Impact of the subsidy reduction program on residential customers and on Meralco
Date
1985-10
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Abstract
The immediate impact of the subsidy reduction program on the residential customers would be to reduce the consumption of the lower consuming groups in the desire to mitigate the impact of the increased rates. The reduction in consumption is however not expected to be so considerable as to offset the effect of the increased rates primarily because the consumers to be affected most by the rate increases in the subsidized kilowatt-hours are the lower consumption groups who most likely are also the ones who consume electricity for the most basic household needs. The impact on the consumption of the higher consuming groups is not certain, after all, people are not expected to deliberately waste electricity just because its price fell.
Furthermore, the subsidy reduction program will result to bill increases for the lower consuming groups primarily because the rate increases that are part of the program cannot be offset by the reductions to be had in the generation charge while it will result to bill decreases for the higher consuming groups because the reduction in the generation charge would more than offset the increases in the rates for the initial kilowatt-hour consumptions.
Lastly, the subsidy reduction program does not give any additional profits to MERALCO.
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Keywords
Electric pricing, Electric industry, Subsidy reduction, Social impact, Meralco customers