Power Consumers ‘Electrocuted’ with False Promise, New Rate Hikes

During the February-May campaign period, President Gloria Macapagal-Arroyo promised power consumers the lowest electricity rates in Southeast Asia. But with the impending increases in Meralco rates and Napocor generating charges, and the forthcoming removal of the inter-class cross subsidy, power consumers might as well consider themselves nakuryente, a vernacular slang term meaning fooled.

By ALEXANDER MARTIN REMOLLINO
Bulatlat.com

With the impending increase of Php0.1327 ($0.0024 based on a $1:Php56 exchange rate) per kilowatt hour (kwh) in the rates of the Manila Electric Company (Meralco), which is to take effect in July, consumer and militant groups are expected to demand that President Gloria Macapagal-Arroyo – whom her K-4 Coalition and even the Commission on Elections have pronounced as the winner in the May 10 elections even before the canvassing of votes could be concluded – deliver on her campaign promise to make Philippine power rates the lowest in Southeast Asia.

As of mid-2003, it is Laos that enjoys the lowest Southeast Asian power rates, averaging the equivalent of Php1.54 ($0.03)/kwh. This is Php4.46 ($0.08) lower than that of the average for the Philippines, which amounts to Php6 or $0.11/kwh.

Power rate increases resulting from the implementation of the Electric Power Industry Reform Act (EPIRA) in 2001 became causes for public grievances against the Arroyo administration, which was installed through a popular uprising in January that year. During the last election campaign period, Arroyo promised to make Philippine power rates the lowest in Southeast Asia.

Higher bill

But the impending Meralco rate increase, which is to take effect next month, is proving that promises are made to be broken.

Meralco, citing as basis an earlier hike in the National Power Corporation’s (Napocor’s) generation charge covering November 2003 to January 2004, petitioned for a Php0.2778 ($0.005)/kwh increase. The ERC approved a Php0.1327/kwh hike.

The June Meralco bill indicates a charge of Php3.1886 ($2.4141)/kwh. Starting next month, it will increase by Php0.1327 ($0.0024)/kwh.

So if a Meralco customer uses 200 kwh/month, he or she will be paying Php26.54 ($0.4739) more for that alone, come July. If the consumer, for instance, uses 225 kwh and pays Php1,308.45 ($23.36) for May-June, he or she will be paying Php1,338.31 ($23.90) next month.

(De)generation charge

The consumer’s burden will be further exacerbated by the ERC’s approval of Napocor’s new generation charge, announced in a statement on June 10.

According to the statement, “The change in generation rates was triggered by upward adjustment in fuel prices and the deterioration of the value of the Philippine peso against the U.S. dollar.”

The new generation charges are as follows:

Luzon – Php 2.2802 ($0.0407) from Php2.1435 ($0.0382)/kwh or a 30.72-percent increase;

Visayas – Php2.5238 ($0.0451) from Php2.2907 ($0.0409)/kwh or a 10.17-percent increase;

Mindanao – Php1.5101 ($0.0269) from Php1.1283 ($0.0201)/kwh or a 33.88-percent increase.

The change is to take effect with Napocor’s May 26-June 25, 2004 billing. This means that a consumer using 200 kwh a month will be paying an additional Php131.70 ($2.32) in July, if he or she is in Luzon.

Adding the extra Php26.54 that the consumer will have to pay when Meralco’s rate increase is implemented, we get a total of Php158.24 ($2.826).

Thus, the consumer who uses 225 kwh and pays Php1,308.45 for May-June will be paying a total new fee of Php1,466.69 ($26.19).

More bad news: subsidy removal

Apart from these, the ERC has also recently announced in its website that it has “completed the evaluation of applications for the removal of inter-class cross subsidies.”

At present, consumers using 100 kwh and less receive the following discounts: 50 percent for 1-50 kwh consumers, 35 percent for 51-70 kwh consumers, and 20 percent for 71-100 kwh consumers. The discounts apply to the generation, system loss, distribution, metering, and supply charges – collectively known by the term lifetime rate subsidy.

The removal of the inter-class cross subsidy will eliminate these discounts.

Those using more than 100 kwh/month pay an additional Php0.0761 ($0.0136)/kwh used to subsidize those consuming less than 100 kwh/month. They also receive a discount of Php0.7130 ($0.0127)/kwh, which is paid for by collecting from commercial and industrial consumers.

When the inter-class cross-subsidies are removed, those using more than 100 kwh/month would no longer have to pay the Php0.0761/kwh, but they would also lose the Php0.7130/kwh subsidy. So their power rates increase by Php0.6369 ($0.0113)/kwh.

Which means that our 200 kwh/month consumer would be paying an additional Php127.38 ($2.2746). One who uses 225 kwh and pays the new total rate of Php1,466.69 will be burdened with a total of Php1,594.07 ($28.47) bill.

The winners

Who will benefit the most from these new rates? The commercial and industrial consumers, according to the broad-based People Opposed to Warrantless Electricity Rates Increases (POWER).

POWER said that industrial and commercials users are presently charged PhP .0761 per kwh to subsidize lifeline consumers. They are also charged the following amounts to subsidize the residential consumers using more than 100 kwh, as well as government hospitals and street lights:

· Commercial consumers – Php0.57 –0.78 ($0.0102)/kwh

· Industrial consumers – Php0.08-0.63 ($0.0014-0.0112)/kwh

Once the interclass subsidies are removed, the above consumer categories would no longer apply. ERC and Malacañang reason that this would enable businesses to be more competitive.

As regards the loan condonation, it is the 119 electric cooperatives in the Philippines which will emerge as the winners. According to POWER, the billion of pesos in these cooperatives’ debts will be condoned but absorbed by the government, meaning that taxpayers will eventually shoulder the weight of these. This would negate the reduction of power rates that the loan condonation will bring about.

��Refund,” and then some

In a move that Engr. Ramon Ramirez of POWER interprets as intending “to titillate the consumers and reduce their anger over the twin increases in their July power bill,” the ERC also recently announced that Meralco will have to refund some Php13 billion ($232.14 million) in meter and service deposits. This announcement came following the ERC’s recent approval of the Magna Carta for Residential Electricity Consumers.

The Magna Carta, among others, provides that consumers will be exempted from payment of meter deposits and entitled to the refund of bill deposits, so long as they pay their bills on or before their due dates.

But in the June 12 issue of the Philippine Daily Inquirer, ERC chairman Rodolfo Albano is quoted as saying that: “To be exact in the provision of the Magna Carta, there is nothing to talk of a refund. What the Magna Carta says is that new connections would no longer pay meter deposits.”

Albano was also cited as saying that the ERC is still studying whether to order Meralco to make the refunds, because the agency would still have to set the guidelines.

So there is no mention of a refund now. With this and the other impending increases in their electric bills, power consumers would do well to consider themselves, in Filipino vernacular slang, nakuryente – in other words, taken for a ride. ()

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