High power bills wreak havoc on family budgets

For Francis Mainar, the reasons why he will have to pay higher electricity bills come May are irrelevant.

The 32-year-old security guard, who lives in Cavite province with his wife and three children, lamented that any increase in power prices can only mean one thing for his family: spending less and further lowering, again, their consumption of electricity.

As it is, Mainar said he spends an average of P1,600 a month on electricity, almost half his entire net earnings for one month. That amount covers his family’s daily use of television, refrigerator, electric fan and lights.

“We have no choice but to cut down on our consumption even further,” Mainar said, lamenting that consumers like him really are quite helpless in the face of the unrelenting rise in power rates.

Mainar is only one of about 5 million customers of electricity distributor Manila Electric Co. (Meralco), which announced Thursday that it will be collecting an additional generation charge of 69 centavos per kilowatt hour (kWh) and up to 4 centavos per kWh, representing the collection by the utility of local franchise taxes.

The Energy Regulatory Commission this week allowed the state generator,  National Power Corp. (Napocor), to increase its generation charge in Luzon by 69.04 centavos per kWh, Visayas by 60.60 centavos per kWh and Mindanao, by 4.42 centavos per kWh. These amounts will be collected by distribution utilities from end consumers within the next eight to 10 years.

These approvals covered the joint applications filed by Napocor and the Power Sector Assets and Liabilities Management Corp. for a rate increase under the generation rate adjustment mechanism (GRAM), which allows utilities to recover costs associated with fuel and purchased power, and incremental currency exchange rate adjustment (Icera) mechanism, which allows utilities to recover foreign exchange-related costs.

The ERC followed this up with the approval of Meralco’s own petition, which will allow the distribution utility to collect a total of P2.3 billion over the next five years, representing the local franchise taxes it had paid to the local governments over the past decade.

Meralco has assured its 5 million customers that they will not be bearing the full brunt of the 69-centavo-per-kWh increase in the generation charge in Luzon.

Lawrence Fernandez, Meralco’s utility economics head, explained that the Napocor increase will be diluted to only about 28 centavos per kWh for Meralco residential customers since the distribution utility sources only a portion of its power requirements from Napocor.

Failure of gov’t policy

These rate hikes are the reason why Mainar and his family will have to scrimp and save to stop their monthly power bill from further shooting up. For instance, Mainar said his family will now have to use lights only after dark and the electric fan only for a few hours at night.

These are also why a number of militant and civil society groups are now up in arms over the country’s overall energy situation, which they blame on the failure of government policy.

In separate statements on Thursday, the Freedom from Debt Coalition, Bagong Alyansang Makabayan (Bayan) and the activist fisherfolk alliance Pambansang Lakas ng Kilusang Mamamalakaya all pointed to the Electric Power Industry Reform Act of 2001, which they said failed to deliver its promise of lower power rates.

The Epira, or Republic Act No. 9136, deregulated and privatized the country’s power and energy sector.

Party-list House member Teddy Casiño (Bayan Muna) said there was a need to reverse the effects of Epira, claiming it was the root cause of the shortages and high electricity rates that have characterized the industry for the past two decades.

“Our problems really started when the government started passing the responsibility of building power plants to private corporations. This reached absurd heights during the Ramos administration, when Congress gave the former President emergency powers to negotiate sweetheart contracts with private companies, resulting in onerous terms like the take-or-pay conditions of the independent power producers (IPPs),” Casiño said in a statement.

“Today, we are at the total mercy of these powerful monopolies in the power sector, which have the ability to manipulate supply and other mechanisms to maximize their profits. This is why we have the highest electricity rates in Asia,” he said.

‘Electrifying protest’

Bayan on Friday called on the Aquino government to remove the value-added tax on electricity, saying this would provide immediate relief to power consumers reeling from escalating prices.

“Malacañang is not powerless to bring down power rates. It can push for the removal, suspension or reduction of the VAT on power rates which will greatly benefit consumers. It should be considered especially for Mindanao consumers whose only option now is to source power from more expensive barges,” said Bayan secretary general Renato M. Reyes.

He said Meralco customers using 100 to 300 kWh of electricity a month would experience a monthly reduction of P70 to P290 in their monthly electricity bills.

Pamalakaya warned that the anounced power rate hike this May was like an invitation to Filipinos to stage a nationwide “electrifying protest.”

“President Aquino is inviting a major political showdown with the people. Let us see how this insensitive presidency of Mr. Aquino will fare against the collective outrage of consumers across the nation,” said Pamalakaya chair Fernando Hicap.

House bill filed

At the House of Representatives, San Juan Representative Joseph Victor Ejercito has filed House Bill No. 6014 exempting petroleum products from the 12-percent VAT to provide immediate relief to motorists.

Ejercito, chairman of the House committee on Metro Manila development, said classifying petroleum among the VAT-exempt products was a more efficient and effective alternative to the government’s subsidy program, the Pantawid Pasada Program, which gives public transport owners discounts on their fuel purchases.

“Neither the bus, jeepney and taxi operators nor drivers agrees it is the solution to the skyrocketing cost of gasoline, diesel, kerosene and LPG. It does not benefit the people at all,” he said.

On concerns of the government that removing the VAT would reduce tax collections, Ejercito claimed that the government’s share from the

P45-billion annual income of Philippine Amusement and Gaming Corp. (Pagcor), P31-billion income of Philippine Charity Sweepstakes Office (PCSO) and P43-billion royalties from the Malampaya gas project would be “sufficient to replenish the lost revenues.”

Ejercito noted that the VAT was imposed in 2004 to boost revenues and lower the government’s dependence on borrowings that were pegged at 78.2 percent debt to the gross domestic product ratio. With the debt-to-GDP ratio falling to 55.4 percent, Ejercito said it was time to reconsider the VAT as it has already served its purpose.—With a report from Gil Cabacungan