Prepaid Electricity in the Philippines: Pros and Cons

There’s an innovation in how consumers get and pay for electricity — the prepaid retail electricity service (PRES). Interested electricity users will consume electricity in pretty much along the same line with prepaid text or cellphone service, with loads of P100, P200 and P300.

[See also A Primer on Prepaid Retail Electricity Service (PRES); Rules for Prepaid Retail Electric Service Using a Prepaid Metering Service, as Amended; Resolution 17, series of 2012: A Resolution Adopting the Amendments to the Rules for Prepaid Retail Electric Service Using a Prepaid Metering Service.]

Two electric cooperatives have applied with the Energy Regulatory Commission (ERC) for authority to offer prepaid or “tingi” electricity to their consumers. The first is the Batangas I Electric Cooperative, Inc. (Batelec I) and the second is Bohol II Electric Cooperative, Inc (Boheco II). Batelec I has started implementing the scheme on 16 January 2013 to around 295 residents of Calaca, Batangas.

And while another distribution utility, MERALCO, has secured an approval for implementation of the plan, it is still in the process of pilot testing the prepaid scheme. The implementation was delayed because of issues relating to the “high cost of prepaid meters, what to do when customers run out of “load” and bureaucratic delays.”

The prepaid electricity service is available to all customers — residential users, industrial and commercial establishments. It is entirely voluntary or optional on the part of the consumers. Once availed of, the consumers will have a period of 6 months to see if they’re better off with the prepaid service. A 2-year lock-in period must be observed if the consumer does not switch back to normal meter use at the expiration of the initial 6-month period.

Power distributors are required to warn customers three days before their load runs out. Users may be notified of their existing “load” or the remaining balance for electricity consumption through text-messaging services or in-home display (IHD).

While prepaid electricity is new in the Philippines, it has been implemented abroad. Foreign providers offer free meter and meter installation, as well as guarantee that they won’t cut electricity at night time/weekend and that they will match the per meter rate of another provider.

The ERC has identified a number of benefits for the prepaid scheme. The advantages to the Distribution Utilities or DU include the following: (a) Reduction of system losses/pilferage; (b) Savings on service disconnection and reconnection fees; (c) Elimination of meter readers; (d) Improved collection efficiency; (e) Better cash flow.

On the other hand, the ERC believes that the prepaid scheme would benefit the consumers who frequently travel and leave their residences and offices for a time. Budget-conscious residential consumers can now control their electricity consumption better. Consumers may opt to buy electric energy credit in reasonably small increments. This will allow users to better control their budget.

Prepaid electricity has a particular appeal for landlords and tenants. Lessors/landlords can now be free of unpaid electricity bills left by errant tenants. For the lessees/tenants, they can move in and use the leased unit without the need to for an electricity connection.

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