A call to consumers: Join the ERC hearings on October 8

Electricity consumers in the Visayas and the rest of the country were urged to participate in the Energy Regulatory Commission’s (ERC) virtual hearings on two rate petitions of the National Power Corporation (NPC) on October 8, 2020 at 9:00AM and 2:00PM.

What are these petitions?

1. Approval of a P20.7B Universal Charge for Missionary Electrification (UC-ME) for 2021 (ERC Case No. 2020-011RC)

2. The recovery of an alleged P5.9B 2018 UCME “revenue shortfall” (ERC Case No. 2020-004)

Anyone may be allowed to join by simply sending his email address to legal.virtualhearings.erc.gov.ph@gmail.com

Increase Monthly Power Bills

Romeo L. Junia of the United Filipino Consumers and Commuters (UFCC) said approval of the two petitions could raise the monthly bill of a 200kwh-household by as much as P52.92.

The cost would even be higher when the on-going Automatic Cost Recover Mechanism (ACRM) charge of P0.0219 pkwh is added. The UCME is collected from “all electricity end-users” under Sec. 70 of the Electric Power Industry Reform Act (EPIRA) to pay for the high cost of diesel and bunker fuel plants that supply power to Small Islands and Isolated Grids (SIIG).

UCME was supposed to “be phased out in a period not exceeding three (3) years” under Sec. 74 of EPIRA, with a one-year grace period added. However, the subsidy thrives 19 years into the power reform law. For the current year, UCME is P0.1561 pkwh. This is about P15.6B on annual energy sales of 100B kwh. However, that is set to increase by 33% next year, to a staggering P20.7B.

“We have to see where that increase will go, let alone ask why that subsidy persists up to the present, in spite of the mandatory phase out under EPIRA,” Junia said.

Situation in Cebu

Junia pointed out that there are two UCME coops with pending rate applications at ERC – Camotes Island Electric Cooperative (CELCO) and Bantayan Island Electric Cooperative (BANELCO).

In the case of CELCO, it is a 15-year Power Supply Agreement (PSA) which Primewater Infrastructure Corp. obtained thru an Unsolicited Proposal. Meanwhile, BANELCO, is a negotiated 12-month Interim Power Supply Agreement (IPSA) with Isla Norte Energy Corp. (INEC). INEC is a subsidiary of the Vivant Consortium that was awarded, separately, a 15-year PSA a year ago, also by BANELCO.

While they may not be emblematic of UCME, they are nonetheless instructive and illustrative of how the subsidy scheme works, Junia explained.

My observation: suffice it to say, the subsidy should not be imposed on us, power consumers, but on the power companies.

What DOE is doing?

In 2016, the Department of Energy (DOE) adopted a Missionary Electrification Development Plan (MEDP) to “graduate” these coops from the subsidy regime to commercial viability. Another path is inter-connection so that the coop becomes on-grid, from off-grid. 

The policy of ‘tariff differentiation’ where UCME subsidy will be targeted to residential and marginal coop members so that commercial and industrial customers will not be unduly advantaged made so much sense, Junia said, but it has not been implemented.

According to Junia, the ‘graduation’ strategy of MEDP is not evident, at all, in the NPC petitions. In fact, there is no perceptible shift to indigenous fuels that could avoid and minimize the use of expensive and environmentally-critical diesel and bunker fuels, he noted.

Junia emphasized that United Filipino Consumers and Commuters (UFCC) does not oppose the concept of a subsidy or help to bring the unserved or underserved areas to the economic mainstream, and reliable, affordable power supply is key to that.

The cost, however, should be borne by government, not the “electricity end-users” who are already burdened with excessive and outlandish charges under the present rate regime, he said.

Taxes power consumers pay

According to Junia, for every P1,000.00 an electricity consumer pays today, about P100.00 to P110.00 goes to taxes.

Every item is VATted, including the System Loss, senior citizen discount, lifeline rate, ACRM, even the Local Franchise Tax.

Government must undertake countryside electrification so that all Filipinos will get electricity, 24-7. But the cost must be borne by government, not the overbilled and overtaxed consumers, he emphasized.

Junia said, in a 300-kwh household that paid a total of P2,801.00 on which he paid P300.00 in taxes and P55.16 in UCME. If government heeds our suggestion and pays UCME out of the taxes we ourselves pay, Junia said, government will still have a net tax take of P245.18 for that month, for that account.

“We hope consumers will look closely into the fine print in their monthly power bills. At the household level it’s just a few centavos but in the aggregate, the numbers are staggering. And as UFCC has shown in helping institutionalize the Competitive Selection Process (CSP) in the landmark Supreme Court decision in May 2019 on Meralco’s Midnight Contracts, consumers can also score winning blows and make a difference, UFCC said.

To intervene and participate in the hearings, consumers can email their interest to: records@erc.gov.ph, records.erc.gov.ph@gmail.com , copy furnish legal.erc.gov.ph@gmail.com.


Ref. ROMEO L. JUNIA, Mob. No. 0917 521 5611

Email: philconsumerforum@gmail.com

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