One year ago, Pres. Gloria Macapagal Arroyo promised to bring down the cost of electricity by reducing the purchased power adjustment (PPA) by 30 centavos. It was her desperate move then to douse off people’s opposition against the omnibus power bill. But the PPA reduction then was not even felt. First, it was implemented for only a month. Second, the PPA got even higher each month.

Now, with growing public unrest against PPA, GMA is making yet another promise.

Just two days ago, GMA announced that she would bring down the cost of electricity by reducing the PPA to 40 centavos per kilowatthour consumed. This time, it will be a fixed amount for twenty years.

The problem is, such promise is obviously illusory.

First, the people will still pay for the cost of the reduction through taxes. GMA’s plan to reduce the charges in the billing will entail government absorbing the difference, which means our money, taxpayer’s money, will still be used to pay for the amount they deducted from our bills as consumers.

Second, the monthly PPA that will be included in our electric bills will still be higher than 40 centavos. Napocor is not the only one collecting purchased power adjustment cost from the consumers. Distribution utilities especially, Meralco collect an amount close to 30% to 40% of the total monthly PPA. This amount goes to Meralco’s power providers other than Napocor.

Worse, GMA’s solution to the problem does not correct the injustice surrounding the collection of PPA. PPA represents payment for electricity that the people do not consume. Continuous collection of PPA only legitimizes this unjust practice. It also legitimizes the burdensome and highly questionable power contracts with the independent power producers (IPPs).

PPA is an automatic cost recovery mechanism used to pay for the unutilized and expensive power contracted from the IPPs of the National Power Corporation and also of distribution utilities like Meralco. NPC entered into about 40 contracts with IPPs with a cooperation period of 10 to 25 years. Under the contracts, NPC buys up to about 70% to 85% of the IPP’s generating capacity whether or not the power is actually generated or consumed. Aside from that, NPC also absorbs the cost of currency rates fluctuations and the cost of fuel. PPA in Metro Manila reaches up to more than 200% of a household’s basic electricity charge. This deprives a household of meeting its basic needs.

GMA’s response to the PPA problem does not affect the terms in the burdensome contracts with the IPPs. The amount and manner of paying for these IPP contracts will still be the same.

The PPA must be totally abolished, and the contracts with the independent power producers must be thoroughly renegotiated and even cancelled outright!

FDC Chapters