Shocking Electricity Charges
Power. Not the political kind. Nor the kind associated with professional athletes. Not even the awesome power mother nature can unleash. This week’s topic for the Small Business File is simply about power of the electrical kind.
This past week I needed to get a temporary electrical permit. It is for a project I have been working on and is at a new site different to where I live and have a business. When I went to the local electrical cooperative, we were told that the permit would not be processed until the account of the previous occupant was settled. Now, imagine how I felt when I was told we’d have to pay P17,000.00 Pesos, because that is what the previous occupant had rung up in charges and skipped out on. I was a little bit shocked, but perhaps perplexed is a better word to describe my wonder.
Electric Maters
Of course I refused to pay the charges, but the billing clerk told me that was their policy. I proceeded to ask if it would be OK for me to charge anyone at my coffee house P1000.00 for their cappuccino, simply because they happened to sit at the same table as a previous occupant who skipped out on paying their bill. Of course, this was a fictitious example, as no event ever happened, but the example was provided to demonstrate how ridiculous such a policy is. To me, it is just not possible to even think that anyone with absolutely no connection to a previous account should be held liable for the actions or account of another.
It didn’t matter. I was still informed: “That’s our policy, sir.”
So, I did what needed to be done. I asked for the person in charge of billing to write it on company letterhead that it was their policy to force new accounts to pay the delinquent accounts of total strangers before their permit could be processed. I also asked that the letter stating that as their official policy be signed by the officer in charge.
In 10 minutes, my permit was processed, with no more questions asked, and no more word of any outstanding charges to be paid.
What happened to me at the electrical utility is not likely to happen to any of you, but it could. The real issue is how difficult it can be to get your utilities lined up when opening a business. There is a lot of red-tape. Forms to be filled out. Lines to wait in to pay deposits and fees. Then more lines to take that paperwork to. In my case, after spending a whole afternoon getting the permit signed off on, I was told to come back in 2 days to get my free meter and 30 meters of wire. After days of getting my paperwork together, then a whole afternoon arguing as to why I should get my permit, I was just happy to have the permit approved. I could wait the two days, even though it was an inconvenience.
After two days, now Thursday, I returned to collect my meter and 30meters of wire, but was told “Sorry, sir, no stock”. Come try again next Tuesday. I left. What else could I do? Again, the point here is to state the obvious: don’t expect things to run smoothly when dealing with utilities or many other government or quasi-government line-agencies. Sometimes things work out great, but many times you’ll face red-tape from bottlenecks like this. It’s part of being an entrepreneur in the Philippines!
There are a few other things to consider regarding electrical power in the Philippines. Commercial accounts pay higher rates per kilowatt hour than residential rates, so please remember to take this into consideration when costing out electricity charges in any business planning activities. And because electricity in the Philippines is in general much higher than in other countries, there is a real need to watch electricity usage very closely. If you’re not an environmentalist, you better become one fast! If you don’t try and conserve electricity, you just may find your utility charges run higher that just about every other input cost you may have in your entire business. That’s no joke. You read it correctly. Utility charges for commercial accounts are extremely high and a major obstacle to many business ventures, small or large.
So what can we learn from today’s article?
First, build in very large allowances of time during start-up to get things like utilities lined up and in working order. It will take much longer than you could ever imagine.
Second, be prepared to pay higher rates for power utilization as a small business owner.
Third, be energy conscious. Spend a bit more and get energy-efficient appliances. Use energy-saving light bulbs wherever possible. Have staff turn off all lights and appliances when not in use or needed.
Good luck to all of you facing similar adventures in power utilization!
Hi Martin,
The old phrase “Welcome to the Philippines” comes to mind.
This problem of previous occupier debt is the norm.
When buying property or even renting its wise to check for any outstanding electricity,landline,cable,and water debt.
Also any outstanding property tax if you are buying.
Fortunately, you were able to get around the problem,others may not be so lucky.
regards Chas.
Hello Martin, reminds me of what I have learned on doing business here. Another thing I was told when I questioned why there are so many electricity accounts just for one property – the rates apparently are progressive (reminds me of the Canadian tax system
I myself didn’t go into detailed research, but you might want to check up on that.
