Group presses early passage of 2 power bills

MANILA, Philippines - An advocacy group batted yesterday for the immediate passage of two Senate bills which could effectively cut electricity cost for the end-users by as much as P2 per kilowatthour.

The Center for Organizational Studies and Advocacy (COSA) was referring to Senate Bills 2 and 3, previously docketed as SB 3148 and SB 3147, respectively.

SB No. 2 cuts government royalties on indigenous energy sources from the current 60 percent to only three percent of net proceeds from the sale of the fuel to generating companies.

On the other hand, SB No. 3 charges a uniform three percent national franchise tax on the income of distribution utilities (DUs) in lieu of all taxes. At present, DUs such as Meralco are required to pay various taxes, notably VAT, franchise tax, real property tax, income tax, regulatory fees, import duties and other fees. These taxes are generally passed on to the consumers.

COSA chief advocate lawyer Rafael de la Torre said the generation charge accounts for more than 60 percent of the electricity-users monthly bills, and, therefore, the biggest factor in the power rate setting process. Industry experts said unlike other Southeast Asian countries, the Philippines imposes a 60-percent royalty on indigenous fuel sources.

If passed into law, De la Torre said the twin measures could bring down electricity rates by as much as P2/kwh.

At the same time, De la Torre expressed concern over the persistent misinterpretation of issues concerning electric charges, saying it does not sit well with “harmonious consumer-service provider relationship.”

He noted that DUs have always been the mistaken object of blame whenever there are adjustments in the consumers’ power bills, showing mostly increases in the generation and transmission which shift regularly.

“Taxes are also a major cost component that drives electricity prices upward. Because power distribution companies deal directly with the consumers, increases in power rates are summarily attributed to them, regardless of the actual basis of adjustment,” De la Torre said.

He said fluctuations in the generation charge are driven by many factors. “Movements in the generation cost charged by distribution utilities are dependent on prices charged by generation companies to DUs. We must also consider the fact that the generation cost charged by DUs are merely ‘pass-through’ fees which comprises more than 60 percent of the bills, and which are eventually remitted to the power producers,” he added.