Paying for Melted Ice

20 Responses to “Paying for Melted Ice”

1. cvj on June 6th, 2008 8:09 am

   How would Senator Enrile’s scheme of paying only for the unmelted portion work? Does that mean returning the melted portion to 7-11 and asking for a return to your ‘deposit’?

   Anway, recently, Tounge had a blog entry that classifies Systems losses into the following:

   1. Technical Losses
   2. Pilferage
   3. Administrative and Consumption Losses

   In so far as the melted ice analogy applies to the Technical Losses component (as explained by Tongue in the link), Judy Ann (or at least her scriptwriter) trumps Enrile.

   Ultimately, we cannot escape the logic of the Second Law of Thermodynamics which tells us that there will always be a portion of energy that is generated but that is inaccessible for use. (If this were not the case, then it would be possible to build perpetual motion machines.)

2. cvj on June 6th, 2008 8:10 am

   My comment is awaiting moderation but the bottom line is Judy Ann trumps Enrile.

3. [splice] on June 6th, 2008 12:40 pm

   The “ice” logic from Meralco isn’t cool. And Judy Ann isn’t even “hot”. But that’s another story. Haha. Pardon my troll post. Haha.

4. Lester Cavestany on June 6th, 2008 12:56 pm

   cvj, what if we use another scenario. let’s say you want to buy a kilo of rice. you ring the store and they sent a delivery boy to your place. when the bag of rice got to your place, it only weighed 0.8kg because there was a hole in the bag. the store insists that you should still pay for 1 kg of rice even though you only got 0.8kg. would that be okay with you?

   of course, there’s more to this issue than simple analogies using melted ice and wasted rice. it’s just that the infomercial used simplified logic conveyed by a popular and charismatic actress (not an expert on electricity or business). no wonder their melted ice analogy is giving sen enrile a brain freeze.

5. Lester Cavestany on June 6th, 2008 1:03 pm

   splice, we can have a field day with this infomercial. To add to your wordplay, I just wanna say that what the writers really want to do is to pour ice water on the hot-headed people who think (and know?) that meralco is overbilling us.

6. cvj on June 6th, 2008 1:28 pm

   Lester, in the analogy with rice, then the problem is clearly man made. Not so with melted ice. In this way, Technical loss because of entropy is more like the the melted ice scenario than the bag of rice with holes. Of course, you could validly argue that we should not be charged for the portion that is pilfered [aka non-Technical loss], but that would be equivalent to stolen ice, not melted ice.

   Why shoot the messenger for a message that is based on sound scientific laws? Her being a hot (imho), charismatic actress is not an issue to me.

7. Lester Cavestany on June 6th, 2008 2:16 pm

   hi cvj. what’s the bottomline in this issue? for me, it’s the fact that consumers are paying for electricity we can’t use because it doesn’t even reach our homes. is that fair? some would argue it is, because it’s not the electric company’s fault that some electricity is lost in transit. but it’s also not the consumers’ fault… so why should anyone be asked to pay for it? I personally believe that the losses should not be shouldered by consumers.

   i have all the respect for actress judy ann santos. she’s won so many acting awards. i’m sure that an award-winning actress of her calibre would know that it’s standard business practice that customers should get what they pay for? the sad part is that in this case, customers are paying for what they get and what they don’t get.

8. benign0 on June 6th, 2008 2:42 pm

   Di ba when we buy chicken, we also pay for the weight of its bones.

   —
   Note that I assume here that Pinoys haven’t become so desperately poor as to resort to eating bones too!

9. cvj on June 6th, 2008 3:34 pm

   Lester, the bottomline is that there is a technical limit to energy efficiency which has to be ultimately borne by the consumer if the business of power distribution is to be sustainable. It’s exactly like the portion of ice that melts on the from 7-11 to your house. Everybody pays for entropy.

   Losses due to pilferage is another matter though and i think may be where the melted ice analogy breaks down since, in this case, it’s more like someone stole some of the ice you were bringing home, so maybe we can attack it from this angle.

10. Lester Cavestany on June 6th, 2008 4:48 pm

    benigno, ayos yung analogy mo hehe. kaya lang yung buto, napapakinabangan yon at napapakain sa aso. yung nawalang kuryente na binabayaran natin, wala tayong pakinabang don. pero bayad yon.

    cvj, you’ve just made it clear to me what the real issue is - sino ba talaga dapat magbayad nyang mga nawawalang kuryente - ang mamimili o ang negosyante? let’s add another analogy to our long list of analogies. what if you want water delivered to your place? should we also pay for the water that was spilled in transit and the water that vaporized? hehe. i’m only joking here pare, tama na to- gamitin na lang natin yung yelo sa tamang paraan - palamigin na ang beer

    have a great weekend mga ka-boses!

11. cvj on June 6th, 2008 5:02 pm

    thanks, have a great weekend Lester

12. Maxwell on June 6th, 2008 6:29 pm

    I am one of the fans of Judy Ann Santos but I guess I didn’t agree on her decision to side on Meralco’s issue on “system’s loss”. I thought “What was she thinking, does she even know what she was talking about and sending this false message to the Filipino people to her fans?”. She should have stayed away from this controversial issue and not be blinded by the promise of big financial gain. Now I know that Juday turned her back on us, her fans to help Meralco to continue their greed in charging us this ridiculously high electric price. I am very disappointed on you Juday…you should have thought it twice before you taking this job. Shame on you Juday!!!!

