What is the Lifeline Subsidy Rate for in your Meralco bill?

After receiving a higher-than-usual electric bill for their March power consumption due to a power rate increase of P0.6427 per kWh, Meralco customers have been discussing on social media one particular item among the rate components in their bill: the lifeline subsidy rate. 

A rate addition dictated by law, the lifeline subsidy rate is meant to help impoverished Meralco customers. 

"Hindi po ito dagdag-singil ng Meralco," clarified Joe Zaldarriaga, Meralco vice president and head of corporate communications, in a video message. 

The Lifeline Rate Subsidy Program is a government initiative, under RA 9136 and RA 11552, meant to help the underprivileged pay their electricity bills. 

According to the law, the purpose of the program is to grant discounts to low-income households, including beneficiaries of the Pantawid Pamilyang Pilipino Program, widely known as 4Ps, and those living below the poverty threshold. 

Meralco customers who qualify for the program receive a discount on their electricity bill. Those with a monthly electrical consumption of 50kWh and below get a 100% discount; customers within the 51–70kWh bracket receive a 35% discount, while those who consume between 71–100kWh get 20%. 

Consumers who do not qualify contribute P0.01 per kWh monthly to help sustain the program. This constitutes the lifeline subsidy rate found in their Meralco bill. 

Zaldarriaga emphasized Meralco does not receive anything from the payments of this rate. 

"Ito ay isang pass-through charge," he said. 

Other charges

Several other fees constitute a Meralco power bill, as explained on the Meralco website. Aside from the lifeline subsidy rate, there are other "pass-through" charges that "include mandated subsidies and taxes, which are remitted to the government through the relevant agencies," per Zaldarriaga.

Generation

Making up most of the power bill, the generation charge pays for the cost of power Meralco purchases from its suppliers. Among these are power producers that are independent, those with existing supply agreements with Meralco, those that use renewable energy, and the wholesale electricity spot market. 

Transmission

Paid to the National Grid Corporation of the Philippines, the transmission service provider of Meralco. NGCP delivers electricity from power suppliers, many of which are located in the provinces or remote areas outside the Meralco franchise area, to the power company's distribution system. 

Distribution

This is the only part of the bill that goes to Meralco. The distribution charge covers the development, construction, operation, and maintenance of a distribution system that ensures power from high-voltage transmission grids is delivered to residential, commercial, and industrial customers. 

Government taxes

The generation, transmission, and distribution services are all subject to value-added tax, which the end-user shoulders. 

System loss

When electricity is delivered from power plants to homes, buildings, or factories, there is always some power lost along the way. Electricity is also lost due to illegal connections and meter tampering. 

The system loss charge covers the cost of this lost power, and is paid to power suppliers and transmission operators. 

To regulate system loss charges, the Energy Regulatory Commission put a cap on the amount that can be passed on to Meralco customers. The commission placed an 8.25% cap from 2022 onward. 

Metering

Meralco customers also pay for the reading, operating and maintaining power metering facilities and necessary equipment. Other costs relevant to the metering service may also be included. 

Supply

Administrative services also require a charge. These include billing and collection, as well as customer assistance and other administrative services extended to consumers. 

Meralco is not the sole organization that implements "pass-through" charges. All distribution utilities and electric co-ops nationwide are also tasked to carry them.

"Ito ay isang sistema ng pagtutulungan kung saan ang mga consumers na nangangailangan ng suporta ay nabibigyan kahit papaano ng tulong at ayuda," added Zaldarriaga. 

The power rate increase implemented in March was due to higher transmission and generation charges, Meralco explained in a press conference last month. In the same briefing, Zaldarriaga warned electricity charges could climb even higher due to the global oil crisis brought on by the Middle East conflict.