(First published Aug. 25, 2017, 1:51 p.m.) The current administration’s paramount goal of ensuring energy security by providing access to reliable and affordable energy must translate to better protections for Filipino consumers and improve their welfare.
Thankfully, the Department of Energy has emphasized its pro-consumer stance by providing a distribution framework that is oriented towards affordability, choice and transparency, principles that consumer groups advocate. Particularly relevant is Energy Secretary Alfonso Cusi’s announcement of the non-extension of the feed-in-tariff subsidies to help keep electricity prices at a minimum.
This move works in concert with the recommendations of Geoffrey Ducanes, Sarah Lynne Daway, Majah-Leah Ravago and Raul Fabella in a study titled “Carbon Footprint, Inclusive Growth and the Fuel Mix Debate in the Philippines.” Presenting the study at a round-table discussion hosted by the Stratbase ADR Institute last week, the study’s authors suggested that the government work towards a feed-in-tariff bankrolled by the Global Climate Fund instead of everyday consumers.
Moreover, they suggested that the government shift additional charges, such as the Feed-In-Tariff, Universal Charge, Stranded Cost, Missionary Electrification Charge) away from the manufacturing and industry sector to services and the state treasury instead, saying that this shift would help create more jobs among the poor.
During the Department of Energy’s budget briefing in the House of Representatives last week, the same pro-consumer direction was on display amid the agency’s thrust to ensure energy security.
The DOE proposed a budget of P2.659 billion for fiscal year 2018, which has increased by P1.335 million or .05 percent from the P2.657 billion budget for 2017. The same was approved by the Committee on Finance of the Senate on Wednesday, subject to plenary deliberations.
In contrast to this pro-consumer direction, however, the Department of Finance, through Undersecretary Karl Chua, has announced a proposed tax reform package for a 5 percent tax on coal, presently the Philippines’ largest source of power.
Based on the DOE’s data for January to June of 2017, coal has 35 percent of the Philippines’ total installed capacity of 21,621 megawatts. Coal also has the highest share of the Philippines’ dependable capacity of 19,536 megawatts at 31.7 percent.
Although one of the DOE’s objectives is to promote a low-carbon economy by increasing renewable energy capacity, conventional power sources such as coal, LNG and fossil fuels will still need to be maintained to support the DOE’s target of additional power capacity of 43,765 megawatts by 2040. By 2040, the primary energy mix, although subject to change, will most likely consist of 41.6 percent coal, 32.2 percent oil, 9 percent biomass, 7.1 percent geothermal, 4.1 percent natural gas, 3.1 percent other technology, 1.9 percent hydro, 1.1 percent biofuels and 0 percent solar/wind. At present, we need 22,144 megawatts to meet that 2040 goal.
By taxing one of the main sources of reliable and affordable power in the Philippines, the cost of electricity will increase, creating additional burden on consumers that will last up to and likely beyond 2040.
Hannah Viola is energy follow of think tank Stratbase Albert del Rosario Institute, a partner of Philstar.com. She is also a convenor at CitizenWatch Philippines.