Senator flags nearly P1B in ‘leakages’ in lifeline power rate subsidies meant for poor consumers

MANILA, Philippines — Senator Sherwin Gatchalian on Tuesday flagged close to P1 billion of possible leakages in 2018 alone in the lifeline electricity rate subsidies intended for marginalized consumers.

The Senate energy committee is tackling a bill seeking to extend for another 20 years the lifeline electricity rate subsidies given to low-income households with a monthly consumption of 100 kilowatt-hours (kWh) or less.

Lifeline rates refer to the subsidized rates given to customers with up to 100 kWh consumption every month. The discounts given to these consumers are shouldered by those with higher electricity consumption.

“Do you have any move to validate the lifeline consumers to any poverty-related database?” Gatchalian, chair of the Senate energy committee, asked the Energy Regulatory Commission (ERC) during the hearing.

“Because obviously yung 100 kWh and below [na requirement] is imperfect and is leading to a lot of leakages amounting to P937 million,” he added.

Before this, Gatchalian and other senators raised concerns over the possibility of subsidies being given even to consumers who are not part of the marginalized sector.

Gatchalian showed two electricity bills of separate condominium units in Makati City and in Tagaytay, which both received lifeline rate subsidies.

“This is a bill in a condominium in Makati and during the ECQ (enhanced community quarantine). Tumira ho sila sa bahay nila, hindi ho sa Makati. But as you can see, there is zero consumption. But even though they don’t have any consumption, we are still giving them subsidies. They received P16 in subsidy. Obviously, that P16 is derived from other consumers, the non-lifeline consumers,” he said.

In the case of the condominium in Tagaytay, Gatchalian explained that the unit’s power consumption dropped to 81 kWh because the owners opted not to stay there due to the ECQ imposed by the government.

“Dahil below 100 kWh, they received P128 in subsidy,” the senator said.

“These are not marginalized end-users. Some of them are rest houses that are owned by well-off families,” he stressed.

Gatchalian then cited data from the Philippine Statistics Authority (PSA) which showed that the country’s poverty incidence in 2018 was at 12.10 percent but the consumers receiving lifeline rate subsidies was at 33.06 percent.

“Pag tinignan ho natin, ito simple lang naman ho ito. The poverty incidence in the Philippines based on PSA data is about 12.10 percent in 2018. But our lifeline consumers are about 33 percent. So there is a difference of about [20.96 percent]. Doing the simple math, mas marami pa hong mahihirap sa lifeline consumers than our actual PSA poverty incidence,” the senator pointed out.

“So this is the gap that we want to discuss on how to plug this, how to make sure that only the marginalized end users will be benefited by the lifeline subsidies,” he added.

How much are the leakages?

According to Gatchalian, a total of over P2.1 billion in lifeline rate subsidies were released in 2019 while there were lifeline rate subsidies amounting to P1.478 billion released in 2018.

An average of approximately P1.6 billion in subsidies were released annually for the last eight years, the senator noted.

“We have to take note that this P1.6 billion in subsidies are taken out from non-lifeline users, including the middle class and lower middle class. Sila ang naglalabas nito,” he added.

To get an idea of the amount of possible leakages, Gatchalian said he made a rough computation which showed that over P937 million in subsidies were given in 2018 to consumers who are not even in the marginalized sector.

“If you look at our poverty incidence (12.10 percent) at ibabangga sa 33 percent, kasi ang tanong: Magkano ang leakage pumupunta doon sa non-marginalized?” he said.

“We did a simple computation subject to validation, lumalabas na in 2018, 937 million to non-marginalized consumers,” he added.

Gatchalian, however, stressed that his computation is still subject to validation.

“For the purposes of this hearing, we did some rough calculations using existing numbers,” he added.

“My point is that the intention (of extending the provision of the lifeline rate subsidy) is good, the senators support it. But there are leakages that have been detected over the years,” he further said.

Alvin Jones Ortega, head of ERC’s Tariff & Rates Division-Regulatory Operation Service, assured the Senate committee that the commission will look into the concerns raised by the senators.

“We’ll study this issue very seriously. We’ll commit to have some report on this so we will be able to address these concerns,” Ortega said.

EDV