|
THE
Energy Regulatory Commission (ERC) recently ordered the
Manila Electric Co. (Meralco), the country’s biggest
distribution utility, to refund customers P2.7 billion
in meter deposits which they have been paying since the
1980s when applying for electric service.
But it’s
not just Meralco but also other distribution utilities
and electric cooperatives nationwide that should now
refund their customers for these meter deposits, plus
interest. What the ERC order means is that Meralco—along
with other power distributors—should not have charged
these deposits in the first place.
The ERC
order is one small step forward in bringing down
electricity rates at a time when the nation is already
reeling from high food and fuel prices. There’s also a
clamor for power utilities to reduce or even scrap
system-loss charges that add up to a considerable chunk
of consumers’ monthly electricity bills, and that’s
probably what the ERC should look into next.
Questions have been asked on whether the government is
really intent on cutting excessively high electricity
rates in view of recent developments that suggest it may
be more interested in playing politics and pandering to
the peanut gallery than in advancing consumer welfare.
At that
televised hearing of the Joint Congressional Power
Commission, officials of the Joint Foreign Chambers who
had written the President to ask for the full
implementation of the Electric Power Industry Reform Act
(Epira) were instead called the worst possible names and
told in no uncertain terms to leave the country, if they
could not stand what’s going on here.
It was
ironic that the bullying was done by proadministration
senators, led by Sen. Juan Ponce Enrile, who surely
could have found a more civil way of telling off the
foreigners—who, after all, have long been asking the
government to do something to lower electricity rates.
The saving grace was the cool, even-tempered censure by
Sen. Joker Arroyo, who at least took pains to explain to
the foreign chambers that it wasn’t their badgering for
lower rates that got the lawmakers’ goat, but their
implicitly accusing senators of attempting to impair
contracts (with independent power producers) by the
pending initiative to amend the Epira. Senator Arroyo
asked the chambers if the foreign businessmen in their
respective countries meddled as blatantly in the work of
their parliament as they did in the
Philippines.
While lawmakers are open to hearing out their concerns,
the act of addressing to President Arroyo the
letter-appeal not to amend Epira and just fully enforce
it as it is, as if with an implied request for the
Executive to order Congress around, was the one that
reaped the senators’ ire, according to Senator Arroyo.
Politics
is also signaled in the attempt by the state-run pension
firm Government Service Insurance System to wrest
control of Meralco. Last week Makati Business Club
issued a statement that it “stands firmly against the
use of state power to intimidate the private sector and
vigorously opposes the nationalization of the
electric-power industry. Reverse-privatization is the
worst way to bring down the cost of electricity, as
state-owned enterprises in this country are vulnerable
to political patronage and are inefficient due to lack
of competition. . . Damaging public institutions in this
way is plainly bad governance. It sends the signal to
the private sector that this administration is prepared
to sacrifice public institutions and its own reform
program for political objectives.”
If the
government really wants to lower electricity rates, it
should look no farther than its own backyard, because
that’s where the big chunk of our padded monthly
electricity bills comes from. It must look at all
components of the power rates—generation to transmission
and distribution, as well as system loss and taxes—and
take firm steps to cut the rates in each component.
That’s the rational way to do it, not by finger-pointing
and playing politics at the expense of consumers both
big and small.
The real peril
AFTER
Tuesday’s Cabinet meeting, Finance Secretary Gary Teves
unveiled to reporters the initial recommendations of a
Cabinet panel tasked to look for ways to give people
relief from high electricity rates and prices, among
other things. As this paper’s Palace reporter summed it
up, the options included subsidies, inducements,
renegotiations and options that, in the long term, are
seen to redound to the tax take of the government and
invite more investments if it forgoes these tax revenues
for the time being.
Here’s
how Teves explained the impact of the package: “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 Meralco to buy
power from the National Power Corp. at a flat rate of
P4.11/kWh, which is seen to reduce rates by P0.58/kWh.
Teves said this “would have an immediate impact on the
cost of electricity within the year.”
Another
recommendation is to negotiate with distribution
utilities to absorb the value-added tax (VAT) on system
loss, now shouldered by consumers, by treating that
amount as “deductible from their operating expense.”
The
panel also recommended: (1) enforcing open access inside
economic zones by mid-July, considering that “Meralco is
now inclined to withdraw the injunction case against the
Philippine Export Zone Administration” on open access;
(2) reducing the cap on system loss recoverable from
consumers, now at 9.5 percent with every 1-percent
reduction in system loss passed on to consumers seen to
cut power rates by P0.065/kWh in Luzon, and P0.05 in
Visayas and Mindanao; (3) a renegotiation with the
Malampaya consortium of a possible reduction of the
take-or-pay volume, or the gas price; and (4) a review
of the rules affecting rates in the wholesale
Electricity Spot Market.
The
local government units (LGUs) are also being targeted
with regard to the use of the national wealth tax. The
Palace position is that 80 percent of the national
wealth tax being provided to LGUs should be used to
lower electricity rates. “This measure is envisioned to
reduce the lifeline subsidies being shouldered by
nonlifeliners,” explained Teves.
Offhand,
the Executive’s power-initiatives list deserves serious
consideration. Yet, what is troubling is the parallel
list of initiatives to beat inflation, which smack too
much of one-time doles (for fertilizers, for food) that
could cause good money being thrown away recklessly down
a bottomless pit of want, as prices keep surging and no
sustainable measures are taken. In the end, we may
simply end up with more new debt—since not all of the
measures will be funded by the VAT windfall—yet remain
in greater want than ever. |
