DOE wants electric cooperatives to put up own generating plants

MANILA, Philippines — A ranking Department of Energy (DOE) official is proposing to temporarily increase the lifeline subsidy mechanics and empower electric cooperatives (EC) to put up their own generating plants to lower the cost of electricity, and the suspension of the Biofuels Act of 2006 to mitigate rising fuel prices.

DOE Undersecretary Benito Ranque said the government may consider expanding the mechanics of the lifeline subsidy from P400 to P800 monthly for the first 100 days in office of President-elect Ferdinand Marcos Jr.

Under the Electric Power Industry Reform Act of 2001 (EPIRA), the lifeline subsidy covers the marginalized end-users who refer to low-income, captive, household electricity consumers which have electricity consumption below a threshold level determined by Energy Regulatory Commission (ERC).

The threshold is currently set at 100 kilowatts  per month.

While the suggestion on lifeline rate is a temporary measure, a more lasting proposal to lower rates is government needs to empower the electric cooperatives (EC) to put up their own generating plants, Ranque said.

“These electric cooperatives should be equipped with their own power plant, preferably renewable energy facilities. By doing so, we get to spare them from buying expensive electricity from the power generators and sell to their consumers,” he said.

Meanwhile, Ranque said the government could urge big power generating companies to “relax” their pricing since they have long been earning from their facility.

“We’ll ask energy companies which have been operating coal-fired power plants for a long time to relax on their rates. Anyway, they’ve already recovered their investments for those aging facilities. Out of compassion and corporate social responsibility, I have this feeling they’d consider it,” Ranque said.

To address rising fuel prices, Ranque is pushing for the suspension of the Biofuels Act of 2006, “which adds up an extra cost that is being passed on to the consumers.”

Ranque said prices of petroleum products may instantly be reduced by P3.26 per liter for gasoline and P1.40 per liter for diesel, provided the 19th Congress enacts a legislative measure to suspend the law.

“Public transportation and small business will directly benefit from this measure. But that is just for the immediate concern,” he said.

The suspension of the Biofuels Act was previously floated by Energy Secretary Alfonso Cusi to help reduce cost on fuel prices if the oil price crisis arising mainly from the Russia-Ukraine war continues to worsen.

Ranque said there is no need to suspend excise and value-added tax (VAT) to lower oil and electricity prices.

The DOE official said that suspending VAT and excise tax on fuel and electricity is no longer feasible as the process requires a tedious congressional deliberation, aside from the fact that such idea would adversely affect the government efforts to ease the adverse effects of the continuing pandemic scare.

Pampanga 2nd District  Rep. Juan  Miguel Arroyo, who chairs the House committee on energy, is pushing for the suspension of the excise tax on fuel as local pump prices skyrocketed due to the global price spikes.

Meanwhile, ERC chairperson Agnes Devanadera said she submitted several proposals to the incoming administration, including suspension of excise tax on coal and petroleum and removal of double VAT imposition in pass-on costs.