Party-list wants to suspend VAT on power bills of low-consumption households
MANILA, Philippines — A party-list group is seeking the suspension of the 12 percent value-added tax (VAT) on electricity for low-consumption households or those consuming just 200 kilowatt-hours (KWh) per month, aside from other bills that would make energy more accessible to the public.
According to the Social Amelioration and Genuine Intervention on Poverty (SAGIP) party-list, House Bill No. 161 or the VAT Exemption for Covered Electric Billing Act of 2022 will translate to a discount of around P240 for eligible households.
Aside from that, party-list Reps. Rodante Marcoleta and Caroline Tanchay also filed House Bill No. 160 or the System Loss Limitation Act of 2022, reducing the system loss cap from 9.5 percent to just one percent.
“Passing too much burden of incurring these system losses to the consumers is unfair and also deters the power firm from prioritizing quality and reliable service, knowing that they can readily pass the charges on to the consumers,” the lawmakers said in the bill’s explanatory note.
Electric distributors define system loss as electricity loss when the product — electric energy — is transmitted from a power generator through high power lines. The rate at which system loss is passed to consumers is approved by state regulators.
But if the system loss cap is brought down, Sagip believes distribution utilities can no longer put the supposed burden on consumers.
On VAT removal, there were suggestions recently to outrightly suspend the VAT for electricity regardless of how much consumers are spending. According to former Energy Regulatory Commission (ERC) Chair Agnes Devanadera, there is allegedly an issue of double taxation.
As of now, all of the electric bill’s components — except for universal fees and feed-in-tariff allowance charges — have been subjected to VAT. This means that generation, transmission, distribution, and even the fuel used by some power generation companies have an additional 12 percent charge due to VAT.
Devanadera said customers consuming 200 kilowatt-hours and below can save as much as P100 on their monthly electric bill.
READ: Scrap 12% VAT on power rates, incoming Marcos admin asked
Aside from these two measures, the Sagip filed eight other bills concerning the energy sector, including the following:
- House Bill No. 164 seeks amendments in the Oil Deregulation Act, to avoid sudden increases in the prices of liquefied petroleum gas (LPG)
- House Bill No. 174 seeks to amend the Electric Power Industry Reform Act (EPIRA), specifically removing the allowance for cross-ownership
- House Bill No. 172 seeks to institutionalize the Energy Investment Coordinating Council (EICC)
- House Bill No. 173 aims to develop natural gas reserves in the country aside from the Malampaya project
- House Bill No. 162 or the Green Energy Auction Act
- House Bill No. 163 or the Laguna Bay Solar Park Development Act of 2022
- House Bill No. 170 or the Enhancing the Implementation of the Net Metering System Act
- House Bill No. 171 or the Act Authorizing the Development of Idled and Unutilized AFP Real Estates for Potential Sites of Renewable Energy Projects
Marcoleta and Tanchay believe the bills, especially those seeking reforms on the EPIRA and the institutionalization of the EICC, would greatly help electricity consumers.
“The prohibition on any form of cross-ownership will remove the conflict of interest as among distribution utilities and generation companies, allowing a level playing field for all power stakeholders,” the lawmakers said
“It is necessary to further amplify the role of EICC to safeguard energy projects, considering the threat of an energy crisis on a global scale and thinning energy resources on the national scale,” they added.
