DTI studies ERC decision on power lifeline subsidy

The Department of Trade and Industry (DTI) is studying the decision of the Energy Regulatory Commission (ERC) to declare as legal the move of Lopez led Manila Electric Company (Meralco) to collect lifeline subsidy from consumers.

“Distribution utilities should not be allowed to pass on their own electricity consumption or administrative loss as recoverable system losses that will be paid by consumers,” Trade Secretary Peter B. Favila said in a statement released late yesterday afternoon.

The lifeline discount is applied to the total of the generation, transmission, distribution, supply, metering and system loss charges. This shields low power consumers from the full impact of rate increases.

Almost two million of Meralco’s four million residential customers enjoy the lifeline discount, as mandated by Sec. 73 of RA 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001. The discounts are paid for by other electricity consumers.

Under the current lifeline structure, customers consuming 0-50 kWh a month are entitled to a discount of 50 percent, those using 51-70 kWh are entitled to a reduction of 35 percent, and those consuming 71-100, a discount of 20 percent.

Meralco wanted to reduce the lifeline discount to five to 10 percent by 2011. however, ERC ordered Meralco to maintain current structure.

The ERC decision likewise added another customer bracket, from 0-20 kWh, which will be entitled to a discount of 100 percent.

In another case, on which Meralco proposed to reduce lifeline discount to five to 10 percent by 2011, Secretary Favila lauded a regulatory order issued by ERC that maintained the current lifeline rate structure of existing lifeline customers.

“This is a good news to Meralco customers consuming less than 21 kilowatt-hours (kWh) of power each month because they will have one less expense to worry about,” said Secretary Favila.

Furthermore, Favila also noted ERC’s decision to lower the cap on so-called system loss, electricity lost due to pilferage, design faults and administrative inefficiency, by one percent which will force distributors to cut the cost of power that consumers bear due to theft and inefficiency.

Favila reminded all electric distributors, to observe prudence in their purchasing practice consistent with their obligations under Section 23 of the EPIRA Law to be able to supply electricity in the least costly manner to its captive market.

“Electric distributors should at all times strategically endeavor to find best electricity price for its consumers and this may be achieved by negotiating and contracting with the National Power Corporation (NAPOCOR) for an increase in its Transition Supply Contract volume to match its updated demand forecast figures under its IPP contracts,” the secretary said.