Hi Martin: I am giggling as I read your article. I have similar experiences when I applied for electrical connection when I first started my small resort business here in Marinduque about 10 years ago. “No stock sir” and come back in two days are the phrases you will hear quite often. The 2 days will come and still no wires. I will always tell myself, be patient, otherwise I may give another lecture on “efficiency of the office” or this is not the way we do business in the States. This will do more harm than good.
With regards to cost, it has been published in several magazines, that cost of electric power in the Philippines is the most expensive in South East Asia. I agree with you that conservation is the answer to saving electrical costs. In my case, I have big signs in all the rooms of the beach house and conference center saying, “Please conserve electricity, by turning all electric fans, air conditioner and lights, if you leave this room for more than 15 minutes”. This seem to work particularly to all of our foreign guests who oftentimes leave the beach house for a day with all the electric lights, AC and fan still on. I used to instruct the maids to shut of the above items when our guest leave the house for sightseeing or to the market. With the sign in every room in the beach house, I solved the problem of guests not aware of the expensive cost of electricity in the Philippines. Have a good Day!
Martin: Bravo. You kept your cool and handled this in the best way possible. Utilities are a constant source of frustratiuon here, and anyone starting a business would be wise to read your posting. As to the rates, I was shocked at how high the cost of electricity is here.
had same problem with PLDT and had to pay 3000p bill the previous renter had skipped out on …
Martin – I second John Miele’s comments. Good for you. And for keeping your cool.
From the ERC website, here is a copy of the Magna Carta for Electricity Consumers. Check out Article 20. Pretty darned explicit.
http://www.erc.gov.ph/pdf/1029_MAGNA%20CARTA%20FOR%20%20CONSUMERS%203RD.pdf
This was enacted in 2004 by the ERC.
Hi has anyone here purchase a powerx system to reduce electric charges? I read it reduces cost appoxi 30 to 40 percent. Has anyone purchased a Powerx system?
Martin, Dealing with the local electric cooperative here in Dipolog has driven many expats close to insanity. The recent death of one expat here was said to be partially attributable to his frustration with the electric company. Written in huge letters across the roof of his house were the words “I HATE ZANECO.” Their latest tactic to get money faster is called “read and bill”, where the meter reader calculates your bill and hands it to you handwritten. Just an amount due, no O.R., or computation.
After you sit half the day in the payment office,waiting to make your payment, they send you to sit in yet another office if you want an O.R. Unfortunately most of the time the OR is not printed yet, and they want you to come back another day, and wait an eternity again.
I got smart, called the manager, and told them it was very simple, NO O.R., NO PESOS. I was told just to procede directly to the customer affairs office, and bypass the payment office. After three months of this baloney, they know that they need to dig my O.R.s up for my three different accounts before I will pay my bill.
It’s a real shame that you must be that demanding, but the cooperative here has an aire of arrogance that there is no other way to deal with. If you are having low voltage problems, you must buy your own transformer, they refuse to provide them. Then you must pay an off duty employee on the side to install it, as there is no official way to get it done.
All in all, dealing with the electric company here ranks up there as highest in the “things I don’t like dealing with” department here in the Philippines.
Hi Martin,
Frustrations on electricity delivery and service is understandably top of the operating cost list for any businesses and households.
Electric bill definitely could represent up to 50% of budget and over the 20 year mark of usage could amount to about 5 million pesos or more adding all the nuances and extra services including installation, retrofits, and repairs.
I tend to think that a better alternative is buying/building a generator at a price range of 50,000 pesos to 250,000 pesos price range with up to 20 year parts warranty. No, I’m not referring to gas-powered engine generator. I’m referring to a multi-feed stock generator that can be powered by vegetable oil, rice/corn husks, or even trash collected from the neigbohood.
well as right now my bill is about 1600 pesos a month so i can’t complain to much yet …Phil n Jess
Hi Martin,
You got bluffed by the Electric company. They usually do that because people will not pay their bills but use a new name to register as a new customer. There is no centralized credit checking or bureaus in the Philippines unlike Canada. You did the right thing KUDOS!! You are becoming a Filipino now!!
