06 May 2008
—Filipinos, rich and poor alike, pay the second highest electricity rates in Asia. Thus, any move by the government to reduce exorbitant power rates in the midst of a devastating food crisis and the rising costs of other goods and services, is welcome news to our people.
The Freedom from Debt Coalition (FDC) therefore enjoins all other stakeholders in the power industry to unite in this common goal of relieving our people the burden of high electricity rates.
We believe, however, that piecemeal and selective action such as the bid by the Arroyo government to cut down Meralco’s distribution rates will not bring significant reduction in power rates. Distribution utilities (DUs), such as Meralco, are just one part of the many problems on why the country has one of the highest electricity rates in the world.
Hence, while supportive of moves to check on DU’s unjust rates, FDC renews its call for the reduction of electricity rates in the country through the following actions:
Cancellation of onerous IPP contracts. Covered with sovereign guarantees and ‘take-or-pay’ provisions, these contracts sunk the National Power Corporation (NPC) deeper into debts, debts that were passed on to consumers through their electric bills. In addition, Meralco’s contracts with its own IPPs have the same “take-or-pay’ provisions.
Remove 12% VAT on power. Putting socially-sensitive products like oil and power under VAT coverage is unfair and unjust.
Stop the operation of the Wholesale Electricity Spot Market (WESM). Contrary to its supposed mission of providing cheap supply of electricity, power sourced at WESM was deviously high since it operated in July 2006, from a low of P2/kwh to as high as P12/kwh this month of April 2008. Because of this PSALM was charged for market manipulation in the WESM, only to be cleared by the ERC for no plausible reason.
Stop privatization of NPC and Transco. To encouraged private sector participation, NPC rates were raised by at least P1/kwh beginning 2004. And with Transco now in private hands, consumers are likely to face increases in transmission charges when concessionaires begin to recover their investments.
Inefficiency and corruption in NPC and Transco have also been noted as other factors that cause generation and transmission charges to rise. On the other hand, the absence of strong regulatory governance to check on corporate malpractice and inefficiency in the power industry led to many cases of overcharging that the Supreme Court later disallowed.
In her speech before the Federation of Philippine Industries the other day, President Arroyo called on business leaders to support her in what she considers a “tough battle” against Meralco. Well, just bring it on.
But will the President wage a tougher battle against the IPPs? Will she change her policy of honoring illegitimate debts? Will she has the courage to deny her office a precious source of revenue by removing VAT on oil and power? Will she carry out not only a revamp of her cabinet but also a reversal of her privatization policies?
We don’t think so. -30-