Meralco advertisement stands on skewed logic

May 27, 2005 at 2:29 am Leave a comment

Signed together with Dr. Giovanni Tapang, Agham Chairperson for newspaper editors

Dear Editors,

Meralco has this half center-fold ad with big bold caps and radio spiel that says that as NPC will raise its rates by 47 centavos this June, mercifully for Meralco customers, the utility company was able to reduce this by almost half, or 24 centavos. Their logic: It is a natural result of the fact that Meralco buys only half of its power from NPC, the rest it buys from its own IPPs like the Lopez’ First Gas, Quezon Power and Duracom.

What Meralco does not mention the costs of purchasing power from NPC and its own IPPs. Data given during the ERC hearings on Meralco’s petition for the unbundling of its rates show that for the base year of 2000 Meralco was buying at an average of P7.55 per kwh from First Gas and P6.23 from Quezon Power while NPC was charging it only half at P3.19.

In November that year it bought from First Gas at P18 when NPC was selling only at P3.57. In Oct of the same year it was buying from Quezon Power at P11.64 at a time when the price charged by NPC was only P3.48. These costs are of course passed on to its customers. If Meralco wanted reduced rates to its consumers it should have bought its power from NPC.

Our latest data on the monthly submittals of Meralco is dated February 2004. Its report to ERC shows that it bought power from NPC at P3.73 per kwh; from DURACOM, P4.23; from First Gas Sta Rita, P4.98; from First Gas San Lorezno, P4.50; and from Quezon Power, P4.90. Their average price is still 25% above that of NPC despite the fact that NPC has already had a 98-centavos provisional rate increase by then.

Pursuing Meralco’s logic to the extreme, if they bought no power from NPC, then they would be claiming that they have prevented totally a rate increase without doing anything- all these while charging rates much higher than that provided by NPC!

So what’s all this claim of the Meralco paid ad about “tungkulin naming siguruhing mabibigyan kayo ng pinakamagaling na serbisyo sa pinakamagandang presyo”? Where’s the truth in expensive advertising?

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