FILE

In response to ongoing comparisons between Meralco’s electricity rates and those of electric cooperatives (ECs), Meralco issued a statement clarifying the factors that shape its pricing and why such comparisons can be misleading.

The company stressed that all of its rates go through a rigorous process of review, approval, and confirmation by regulators to ensure they remain fair and reasonable. One of the most notable aspects of its pricing is the distribution charge, which has remained unchanged for the past ten years. Despite rising operational costs over the years, this charge remains among the lowest in the country, ranking in the bottom 30 percent among all power distributors, including ECs.

Meralco’s Weighted Average Cost of Capital (WACC), the rate of return granted to utilities, is also the lowest among private distribution utilities approved by the Energy Regulatory Commission. Despite this, Meralco continues to deliver a high standard of service, maintaining energy reliability and system efficiency across its service areas. The company also continues to improve its performance levels year after year.

A major source of the difference in overall power rates between Meralco and most ECs lies in the type of power each one sources. While ECs largely depend on lower-cost coal-fired plants, Meralco draws from a diversified energy mix that includes coal, natural gas, and renewable energy. Around half of Meralco’s power supply comes from gas-fired plants. This is necessary to meet growing demand and ensure a stable power supply, especially since the current coal moratorium limits the construction of new coal-fired plants.

Meralco explained that its reliance on gas is not only driven by supply requirements but also by government policy, which promotes natural gas as a transition fuel to help the country move toward a more renewable energy mix. This approach also contributes to avoiding widespread grid alerts, which signal potential power shortages.

The company responded to calls from some groups urging that its rates be aligned with those of ECs by pointing out that such proposals would effectively mean rolling back national energy policies. These include the recently passed Natural Gas Law and the Department of Energy’s Power Development Plan, which aims to triple the country’s gas-fired power capacity and push for a 50 percent share of renewables in the energy mix by 2040. These calls, according to Meralco, would also imply lifting the coal moratorium and building more coal plants—steps that would run counter to the country’s climate and energy transition goals.

Meralco reiterated that its power supply procurement strategy is consistent with government plans and regulatory expectations. Unlike some ECs, Meralco operates without subsidies or government funding, and serves its franchise area using resources secured through competitive and regulated processes.

In its closing statement, the company said it remains committed to providing electricity that balances affordability with long-term supply stability for its more than eight million customers, while continuing to support the country’s economic growth and energy transition objectives.