24 March 2009
– The Freedom from Debt Coalition (FDC) welcomes the move by Sen. Mar Roxas to have the Energy Regulatory Commission (ERC) and other concerned agencies investigated by the Senate energy committee for allowing the National Power Corporation to increase its rate by an average of P0.46/kWh in Luzon, P1.146/kWh in Visayas, and P0.77/kWh in Mindanao.
In a statement, the group believed that the ERC erred in hastily granting the NPC a provisional authority while the latter has yet to comply with filing requirements and has yet to prove the merits of their application.
In their joint application filed before the ERC on January 16, 2009, the NPC and the Power Sector Assets and Liabilities Management Corporation (PSALM) have applied for a “maximum allowable increase” of 12% on its return on rate base (RORB) from the previous 8% approved rate in 2005. The increase, according to the applicants, was needed to address the “financial burden” of the NPC due to mandatory discounts it has extended to consumers and purportedly to comply with the loan covenants with its creditors such as the World Bank and the Asian Development Bank.
“This move of the NPC was tantamount to promoting a ‘bigay-bawi’ scheme and callousness in the highest level by placing the WB and ADB’s interests first before that of the consumers,” FDC said.
FDC said that once approved, this will be the second biggest rate hike since the privatization of the power industry under the Electric Power Industry Reform Act (EPIRA) in 2001. It is recalled that in 2005, the NPC was granted a P1.03 per kWh increase.
“Ironically, EPIRA promises a more affordable and efficient energy future for Filipinos,” stressed FDC.
Last Friday, Roxas filed Resolution No. 946 urging the committee on energy to conduct an immediate investigation on the wisdom of the provisional authority issued by the ERC to NPC last February 16, 2009. The move came on the heels of strong protests coming from consumer groups led by the FDC, business groups as well as local governments and electric cooperatives particularly in the Visayas region.Failure of EPIRA
FDC asserted that the recent rate hike is a living testament to the failure of EPIRA and the country’s power sector reform program which was anchored on privatization.
The group also bewailed the fact that on top of the two rate increases, NPC also enjoyed a series of rates adjustments under the Generation Rate Adjustment Mechanism (GRAM) and the Incremental Currency Exchange Rate Adjustment (ICERA). Both mechanisms, the group said, were designed for the NPC to recover the full cost of its operations including its obligations with the Independent Power Producers (IPP) such as fuel costs.
On the other hand, NPC admitted in a previous hearing that there was a necessity to increase its generation charge in order to entice private investors in the industry, the same reason it raised when it applied for a rate increase in 2004.
“Ever since, it has always been a contest between the consumers and the private investors. Unfortunately it is the latter’s interest that always prevails, courtesy of weak regulations and pathetic governance,” said FDC.
The group is appealing to the members of Senate to pursue the case against ERC, PSALM and NPC, by demanding full accountability for their actions, in behalf of the hapless consumers who are battling against one of the highest power rates in the world. -30-