Gatchalian seeks lower pass-on power charges

MANILA, Philippines – Sen. Sherwin Gatchalian is seeking the immediate passage of a bill, which seeks to lower electricity rates by as much as 15.67 centavos per kilowatt hour through the reduction of charges passed on to consumers by power companies.

Senate Bill 1188, or the proposed “Recoverable System Loss Act,” lowers the system loss cap – the maximum charge that can be passed on to consumers to compensate for electricity lost in the distribution system from the receiving point of private distribution utilities and electric cooperatives to the consumer’s metering point – from 8.5 percent to five percent for distribution utilities, and from 13 percent to 10 percent for electric cooperatives.

The bill also seeks to prohibit electricity distributors from passing on other charges to consumers: non-technical system losses caused by electricity theft or pilferage, and the electricity company’s own power expenses.

“Consumers should not be made to pay for what is ultimately the responsibility of distribution utilities and electric cooperatives. It is time for us to prioritize the welfare of Filipino households over the interests of power sector insiders,” said Gatchalian, the bill’s author and chairman of the Senate committee on energy.

Additionally, the bill provides for a value-added tax (VAT) exemption for system loss charges.

If passed into law, Gatchalian estimates consumers could save as much as P386 million per month in electricity costs.

In a related development, Sen. Loren Legarda is pushing for full electrification of all barangays, sitios and households through funding in the national budget as she welcomed the European Union’s (EU) support for the Philippines’ rural electrification targets.

Legarda, chair of the Senate committee on finance, said the country’s electrification profile showed 89 percent of households in Luzon have power, 79 percent in the Visayas, and a very low 56 percent in Mindanao.

Urban electrification stood at 94 percent, while rural electrification in the country stood at a low of 73 percent, she said.

She noted most of those who have no access to electricity primarily live in the rural areas, which account for 4.4 million households living in remote areas as well as in the outskirts of Metro Manila and Davao.

“We want these statistics to reach 100 percent by 2017 or in the next two years, definitely before the 2020 original target. But we do not want just statistics, we must ensure that indeed all barangays, sitios and households in the country are electrified,” she at the 4th EU-Philippine meeting of Access to Sustainable Energy Programme (ASEP) last week.

She said she will look into how much funding assistance is available from foreign sources and how much the government can provide as counterpart under the General Appropriations Act (GAA) so that the country will not need to wait until 2020 to achieve full electrification.

Through ASEP, the EU has allocated a grant of over P3 billion to assist the Philippines to meet its rural electrification targets by means of renewable energy and to promote energy efficiency.

The senator said electrification goals would need to be aligned with a low-carbon objective in the energy sector.