MANILA, Philippines – The recent decision of the Energy Regulatory Commission (ERC) extending the provisional rate increase it granted to the National Power Corporation (Napocor) and Power Sector Assets and Liabilities Management Corporation (PSALM) is an irresponsible decision at the expense of consumers, according to the Freedom from Debt Coalition.

“The ERC should have rejected this joint application right away. For more than a year, the ERC failed to justify this provisional rate increase, yet the Commission is extending it four months more. This decision requires electricity consumers to give an ‘unjustified cash advance’ to Napocor when their purses are already empty,” said Milo Tanchuling, FDC secretary general.

“Worse, this decision makes it more difficult for consumers, especially the poor ones, to get electricity. Due to its high cost, electricity is now an exclusive commodity,” he added.

Citing government data, FDC said that, at the average, around 40 percent of the total households in the country have no electricity. In poor areas like the Autonomous Region of Muslim Mindanao, it is around 70 percent.

Tanchuling said they are considering filing a case either in the Court of Appeals (CA) or the Supreme Court against ERC’s grave abuse of authority regarding this decision and ERC’s inaction on a “Motion to Recall Provisional Authority for Rate Increase with Prayer for Temporary Suspension” the group filed last April 2009.

“We believe that the resolution of the Motion to Recall cannot be left pending indefinitely while consumers are reeling from the effects of high electricity cost,” Tanchuling said.

To date, the Philippines has the most expensive electricity in Asia, next to Japan.

Last Feb. 8, the ERC issued an order extending the petitioners’ provisional rate approval and directing the applicants “to submit the asset valuation reports not later than June 15, 2010, otherwise, the Commission shall be constrained to revoke the provisional authority granted.” Said ERC Order was docketed on Feb. 15.

It can be recalled that on Feb. 16, 2009, the ERC granted the provisional authority which permitted the applicants to raise power generation charges up to P0.4682, P1.1460, and P0.7147 per kWh for the Luzon, Visayas and Mindanao grids, respectively.

Due to protests in Visayas and Mindanao and to official interventions by local government units, consumer groups and FDC, the ERC modified its February 16 Order and reduced by 30.84 centavos the provisional increase of P1.1460 per kWh in Visayas it earlier granted to NPC-PSALM “taking into account the impact of the sale of NPC’s Panay and Bohol diesel power plants.”

FDC, in its latest intervention before the ERC, reiterated several issues pertaining to the petition:
• The computation for the new rates were based on data and figures not found in the records and it did not correspond with the data and figures supplied by the applicants;
• The theory that sales of electricity will decrease with the privatization of Napocor’s power plants is an assumption devoid of basis;
• The revenues from ancillary service, One-Day Power Sales (ODPS), and Wholesale Electricity Spot Market (WESM) sales must be deducted from the revenue requirement, thus, resulting in lesser, not higher, rates;
• That several power barges must not be included in the rate base application such as PB 117 and 118 which was already privatized; and,
• The provisional authority violates due process.

FDC also said that the joint application is just one of government’s legal maneuverings in order to cover-up the fundamental issues regarding Napocor debt obligation to its independent power producers (IPPs) which comprises the bulk of its problems.

Currently, the total financial obligation of Napocor is around P447 billion based on another petition on stranded debts under the universal charge. In addition, Napocor and PSALM are also seeking to recover around P27 billion under the stranded contract costs. (30)

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