13. Pochero on June 9th, 2008 4:18 pm

    We need more than analogies to understand this case.

    Normally, when one pays for a product, it is assumed that the price for that product covers the seller’s production cost, delivery cost, overhead, etc., and profit. All the costs of putting that product into your hands is incorporated into the price.

    The only limitation is the willingness of a customer to pay the set price. This is a crucial factor, we’ll get back to that later.

    So if I were to buy a chicken, bones, feathers and beak and all, and if I were to de-bone it and sell you de-boned chicken, the price of the boneless chicken would still include the cost of the bones and feathers because I have to cover my cost of the whole chicken.

    So Meralco has to pass all its costs to the consumer. This includes systems loss because it is part of the cost of delivering the product into our homes.

    Even if Meralco were to somehow “absorb” systems loss, the cost would still inevitably end up in our bills. It would still be passed on because that’s just how a business works.

    Now we come to a vital point. In the boneless chicken example, I can price the product any amount I want. The limitation is the consumer’s willingness to pay the price. In this case, the consumer has a choice to pay the price for the product or have vegetables for dinner.

    Electricity is different. We do not have much choice since we do not have a ready alternative to electricity.

    Therefore, companies who deliver electricity are granted a franchise, a natural monopoly. And since it is a monopoly, it is heavily regulated.

    Meralco cannot make as much profit as it wants because it has a captive market. It is regulated by law and the maximum profit it can make is 12% return on its base assets. (It’s actual profit is probably around 8% or lower).

    Since there is a cap on its profits, Meralco has to seek permission from a regulating body (the ERC) what other costs constitute the cost of production and can be passed on to consumers.

    Worldwide accepted practice in the power distribution utility business is that systems loss is one cost that can be passed on to consumers. And to prevent abuse, a maximum cap is prescribed. In Meralco’s case, it’s 9.5%.

    When we pay for boneless chicken (as an example) we pay just one lump price. It is assumed that that price covers all the seller’s costs and profit. We do not get a bill that breakdowns the total price into cost of bones, cost of feathers, labor, packaging, delivery cost, etc. And we do not know how much gross profit the seller makes.

    Since Meralco is regulated and the amount of its profit is IMPOSED upon it, we get a meralco bill that’s as long as your arm (or forearm at least). Where you see all the components of the final amount that we all pay.

    Sad to say, Meralco billing us for systems loss is legal. However, Meralco for all the money it makes, should get off its lazy ass and really try to explain this issue to consumers. They seem to think that Filipinos are simple minded people who will swallow a simple analogy from a celebrity. No wonder ABS-CBN’s programming tends to go tabloid television. But that’s another matter.

14. Deb on June 15th, 2008 8:03 pm

    Just too bad that Juday became the poster girl for this Meralco issue. If she only stuck to endorsing shampoo and stuff, then she would’nt be “devastated”, as her brother shared in one interview.

15. TonGuE-tWisTeD on June 19th, 2008 9:56 am

    Pochero has a clear grasp of the issue. Others are infuriated by the “small” systems loss charge, 7.8% per my month-of-May bill, while they obviously are not aware of the HIDDEN take-or-pay cost that is almost HALF of your monthly bill.

    It’s the same thing - you pay for what you did not consume! The big difference is that the huge 50% take-or-pay, or by the above analogy, half the bag of “melted ice” goes to the IPP plant and Napocor while the smaller drips of 7.8% goes to Meralco. The real value of power is about only 45% of what we’re paying now.

    Check this out, the price of competitive power in the global market is only 7 and a half US cents (about P3.32 per kilowatthour). Metro Manilans are charged about P9.65 per KWhr.

    Now, whose neck would you rather slash, Juday’s (the explainer) or Enrile’s (the lawmaker)?

16. Pochero on June 19th, 2008 10:40 am

    The “take-or-pay” provision is probably the biggest green-eyed monster that has yet to come to the fore. This is one of the biggest and dirtiest secret that the powers-that-be have buried with double-talk, obfuscations, and mathematical sleight of hand.

17. cvj on June 19th, 2008 11:37 am

    Wow thanks Pochero & Tongue, i didn’t know that.

18. Lester Cavestany on June 19th, 2008 3:36 pm

    Pochero and Tongue - What can you say about the melted ice analogy? Did it make sense to you? Sometimes, it’s not that easy to decide on what we can and should believe in. Even the news re Ces Drilon’s kidnapping and release is confusing. Did they pay a ransom (aka “board and lodging”) or not? In any case, I’m just glad that they are now safe and out of harm’s way.

19. Pochero on June 19th, 2008 3:52 pm

    The melted ice analogy probably explains only about 70% of the problem. Like I stated before, we need more than analogies to explain the systems loss issue. And Meralco owes us the time, effort, and money to explain it properly and not just foist a pretty (?) face and a very simple-minded analogy on us.

20. Mikey_Liling on June 19th, 2008 4:34 pm

    Say, Meralco explains the take-and-pay and explains that said amount goes to the IPP Plant and NAPOCOR, who’s next to blame, the rising oil prices? We’re just passing the buck to the next one down the line.

    I say once and for all, the government explain the REAL situation, and most importantly, define a SOLUTION.

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