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THE
government is moving to give relief from the high cost
of power, the second-highest in Asia, with a Cabinet
study group presenting its recommended relief measures
Tuesday—a slew of subsidies, inducements, renegotiations
and options that, in the long term, is seen to redound
to the tax take of the government and invite more
investments if it forgoes these tax revenues for the
time being.
Finance
Secretary Margarito Teves, who heads the Energy
Contingency Task Force formed by the President, told
reporters after the group submitted its recommendations,
“Through these immediate measures, we can possibly
reduce cost of electricity by about 64 centavos per kWh
[kilowatt-hour]. . . . A number of these are still
subject to negotiations, but you can see the direction
and the potential of the savings within the year, and
then there are more savings as we move along if we
implement the other measures in the long term.”
Among
those approved by President Arroyo is for the Manila
Electric Co. (Meralco) to buy power from the National
Power Corp. at a flat rate of P4.11/kWh, which would
reduce rates by P0.58/kWh. Teves said this “would have
an immediate impact on the cost of electricity within
the year.”
This has
a catch, though: “Meralco is somewhat in agreement with
this provided that the issue of ‘bank gas’ is absorbed
by the government. Again, this is something we need to
thrash out with them, but I think the direction is
there. That bank gas is estimated at P1.2 billion. The
government can afford this. If that happens, we will be
able to reduce cost by P0.58 /kWh.”
Teves
said paying P1.2 billion “is not too much” for the
government, and is considered a “good deal” since it
would mean a “substantial” reduction in power rates that
could improve the business climate, boost production and
entice more investments that generate more taxes.
Another
recommendation is to negotiate with distribution
utilities to absorb the value-added tax on system loss,
now shouldered by consumers. Teves said the government
wants these utilities to “consider treating that amount
as part of their
operating expense, as deductible from their operating
expense.” The possible savings to consumers would be “a
little over P0.07 centavos per kWh.”
The
study group also recommended the implementation of open
access inside economic zones by mid-July, considering
that “Meralco is now inclined to withdraw the injunction
case against Peza [Philippine Export Zone
Administration]” on open access.
The
study group proposed reducing the cap on system loss
recoverable from consumers, now at 9.5 percent. He said
every 1-percent reduction in system loss passed on to
consumers would cut power rates by P0.065/kWh in Luzon,
and P0.05 in Visayas and Mindanao.
“We
think this could be decided upon by the Energy
Regulatory Commission based on Section 43 in Epira. At
the same time, if the IRR [implementing rules and
regulations] has to be changed, that could be done by
the Joint Power Commission, whichever comes earlier,”
added Teves.
Another
measure is to validate pass-on of the P0.30/kWh mandated
rate reduction to residential customers.
The
President also ordered a compliance review of local
government units (LGUs) in the use of the national
wealth tax. “Of the national wealth tax being provided
to the LGUs, 80 percent of their share should be used to
lower electricity rates. This measure is envisioned to
reduce the lifeline subsidies being shouldered by
nonlifeliners. The President’s instruction is to see to
it that LGUs are implementing it. So Secretary Reyes [of
energy], through his network, will try to determine the
extent of implementation of the national wealth tax.”
The
Government will also determine whether it can
renegotiate with the Malampaya consortium a possible
reduction of the take-or-pay volume, or the gas price;
and a review of the rules affecting rates in the
Wholesale Electricity Spot Market.
Teves
said that in the next two years, the energy task force
chaired by Executive Secretary Eduardo Ermita will
continue initiatives to reduce electricity cost,
including a review of Meralco’s contracts with
independent power producers.
In a
separate development, Sen. Loren Legarda prodded Meralco
to immediately refund its customers the P21 billion
worth of meter and bill deposits that it had collected,
including interests earned from the deposits, since the
1980s.
In a
statement, Legarda noted that the Energy Regulatory
Commission, in a directive last June 4, had ordered
Meralco to refund its customers billions worth of meter
deposits, including interests. Under the ERC order,
Meralco and other private distribution utilities should
start giving the refund six months after the effectivity
of the rules, which takes effect 15 days after
publication in a newspaper of general circulation.
The ERC
order was issued after Government Service Insurance
System president Winston Garcia, a Meralco director,
exposed the unlawful collection of meter and bill
deposits consumers were required to pay. In previous
orders, the commission consistently ruled that meter and
bill deposit earn 10 percent per annum. |