By the way, where are you from Canada?
Kyrie Elieson!
Toting
& days here now
I am watching closely,and have started with air flow and less a/c.
our light bulbs are allready the florencent type and even so we turn of the light when not in the room.
as far as attic temps go I have installed a fan to pull air into the attic and out the eave vents.
double pane windows are out of the question here.
A cold shower does the trick for me
Martin – I’ve seen the utilities here in Florida USA try to collect on former bills at the same property too, since all of this foreclosure stuff started a couple years back. It generally just takes a gentle push back, a stack of documentation, and problem solved. Now the deal with the meter and the wire, all together different. That’s just the way things work there and throughout most of the tropics.
Am born here in the Philippines, I know that the standard easy to do paper works become not so easy when Pilipino takes care of it. But I did not know that despite the Philippines uncomfortable living standards you guys still want to live here. While me, on the other hand are trying to go to the states.
Martin it doesn’t surprise me the electrical company would try to make you pay someone else’s unpaid bill. If you buy a property and the seller fails to pay their capital gains tax which is lawfully their tax to pay the government will refuse to give you your tax declaration until the capital gains tax is paid. Quite naturally you will end up having to pay the sellers tax for them unless you take the seller to court and successfully force them to pay. Lots of luck squeezing blood from a turnip. When at the BIR I raised the argument that I and my wife had paid every tax that is lawfully ours to pay and therefore we have a right to the tax declaration. I also argued that that even if the BIR wasn’t breaking any law it was still guilty of violating our rights. Making us pay for someone else’s tax bill is a crime against us even if the law allows for it. There doesn’t have to be a law against a crime in order for that crime to be a crime. The next time I and my wife bought property we witheld from the seller their property gains tax knowing that they would likely never pay it if we trusted them to pay it. On the day of the sale we gave the seller the sale price minus their tax liability and a receipt showing the tax was paid. Well there you have my two cents worth.
Sincerely,
Michael
Hi Michael,
Yes, it appears efforts to tackle delinquency goes too far in many cases.
In the electricity connection case, there is a law that prohibits this tactic by the utilities. Nick was kind enough to provide the link to the Magna Carta for Electricity Consumers that is overseen by the Electricity Regulatory Commission of the Philippines.
In the case of unpaid taxes and property transfer, most lawyers know the proper proceedings for making sure the property transfer goes according to the deal stuck between buyer and sell, and that includes who pays any outstanding taxes. The moral of the story for property transactions is to have an advocate draw up the agreement properly and you should have no headaches when it comes to execution of land transfer.
Thanks for sharing, I agree with you and how frustrating these issues can be.
Hi,
I just want to know how much does it cost to get an elecricity connection in the philippines if i have a newly built house there. I am told I have to pay 10,500 Pesos. Is this true?
Hi Avner,
Every electricity company in the Philippines will have their own fee structure when it comes to opening an account. Some require a set deposit to help recoup any potential losses from people who fail to pay their bill. Please ask what the high rate is for. If they are asking you to pay the delinquent account of the owner who had a meter on the property prior to you, then they are not allowed to do so.
But if the fees are for installation, and paying a deposit, then perhaps it is legitimate. It just seems very high, as I know P10K is more than the monthly salary of many Filipino households, and not many new customers could afford electricity connections with such a high rate.
I hope this helps.
Hi Chas,
I think it is strange to ask someone with no connection to the previous occupant to pay for their electricity charges. That’s why I asked for the policy in writing. I suspect there is no legal argument that supports the utilities’ request to pay others’ bills, but I could be wrong.
Cheers!
Hi Ellen,
I’ve never really looked into all the different types of accounts, but I’m sure what you have encountered is not uncommon.
I do know that in most countries, commercial properties pay higher rates than residential rates. And in Canada, I know of large companies who are able to negotiate rates with utilities because they are ‘bulk’ consumers of natural gas. I just thought I’d bring up the point that small businesses should be prepared to pay higher rates as they will be considered commercial establishments. In other words, don’t use your residential bill as a proxy for what you may pay in your small business.
Thanks for sharing, Ellen!
