Manilans to pay higher power rates

Residents of Metro Manila and other areas covered by the franchise of Manila Electric Co. (Meralco) will pay for a rate increase of up to 4 centavos per kilowatt hour (kWh) on top of the hike in the generation charges of state-owned National Power Corp. (Napocor).

A day after the Energy Regulatory Commission (ERC) announced the Napocor rate increases ranging from 4.4 centavos to 69 centavos per kWh, the ERC allowed Meralco to collect P2.3 billion from its customers. Both increases will start in May.

ERC Executive Director Francis Saturnino Juan said the approved amount, which was less than the P2.8 billion that Meralco had sought, represented local franchise taxes paid for by the utility from 1999 to 2009.

Meralco will be able to collect the P2.3 billion over a five-year period from its customers in the provinces of Bulacan, Batangas, Cavite, Rizal and Laguna; in the cities of San Jose del Monte, Batangas, San Pablo, Tagaytay, Lucena, Mandaluyong, Marikina, Quezon, Caloocan, Pasay, Las Piñas, Manila, Calamba and Pasig, according to the ERC.

The amounts to be recovered from each area will vary from about 1 centavo to 4 centavos per kWh depending on the amount of local franchise taxes remitted to that particular local government.

The ERC ruling said the rate increase shall be reflected in the monthly power bill as “tax recovery adjustment cost.”

Juan said local franchise taxes levied by local governments and remitted by Meralco were legitimate expenses, which the law allows to be recovered from customers as these charges are considered a pass-through cost.

Dated Feb. 27

“The commission verified the procedures undertaken by Meralco in determining its gross receipts and found the same to be in accordance with the law,” the ERC said in its decision dated February 27, but which was issued only Thursday.

The ERC said the P2.3 billion included carrying charges.

“Meralco started remitting its local franchise tax payments as early as 1993. In this regard, the commission deemed it prudent to allow Meralco to recover a carrying charge for advancing the payments of its local franchise tax,” the ERC said.

“However, the commission disagrees with Meralco on the applicability of the 91-day treasury bill rates plus 3 percent considering that a previously issued resolution did not provide for the use of this as basis for computing the carrying charge. Instead, the legal interest rate of 6 percent will be used as it is more reasonable under the circumstances,” it said.

VAT on power

Meralco is the country’s biggest power distributor.

The umbrella group Bagong Alyansang Makabayan (Bayan) called on the Aquino administration to remove the value-added tax (VAT) on electricity, saying the move can provide immediate relief for  consumers reeling from escalating power rates.

The VAT on electricity was introduced, along with the VAT on oil, during the Arroyo administration. It has been assailed as oppressive because all items on the electric bill, including systems loss and franchise taxes, are subject to VAT.

“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 Jr.

Bayan said Meralco customers, who consume 100 to 300 kWh a month, would get a reduction of P70 to P290 in their monthly bill should the VAT on power be suspended.