Electric bill deposit

Egay Uy . 

ACCORDING to a national daily report, the country’s electric distribution utilities have collected a total of P26.3 billion worth of consumers’ bill deposits as of January this year.  As we know, a bill deposit is the amount that electricity end-users are required to pay to the electric company to secure the payment of one month’s estimated electric bill.

The same report says that of the country’s more than 120 electric cooperatives and 20 private distribution companies, only 10 power utilities opted not to collect bill deposits.  Of this, five are from Luzon, two are from the Visayas, and three are from Mindanao.  What is notable is that all of the ten are electric cooperatives.

The Energy Regulatory Commission reportedly prefers that all other electric distribution companies and cooperatives emulate the 10 cooperatives in sparing consumers from the bill deposit requirement.  Twenty-six billion is a staggering amount which must be the reason why the ERC has taken note of it.

If that amount were reinvested by the electric distribution utilities, it will have generated additional revenue of 2.63 billion at only ten percent return.  On the average, each distribution utility and electric cooperative would have generated additional revenue of at least 20 million annually.

The ERC’s position is laudable.  However, it will help to know why bill deposits have been required from end-users in the first place.  Distribution utilities purchase electric power from their respective suppliers.  Then, the distribution utilities distribute the power they purchased to their respective end-users.

A few days after the power meters are read by the suppliers, the distribution utilities are required to pay otherwise they are penalized by means of surcharges, or worse, discontinuance of service.  Since in the meantime the utilities have not yet collected from their customers, they have to put up an operating capital equivalent to the cost of power purchased.

What is certain is that distribution utilities pay their suppliers in advance before they could collect from their own customers.  This will simply tell us that the bill deposits are necessary.  However, since what is actually financed by the distribution utilities is not equal to the total of one month’s consumption of their customers because almost simultaneously the distribution utilities also read the electric meters of their own customers, the required bill deposits should also be adjusted accordingly.

It may be best for the distribution utilities to consider these bill deposits as investments of their respective customers.  While bill deposits earn minimal interest, such interest at six percent is much lower than the expected return on investment of the utilities as allowed by the regulator which could be pegged at current borrowing rates.

This way, bill deposits will probably be welcomed by all.

(Egay Uy is a lawyer. He chairs the City’s Regulatory and Complaint Board, co-chairs with the city mayor the City Price Coordinating Council, and chairs the city’s Joint Inspection Team.  He retired as a vice president of Cepalco.)