My electric bill came this week and as expected, it was a shocker.
In terms of usage, or kilowatt-hours consumed, it was one of the highest, which can be attributed to the increased air conditioner usage due to the extreme heat of the past month. I expected that, as there were many days when we had no choice but to use the AC, especially during weekends when everyone was at home.
However, the kicker of the bill was the price of electricity, which shot up by around 3 pesos per KWH this month, leading to an electric bill that was almost twice as the previous month’s and 3x that of March.
What is interesting to note is that the reason why power prices were expensive was because there wasn’t enough of it last month. Remember the red and yellow alerts issued by the National Grid Corporation of the Philippines? We may have not been hit with rolling blackouts because the power supply managed to scrape by, but it was during that time when we almost ran out of power that electricity became super expensive.
And since we are a captured market, meaning we have no choice but to consume the electricity our power sector provides, regardless of the cost, because we don’t know how much it is until the bill comes after a month, we continued buying/using that expensive power because the only option would be to go powerless.
The reason why the price of electricity goes up when power plants are offline and there isn’t enough power is simple economics: the law of supply and demand. This is because we have an electricity spot market that sells extra power when the market needs it, but of course, at a price. This spot market prevents the blackouts, but only if the customers are willing to pay for it.
The funny thing about CENECO power rate increase is that they have a contract for peak and reserve power, which in theory should shield the consumer from such price fluctuations, but I guess the contracted reserve power wasn’t enough so they had to turn to the spot market to provide the shortfall.
Whatever the case, it is we the consumers who have no choice but to pay our shocking electric bills, regardless of the cost of the power the distribution utility purchases for us.
Power distribution in the Philippines is a beautiful business model for those who are interested in profits because a power company simply passes on the cost to the consumers who have no choice but to pay, regardless of the reliability or quality of the power.
That no-lose business model is why a relatively big power and fairly successful cooperative like CENECO that suddenly, mysteriously, and conveniently started messing up big time, would be a juicy acquisition for any shrewd businessman. Those who get to sink their teeth into a sure-profit power business would love to invest in a venture that will never lose money in theory and in practice because it has a captured market that ultimately has no choice but to pay for everything.
Case in point is this month’s bill shock, which we were already warned of. Government even offered power companies loans so they can soften the blow of the expected bill shock, but if you come to think of it, even that “consideration” would only defer the pain, along with the burden of added interest that we still end up paying.
There was nothing anyone could do to stop a bill shock, and no way the power/distribution company would lose any money from any disaster, natural or man made. Profits are always guaranteed, come hell or high water, and that is why the CENECO that we’ve taken for granted because of its piss poor performance of late is such a catch for shrewd capitalists.
The big question is why did the people who were supposed to be the stewards of the cooperative, which is by nature a non-profit, even if it was designed to never lose money, throw away something so valuable so easily? Instead of mustering the competency and capability to solve the solvable problems of the cooperative, they took the easy way out and sold it to the first guy to offer a deal, which wasn’t even the highest bidder because there was no contest anyway.
For me, this month’s shocking electric bill is a reminder of how lucrative the power sector business is, and emphasizes what we lost as member-consumers of CENECO when we allowed it to be sold off instead of demanding that better management step in. Now that it is going to be owned by a private company, we have even less of a say when the new owners make business decisions. That’s what we get for our apathy and for allowing our supposed representatives to make the short sighted choice for us.
I’m not saying that the power bill is going to be shocking from now on. All I’m saying is that since it is no longer a coop, we don’t get to have a say anymore. But since we didn’t use our voice properly when we still had it anyway, it’s probably not that big a loss for most of us. As long as there are less brownouts, we will probably be fine with whoever owns the power company.*
