‘With great power comes huge electricity bill’

Before we could see any signs of immediate relief from rising electricity rates, we should brace for more increases in power prices in the next four years. In a public notice issued last week by the Energy Regulatory Commission (ERC), we were alerted about a rate increase petition filed by the National Power Corp. (Napocor).

The state-owned Napocor seeks to collect from consumers rate increases of 19.62 to 22.56 centavos per kilowatt-hour (kWh) for the Universal Charge for Missionary Electrification (UCME) spread over a period from 2012 to 2016.

Specifically, Napocor asked the ERC to approve UCME of 19.62 centavos per kWh for 2012; 22.62 centavos per kWh for 2013; 32.93 centavos per kWh for 2014; 33.18 centavos per kWh for 2015, and 22.56 centavos per kWh for 2016.

Furthermore, Napocor applied for the UCME subsidy adjustment of 8.51 centavos per kWh recoverable for 12 months that will be collected on top of the existing and proposed UCME subsidy to all consumers. This will allow Napocor to recover the shortfall in the UCME subsidy for 2011.

Specifically, total UCME subsidy requirement for 2011 was at P8.454 billion. The ERC though approved only P2.763 billion for Napocor to pass on its subsidy charges to us end-users of power. In 2010, the ERC reduced UCME level to 4.54 centavos per kWh from 9.78 centavos per kWh.

In its petition, Napocor stated the higher charges would enable it to “continue its present operations in the off-grid areas and prevent the repeat of shortage of fuel and the consequent reduction of operating hours.” In layman’s language, this simply meant we consumers have to pay for investments of government, through Napocor, if we don’t want the recurrence of long hours of rotating blackouts.

“There is an urgent need for the issuance of a provisional authority to ensure sufficient funding for Napocor-Small Power Utilities Group (SPUG) operations and sufficient funding for new power producers’ subsidy,” it added.

The application for higher rates of Napocor falls under the recovery schemes allowed under the Electric Power Industry Reform Act (EPIRA) of 2001 and is supposed to bankroll the government’s electrification services to reach far-flung areas.

The Napocor UCME hike petition is on top of the P10.59 centavos per kWh rate increase petition earlier filed before the ERC by the Power Sector Assets and Liabilities Management Corp.(PSALM), which is among the spin-off companies created out of Napocor.

Napocor earlier estimated P16 billion as the amount they need to collect to continue the construction of new power generation facilities and transmission assets for the next 10 years in far-flung provinces. Napocor was left with the function of operating the SPUG and the remaining power plants left unsold up to now by the state-run PSALM.

According to Napocor, there are 14 areas under SPUG that operate in off-grid areas. These include parts of Catanduanes, Romblon, Siquijor, Sulu, Tawi-Tawi, Basilan and Palawan.

These are the so-called “missionary” areas where no investors dare put up base-load power plant because of small market. So how can private entities recoup their investments over a reasonable period of time if the demand for electricity is low because there are not enough consumers?

This is where the government steps in to provide electricity service to these “missionary” areas. But where would the government source its funds? Of course, the government dips from the budget (taxes) or borrow funds locally or from abroad.

Speaking of Palawan, the local legislative council of Puerto Princesa City declared last Friday a state of emergency all over their chartered city due to acute power supply shortage. Ironically, for the province where the rich Malampaya natural gas comes from, Palawan folks have to live with at most eight hours of electricity service and suffer rotating blackouts everyday.

As if this were not enough, the ERC approved last week the petition of the Manila Electric Co. (Meralco) for increases in its maximum average price (MAP) of P1.6303 per kWh for distribution, supply and metering charges to its different customer classes.

Households consuming 201-300 kWh per month will shoulder a 12-percent increase to P1.5535 per kWh from P1.3851 per kWh, while those with an average consumption of 301-400 kWh will have to bear a 9.8-percent increase to P1.8907 per kWh from P1.7223 per kWh. As approved by the ERC, the higher rates take effect from July 1, 2012 up to June 30, 2013.

Only last March, the ERC approved as much as four centavos per kWh in additional charge for Meralco’s local franchise tax payments.

I have said it before and I’m saying it again, why the hell do we have to pay the value added tax (VAT) on lifeline rate subsidy, cross subsidy charge, and senior citizen subsidy? This is aside from the “missionary” electric service for the so-called marginalized sector of the consumers under the “universal charges” we pay in our Meralco monthly bill.

These subsidies and equivalent VAT charges are passed on to Meralco consumers categorized in the higher level of power usage. We, Meralco consumers in this category, have to pay for these power subsidies and taxes that the government charges us whether we like it or not.

Though grudgingly, we have been shouldering the “take-for-pay” of electricity from the independent power producers (IPPs). But do we have to pay too for the VAT on systems loss of Meralco and the IPPs as charged to our electric bill every month?

When I wrote in my column last week about “Electric shocks,” my nephew tagged me this funny line from 9GAGCOM: “With great power comes huge electricity bill.” Obviously, this was inspired by a popular movie blurb from one of the Spiderman trilogy movies starred in by Hollywood actor Tobey Maguire.

This blurb was actually taken from the dialogue between Peter Parker, a.k.a. Spiderman, and his aunt, telling the reluctant superhero: “With great power comes great responsibility.”

President Benigno “Noynoy” Aquino III will remain in power until he steps down from office in June, 2016. Could we see relief on our power rate burdens any time sooner Mr. President? –Marichu A. Villanueva (The Philippine Star)