‘Who’s paying for prepaid electricity?’

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Meralco on Kritz’s

[This letter was received May 15, 2013.]

An article written by Ben D. Kritz entitled “Who’s paying for prepaid electricity? Apparently, you are” appeared in The Manila Times of May 9, 2013. Please allow us to clarify some of the main points Mr. Kritz wrote in his column.

1. We agree with Mr. Kritz that “the program does not actually make electricity cheaper, but makes the cost manageable for customers with low or irregular incomes and helps to encourage energy conservation.” Consumer research showed that consumers like to have more control over their consumption, and prepaid electricity allows them to do that. This is true not only for the 100 kwh and below consumers as mentioned by Mr. Kritz, but also for the middle class whose consumption may well exceed 200kwh.

2. We want to clarify a few points however where Mr. Kriz was patently erroneous:

a. Mr. Kritz wrote that Meralco has 15 million customers; we serve 5.2 million customers.

b. He states wrongly that the cost of the meter is P12,000. Meralco is in the process of negotiating with vendors and the quotations we are getting is from P3,800 (lower than the P4,000 that Mr Kritz quoted for Xen Energy) to P5,000. These meters, suitable for both prepaid and postpaid, are sourced from proven suppliers, known for their accuracy, quality and durability suitable to Meralco’s context which include (i) a service design that best suits its customers—from the traditional clusters of single detached homes, to the new horizontal housing developments and now even high rise buildings where meters may be placed within customer premises or housed centrally in basements; (ii) Meralco’s existing network and information technology infrastructure and how new systems (like a prepaid service) may be seamlessly and efficiently integrated; (iii) Meralco’s wholistic infrastructure plan to boost customer service and reliability, empowering customers to have better control of their consumption, being able to offer rate options, and accommodating renewable energy, among others.

While meter cost is significant, it is erroneous to make a comparison on meter cost alone, given the hardware, software and integration costs required to deliver a service. We seek ERC’s approval on the total solution architecture as well as the total system cost. Meralco is likewise benchmarking with forward-thinking utilities in the world while localizing the technologies for our country. Rest assured we are working closely with our regulators and in touch with our customers, on a balanced approach.

It is also erroneous to compare Meralco with other local distribution utilities given the differences in context: service design, existing infrastructure, and wholistic infrastructure plan. Even more basic is the vast differences among Metro Manila, Batangas and Bohol.

Service design in each of these places (and the attendant infrastructure required) are expectedly going to be different.

c. Mr. Kritz assembled a patchwork of reports from various media on Meralco’s testing schedule. Given the many technical factors involved, schedules do change. Presently the technical test is on-going, and we plan to do a commercial pilot of 2,000 households within the year. We will keep ERC abreast of our schedules as they change.

3. Meralco also evaluated the proposal of Xen Energy Systems for prepaid electricity and deemed that there were proposals that had proven track records more closely aligned with Meralco’s objectives. Meralco will consider solutions from Xen Energy Systems in future projects.

Meralco is open to constructive ideas and commentary that serve to provide customers a better service in the end. Rest assured that Meralco goes through strict due diligence conscious of its role as a public utility, and I am hoping that your paper can publish its reply in the spirit of transparency and fair play

Mr. Michael D. Garcia
External Communications
Meralco

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