PS — I referred a reader to you and your website. He’s interested in boating and starting a charter business in the Philippines. Hopefully you can help him out with some information should he contact you.
Hi David,
We did get the wire, but it was not easy. It took a lot of phone calls and we had to really go up the utility ladder to get any movement.
I’m glad you shared your experience with conservation efforts. People really don’t realize how big the savings can be. Because the utility charges are so high in the Philippines, small behavioral changes really do make a difference. And buying energy saving bulbs and devices really do help as well.
Thanks, David, for helping raise the importance of trying to conserve energy. As I’m sure you would agree, it is important for both the environment, and the bottom line of business!
Hi John,
People really don’t get how high the rates are until they actually get their bill. It is an absolute shock when you do get your first bill. Even after making changes to try and reduce consumption, I suspect many will still find their bill still seems on the high-side.
Hi Lenny,
Does anyone really know whether this practice is legal? I can understand if you have an account and have payments in arrears, then the utility should have the right to not connect you until you pay off your debt. But asking someone to pay for another person’s usage seems very wrong. Again, it is like eating at Pizza Hut, and getting a bill that is double what you ordered, simply because the previous occupant at your booth skipped out on the bill. There can’t be any legal basis for this practice. Isn’t that what the legal department and collections department of a utility is responsible for?
Hi Lloyd,
Sorry, I am not familiar with the system you mention. My experience has only been with purchasing energy saving appliances and light bulbs.
Lloyd: I’ve not heard of the “powerx” system, but it might similar to some “power factor” correctors i’ve seen advertised on the net. Those are worthless rip-offs.
Hi Nick!
Am I ever glad you’ve jumped in on this conversation! I knew from previous exchanges that you are working with many of the electrical coops here in the Philippines on energy policy and delivery among other things.
Thank you very much for sharing this important document! Hopefully others will print it out and keep a copy in case they too face a similar problem.
Next time you’re in Butuan, please stop by and I’ll buy you coffee!
Oops, forget to mention it can also be powered by sun.
Hi Jerry,
I’d bet that there are many individuals out there like you, and are almost ready to give up on the local energy utilities. I don’t personally know of anyone who has gone ‘off-grid’ like you are suggesting, except for a few people who do so because they have weekend houses on small islands where there is no electricity to begin with. But I think many people contemplate the idea when their frustration levels rise because of something done by the electric coop they rely on.
Good luck! Let us know if you do decide to invest in this particular generator you’ve mentioned and whether or not it makes life easier for you here in the Philippines!
Cheers!
Hi Martin,
I’m not that well informed on the legality,but its certainly common practice.
My understanding is that all utility debts are assigned against the property and not to the individual as such.
This is similar to the way land tax debt is assigned.
It is my understanding also that if renting property,all existing utilities will remain in the name of the property owner.
However,the tenant is responsible for paying their own usage for the period they rent the property.
If you wish to add a non existing utility,(eg landline)then you have to get written permission from the property owner (landlord) and show this to the new utility provider before they will commence connection.(Different rules for different countries)
Its advisable to keep an eye on electricity consumption as tapping into someone elses meter is not unknown.
regards Chas.
Hi Chas,
Nick’s link below clearly articulates that the practice is not mandated. I’m assuming if you bring a copy of the energy ‘magna carta’ into the electrical coop office, you’ll get everything cleared up just like I was able to. I think the utilities try and rely on ignorance and attempt to bully people into paying so as to increase their collection rate from delinquent accounts. But clearly this is not allowed after reading the guidelines.
Good luck!
Hi Dave,
I’m very sorry to hear about the many problems residents are having in Dipolog with their energy coop. I suspect similar issues and ‘tactics’ are cropping up in and being used by other electrical coop’s around the country as well. It is very frustrating. I wonder if the practice of failing to provide an OR on payment has been brought to the attention of the DTI? I’m pretty sure an OR needs to be made available immediately upon payment in just about all cases. But I could be wrong.
Hi Phil,
That sounds about right for a residential account with minimal power usage. But that amount shouldn’t be used to make projections for a small business — the costs are going to be at least 3 to 4 times higher, and that’s for minimal usage in an office environment or other low-utilization environment. But it gives me a good idea — perhaps this price difference can help people consider the benefits of a home-based business where possible.
