billing.

After certain conditions are met in the industry restructuring under EPIRA, the ERC is to allow large industrial customers - those with an electric demand of 1 MW or more - to seek power supply from alternative power suppliers (generators). But they still must use the local utilities wires and billing services. We call this "retail access" or "retail competition".

About 70% of your electric bill is associated with this "supply" as opposed to the "wires and billing" stuff. Now you can start to see why we had to go through unbundling which resulted in your bill having so many line items on it today.

For reference, a 1 MW load is roughly equivalent to 50 or so large, air conditioned homes (I may be off on this a bit - so feel free to correct me). Over a number of years, the size of a load that is permitted to seek alternative suppliers is lowered until eventually any Tom, Dick, or Harry can shop for his electricity supply (but not his wires needs).

Almost all the conditions are just about met for this first step in retail access except for one big elephant - the privatization of 75% of Napocor's generating assets.

So I presume that the gist of the "unconditional offer" is that Meralco is willing to let this first step toward retail access (allowing 1 MW loads to be contestable) go foward even without the necessary privatization of 75% of the Napocor assets.

If that's that's the case, then indeed there seems to remain the issue of getting around the EPIRA mandate for 75%.

Update: I've made an even more geeky observation over on my other blog.