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What type of monopoly is Meralco? Explain your answer.

What type of monopoly is Meralco? Explain your answer.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Questions: 
1. What type of monopoly is Meralco? Explain your answer.
2. What inefficiencies does the over recovery impose on the market?
3. Aside from the government directive, what can be done to prevent Meralco from overcharging? 

Consumer group People Opposed to unWarranted Electricity Rates (POWER) called on the Energy Regulatory Commission (ERC) to proceed with an inadvertently leaked directive ordering the Manila Electric Co. (Meralco) to refund P6.927 billion in overrecoveries charged to its consumers from January 2014 to December 2016. Details of the directive were posted on the ERC website last May 4 but later taken down. ERC Commissioner Josefina Magpale-Asirit confirmed the existence of the directive but said the commission en banc has yet to finalize the order next week. Meralco wants the figure reduced P5.847 billion, saying it is entitled to retain P1.08 billion in property tax payments from the overrecoveries. Meralco also wants the refund to be done over a period of 36 months. "ERC should not allow Meralco to pass on its real property taxes to its consumers nor should it be allowed to keep enjoying the fruits of its overcharging. As a matter of justice, the full refund should be reflected in next billing cycle," said POWER. The group said Meralco had already reaped the full benefit of overcharging P6.927 billion from its consumers in the last three years. "Every second that Meralco is allowed to retain and benefit from that money is a stroke of injustice to every electricity consumer and the public at large. ERC should order Meralco to return the whole amount immediately," the group stressed. The group lamented that Meralco's overcharging did not only mean higher monthly bills but higher prices of goods and services for the entire country, since most of the country's offices and factories are located in the Meralco franchise area. POWER urged the ERC to come up with a way to determine such overrecoveries immediately. "Allowing a giant like Meralco to overcharge its hapless consumers for three (3) years is bordering on the criminal," they said.
Transcribed Image Text:Consumer group People Opposed to unWarranted Electricity Rates (POWER) called on the Energy Regulatory Commission (ERC) to proceed with an inadvertently leaked directive ordering the Manila Electric Co. (Meralco) to refund P6.927 billion in overrecoveries charged to its consumers from January 2014 to December 2016. Details of the directive were posted on the ERC website last May 4 but later taken down. ERC Commissioner Josefina Magpale-Asirit confirmed the existence of the directive but said the commission en banc has yet to finalize the order next week. Meralco wants the figure reduced P5.847 billion, saying it is entitled to retain P1.08 billion in property tax payments from the overrecoveries. Meralco also wants the refund to be done over a period of 36 months. "ERC should not allow Meralco to pass on its real property taxes to its consumers nor should it be allowed to keep enjoying the fruits of its overcharging. As a matter of justice, the full refund should be reflected in next billing cycle," said POWER. The group said Meralco had already reaped the full benefit of overcharging P6.927 billion from its consumers in the last three years. "Every second that Meralco is allowed to retain and benefit from that money is a stroke of injustice to every electricity consumer and the public at large. ERC should order Meralco to return the whole amount immediately," the group stressed. The group lamented that Meralco's overcharging did not only mean higher monthly bills but higher prices of goods and services for the entire country, since most of the country's offices and factories are located in the Meralco franchise area. POWER urged the ERC to come up with a way to determine such overrecoveries immediately. "Allowing a giant like Meralco to overcharge its hapless consumers for three (3) years is bordering on the criminal," they said.
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