Meralco, abuse of ‘power’: A case of monopoly, rightly or wrongly

Ej Lopez

Ej Lopez

Despite obvious lapse in judgment on the part of the power distribution company Manila Electric Co. (Meralco), resulting into unnecessary expense and cost increase, still they have the temerity to pass to the consumers a cost that they themselves wrongly misjudged. Because of what seemed to be the company’s greed for profit, in the guise of customer service, it looks inevitable that consumers of Meralco have no other recourse but to “bite the bullet,” resulting into the expected increased cost of electricity.

Such is the case of a monopoly; the ability to abuse and exploit the need of the consumers despite “reasonable schemes.” The absence of a direct competitor that characterizes this market; a monopoly ultimately provides the “authority” to act in any manner deemed appropriate for its welfare despite destructive or disadvantageous to the consumers. These are the common perceptions circulating among disgruntled consumers of the power distribution business, which for all intent and purposes will be detrimental to the consumers.

Government as well as the private sector authorities have their both hands tied and caught in a bind as regards their obscure position in this issue. The company with all its rights as a monopoly has all the power to bring inconveniences to the people if ever their desire for a price increase is not approved.

The mere fact that it has been on a deregulated status because of its privatized nature, the government through the Energy Regulatory Commission (ERC) is merely an approving agency meant to accept its entire clamor for a price adjustment, short of saying the ERC is a “stamp pad agency.” That is how the system works in ERC, but we cannot entirely blame them because it is a component of their very limited, if not “inutile” duties.

Meralco, for its part, is not the agency to blame for such actions for it is self-mandated that a business should be profit maximizers, first and foremost. And this drive for profit should supersede other objectives of the company; in the first place it is the goal for its existence. This incessant clamor for maximum earnings will be a customary dilemma and should be resolved, lest it becomes a lingering social crisis far more extensive in the years to come.

Economically and socially as well, a monopoly’s disadvantages outweigh its advantages. The social implication of monopoly redounds to abuses that obliterate decent social structures, because of inability to cope up with living conditions that should be rightfully enjoyed by average individuals. This, however, cannot be blamed on the monopoly, because that is how this stuff is made of; a benefit it enjoys because of the absence of competition, excessive profit and a threat of service interruption if its whims and caprices are not granted.

Eliminate the monopolistic structure
In other countries, power service providers are not a complete monopoly; consumers have the privilege to choose what kind of power company they would want to serve them. In Australia for instance, power cost was not much of a problem and expenses for such was not much of a concern. In fact, because of the affordable nature of power, the power companies collect and consumers pay their bills every quarter.

On the local front, the country has had its share of experiences as regards services that are monopolized. Gone are the days when the Philippine Long Distance Telephone Co. (PLDT), a telephone company was monopolized, where application for telephone lines would either be forgotten or may take the “shortest” reply, a year; when its services were mired with malady because of its monopolistic nature. The advent of the 1980s proved to be the turning point for the industry upheaval against PLDT that eventually led to the entry of other more if not equally capable telephone service companies into the country.

The industry has never been better because of the competition that other companies have offered. It put PLDT on its toes that eventually led to greatly improved services that it offered. Whereas previously, you have to literally beg for telephone lines to be installed in your homes; now it is the telephone company that practically knocks at your door to offer their telephone services.

Why not for Meralco?

If that is possible for some areas of the industry, it will also be possible for the power distribution company. The government should declare and develop an open market, where technically and financially competent and capable investors can bid and invest on this sector. This may not be possible in the short run, but with the local economy enjoying a certain degree of economies of scale, there is no doubt that many interested investors would show and manifest their interest in this investment.

It may be difficult, but it can be done. It would be much better than forever be immersed in the quagmire of economic agony brought “rightly or wrongly” by the nature of a monopolistic market structure.

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  1. What a pitiful situation now in our country! When we realized that the Napocor was mismanaged with debts to the tune of billions of pesos, we turned to privatization of the power industry so as to elicit efficiency and hopefully bring down the power rates to a minimum acceptable for both the private companies and the consumers. However, that was not the case because those private companies want to maximize profits forgetting their social responsibility to the end users. So what do we do now to correct this malaise? Congress and the Executive Department must act immediately and decisively for the sake of the majority poor Filipinos, now!