23 March 2007
While the latest petition of the National Power Corporation (NPC) to reduce its generation charge due to appreciation of the peso was welcome news, a greater challenge on how to address the high power rates in the country is still being posed not only to NPC, but to the present administration as well as to all electoral candidates, particularly the senatoriables and House Representatives.
If the administration of Gloria Arroyo together with her senatorial candidates thought they have already earned “pogi” points after gaining media mileage in the power rates reduction of Meralco last month, they are wrong. The announcement could only temporarily appease the electricity consumers as they continue to pay relatively high electricity bill, eating a huge amount in their monthly budget. Consumers are feeling the crunch of paying high for electricity especially since enrolment for next school year starts again one month from now. As long as this administration does not bother to address the fundamental question on how to reduce the high cost of electricity, consumers will remain edgy and will continue to hold the administration responsible for their sorry plight.
The Freedom from Debt Coalition believes there are five reasons why power rates are high which the Arroyo administration and all candidates running for higher positions in the land ought to address.
First, the continuous payments to expensive contracts with independent power producers even when they are grossly burdensome contribute largely to rising electricity prices. Purchased power, fuel and currency exchange rate costs that NPC and distribution utilities like Meralco pay to their IPPs are being recovered from the electricity consumers through the generation rate adjustment mechanism (GRAM) and incremental currency exchange rate adjustment (ICERA). These charges are tucked in the generation charge item which account for about fiftty percent of the total electricity bill.
Second, the aggressive drive to privatize NPC had resulted in an increase of P1.00/kwh in its generation rates in 2004-2005 allegedly to meet the so-called true cost of electricity. Such increase was just half of the P2.00/kwh generation rate increase that NPC asked for. This was apparently to attract more investors to buy NPC plants.
Third, abuses such as overpricing/overcharging and collection of costs that should not be borne by the consumers by some private distribution utilities as well as of some electric cooperatives also lead to increase in price of electricity.
Fourth, the Arroyo administration’s measure to impose the 12% value added tax (VAT) on electricity has resulted in increase in the electricity bill by as much as P200 monthly for consumers with 210-290 kilowatt hour consumption.
And last, the stance adopted by the the Energy Regulatory Commission (ERC) aggravates the burden of consumers who are taken advantage of by the power utilities. The ERC should act in the interest of the greater public, and not of a few elites.
Consumers will be watching out the platform and promises of the candidates with regard to power rates. We all want lasting solution to high power rates... not temporary palliatives!