02 August 2004
In her State of the Nation Address last Monday, the President underscored that in order to achieve sufficient and cheap electricity, Napocor’s generating assets and transmission lines should be privatized.
But in stark contrast with the President’s declaration, Napocor is now saying that it will have to increase electricity rates in order to privatize its generating assets. In fact, it has a pending petition that will result to a P1.98/kWh average increase in generation charges.
The Freedom from Debt Coalition points out the glaring contradiction as it asks the President: “Will you choose cheap electricity or Napocor’s privatization?”
Napocor’s petition comes on top of other rates increase petitions, which includes Meralco’s Generation Rate Adjustment Mechanism, the Meralco- Napocor Settlement Agreement, and Meralco’s rate increase application.
Combined, these petitions will increase electricity rates from an average of P5.58/kWh to P7.08/kWh, an increase of P1.50/kWh. This means ordinary households within the Meralco franchise consuming at least 200kWh a month will have to shell out P1,415 for electricity instead of the previous P1,131.
FDC denounces these rate increases because they mean added burden to poor consumers. For a family earning a measly P6,278 a month net of all mandatory deductions, this means smaller allocation for other equally important expenses like food, house rent, education, health, and others.
But the impact of these rates increase does not only concern Meralco consumers: Napocor’s rate will have equally drastic effects to consumers in the Visayas and Mindanao. Thus, Luzon consumers are bound to pay 99.84% higher than current rates; Visayas consumers, 81.82% more; Mindanao consumers stand to pay 107.38% higher than their current electricity bills.
FDC condemns the President’s failure to address the fundamental cause behind the high electricity rates: onerous contracts with independent power producers (IPPs).
Our experience thus far discredits the President’s claims of cheap electricity through privatization. When the government allowed private IPPs to buy Napocor’s plants, power rates did not decrease. The generous risk- and profit- guarantees extended to the private sector have contributed to successive increases in power rates.
Until now, the President has failed to bring about a long-term solution to consumers’ woes through outright cancellation of onerous IPP contracts. Until now, consumers continue paying for unused electricity, even electricity that IPPs failed to produce. Until now, electricity rates in the Philippines continue to be among the highest in the world.
FDC poses this challenge to the President, “Which will you choose: cheap electricity or profits to IPPs? Which will you choose: public interest or vested interests?”