Power rate cut of 30¢/kwh to be reflected in August billing

The 30-centavo per kilowatthour (kwh) rate reduction in the electricity bill of residential customers will appear in the August billing covering the July period this year, according to the new energy secretary.

In his first press conference, newly installed Energy Secretary Vicente S. Perez said that the mandatory rate reduction stipulated in Republic Act (RA) 9136, otherwise known as the Electric Power Industry Reform Act of 2001, covers the month of July.

However, the 30 centavo per kwh discount would result in a P3.723-billion loss for the National Power Corp. (Napocor), the government agency selling electricity to utility distributors like the Manila Electric Co. (Meralco).

Meralco is the exclusive franchise holder covering all of Metro Manila and in certain adjacent areas.

The loss will be shouldered by government but will inevitably be passed on to the consuming public via the so-called university levy that is in fact already being implemented through Napocor’s billing to the distributors. This is in turn passed on to the consumers in their monthly electricity bill.

"It is better to get it (levy) now rather than 25 years from now," Perez told newsmen late Friday afternoon.

That loss of P16.865-billion for the second semester of the year will result in an accumulative loss of P20.588-billion for Napocor. Napocor has an accumulated debt of nearly $6.7 billion stemming from unfair contracts with independent power producers (IPPs), and foreign and local debts.

The Department of Energy said that Napocor would raise the amount from various funding sources to cover the losses stemming directly from the P0.30 discount, while the long-term payment of its accumulated losses will come from privatization earnings or from the sale of its assets aside from the levy.

Energy officials admitted that they still do not have a formula for the mechanics for the P0.30 rate reduction. Meralco will be implementing the mandated discount in its franchise area. In turn, it will seek an equivalent reduction or rebate from Napocor where it buys its electricity.

"We will work on its backwards on how the rate reduction will affect the rates of Napocor," was the explanation of former Energy Secretary (now finance secretary), Jose Isidro Camacho.

Meralco buys electricity from Napocor at an effective rate of a little over P3 per kWh. But its rate is different when charged to individual residential customers.

Government wants the power distributors to clearly indicate the rate reduction for customers to see in their monthly bill.