15 June 2006
The Freedom from Debt Coalition welcomes the power rates reduction that the National Power Corporation announced this week. However, said reduction amounting to 35-centavos in Luzon grid will not be fully felt by consumers in Meralco franchise areas as Napocor supplies only about 60% of the energy requirement of Meralco. The rest of Meralco’s electricity is still supplied by other independent power producers (IPPs), most of which are also its sister companies that sell more expensive power than Napocor’s. Meralco’s computation of power generation charge averages the cost of power from its suppliers – Napocor and IPPs contracted by Meralco.
Unfortunately for Meralco consumers who will not enjoy fully the rates reduction of Napocor, we are facing an impending 14.76-centavo rates increase if Meralco’s petition is approved by the Energy Regulatory Commission this September. We believe this increase is unjustified as the basis used by Meralco in arriving at such amount – ERC decision on 30 May 2003 on ERC Case Nos. 2001-646 and 2001-900.– was already nullified and set aside by the Court of Appeals in 2004. Besides, the 14.76-centavo rates increase petition was a result of Meralco’s computation based on a15.93% return on rate base (RORB) – way above the 12% RORB ceiling being adopted in the Philippines for public utilities such as power.
The ERC should not entertain anymore Meralco’s rate hike petition. It should stop hearing such petition until Meralco’s motion for reconsideration to the Court of Appeals decision is settled. The Commission had already set a precedent on this when it announced that it will suspend approval of generation rate adjustment mechanism (GRAM) applications until the Supreme Court had decided on ERC’s motion for reconsideration on the high court’s decision nullifying the Commission’s order on Meralco’s GRAM application that resulted in rates increase in 2003. It should also apply the same rationale for suspending approval of GRAM applications to Meralco’s present petition.
In this time of economic hardship, any reduction is welcome, but an increase especially one that is unjust is despicable! Consumers have long been suffering from high power rates and this greatly affects the family. Oftentimes, the budget for food and education are sacrificed in order to avoid the inconvenience of power disconnection. Consumers are held hostage by power utilities. Yet this government is inutile in addressing our plight. Worse, this illegitimate government even added burden to us by imposing a value added tax (VAT) on power which increased further our electricity bills by as much as 10% monthly.
FDC calls for suspension of rates increases. Furthermore, the coalition calls for more rates reduction beginning with the lifting of VAT on power! ###