Cheers!
Investment in time, research and design – yes. Investment in money, small amount yes. Construction and test, that will be next. Making it available for public thru fabrication, soon to be.
Hi Martin, ok, I will certainly answer his/her questions as best I can.
What I mean by progressive rates is that the rates per kw increases the more you use. I was told they open several accounts per property (i.e. 3-4 meters) so as to keep each meter below the next level where the rates per kw will jump higher. I once asked what the per kw rate is and they always answer “it depends”. I couldn’t understand why I couldn’t get a definite answer. Now I think I know why. Rates are different at different levels of usage. Next time, maybe I should ask for the bills to really look into the details of the electricity rates.
Hi Ellen,
Yes, that’s a great point on consumption and ‘tiers’ used when applying rates. I think you are right about it being a progressive system (i.e. the more you use, the quicker you get ‘bumped’ into a higher per unit charge). I didn’t realize that was the reason behind multiple meters, but it makes sense if that’s the case. It’s also another reason why we all might want to try and be more energy conscious!
Cheers!
I wonder if these KW/hour rates are universal for all of The Philippines or do they differ from one area to another or from one supplier ( Electric Company ) to another ?
One of my Filipino friends rented an apartment a while ago and tried to explain the stiuation about the electricity there and it left me totally confused and having a headache from trying to figure it out. This article has clarified a lot of things for me. Thanks for writing it.
Hi Bob,
I suspect different electrical coops have different rates. Some provinces have geographical challenges that push up the cost of transmitting power. Some other municipalities have also been successful at tapping into geothermal power resources and actually give a rebate to their townspeople! So in short, every province or municipality with an electrical coop is probably different.
I’m glad you enjoyed this article. Thanks for dropping by!
Hi Toting,
Thanks for sharing your thoughts. I agree,the utility probably does this by default to try and help increase collection on delinquent accounts. But obviously it is against the charter they signed with the electrical regulatory commission. That seems like a highly unethical practice that shouldn’t be condoned. Hopefully a bit of awareness on the issue will help others caught in a similar set of circumstances.
I’m originally from the prairies, but my family now lives in BC. I last lived in Vancouver before moving to the Philippines full time.
Cheers!
Hi Erik,
Thanks for sharing the different ways you’re trying to keep electricity prices in check. I think the attic fan is a great suggestion.
Cheers!
Hi Bill,
I suspect things are a real mess with the high rates of foreclosure in many parts of the US. I bet the utilities aren’t prepared or have enough staff to keep track of all the delinquent accounts and transfers. Here in the Philippines, you’d be surprised to know how insistent the utility was that I had to pay, and that it was their policy! I think in my care the utility was dangerously close to getting into trouble with the Energy Regulatory Commission here in the Philippines. The minute I asked for the officer to put their policy in writing, the entire office changed their tune entirely. Thankfully, Nick sent the link from the ERC where it states this practice is not permissible in the Philippines. As you say, the wire and meter is another story altogether. On a side-note, since this post was written, we did receive our meter and wire.
Cheers!
Hi Martin,
I doubt it is legal here either, but I guess they figure there’s no harm in trying. The worst that could most likely happen for them is a slap on the wrist as they say, and a refund to the customer, if they are caught up in it – should someone be unwise enough to pay. I only run into this as real estate is one of my businesses. I don’t see it with all the utilities, mostly just the smaller ones. Glad to hear that you finally got your meter and wire.
Hi Capitanbrgy,
I’ve been lucky enough to live in a number of different countries. I have found that everywhere you live, there are good things and bad things. Some places offer more of one type of living experience, while others offer a different type of living experience. Some places are easier to live in than others. But then again, some people adapt better than others. I also believe a person learns more about where they are from when they leave rather than when they only live within their own country. It is only by living somewhere else that one gains perspective on what your country does well, and what it doesn’t do well at.
I hope you get the opportunity to live someplace else — it doesn’t matter if that is for a long stay, or for a short one. I think the experience of living in different countries and in different cultural settings really makes ones’ life ‘richer’, and I don’t mean that in a monetary sense.
Thanks for sharing!