Full retail competition, open access to offset impact of higher coal taxes

MANILA, Philippines — The full implementation of retail competition and open access (RCOA) can mitigate the projected impact of higher coal taxes, Sen. Sherwin Gatchalian said.

Gatchalian is urging the Department of Energy (DOE) to fast-track the implementation of the RCOA circular to mitigate the effects of projected electricity rate hikes in case the huge excise tax hike on coal becomes law.

The circular, which seeks to finally implement the RCOA provision of the 16-year-old Electric Power Industry Reform Act of 2001 (EPIRA), is expected to foster competition among electricity suppliers by giving consumers the freedom to choose where and what kind of electricity to purchase.

This is expected to drive down electricity costs and promote transparency in the energy sector.

“With the coal tax in place, all the more that we need to implement RCOA to democratize our power sector. The RCOA will help lower costs to protect consumers from the inflationary effects of the coal tax,” Gatchalian said.

“Once you give the consumers the power of choice, they will be able to choose whether they want coal, renewable energy or geothermal, whichever is cheaper and more sustainable for them,” said Gatchalian, who chairs the Senate energy committee.

Based on studies, the lawmaker said electricity bills of average households are expected to increase by P10 in 2018, P20 by 2019 and P28 by 2020, noting that these estimates are bound to grow as new coal plants come online in the near future.

The Senate rushed to approve the Tax Reform for Acceleration and Inclusion (TRAIN) bill Tuesday night, which included a coal excise tax increase from P10 per metric ton to P100 per metric ton on the first year, P200 in the second year and P300 in the third and succeeding years.

Gatchalian was the lone dissenter on the coal tax since he said this will be passed on to consumers.

“If ever the coal tax will be signed into law, then we will really feel the P300 per metric ton tax on coal in our electricity bill,” he said.