New Rates Increases to Haunt Power Consumers

Power consumers face new power rates increases this year. For power consumers, there is no relief from the spate of rate hikes they had to put up with last year, for that matter, for decades.


After greetings of “Happy new year!” have faded, power consumers have to brace for something to be unhappy about for 2005. They are to face new power rates increases this year. There seems to be no relief, then, for power consumers from the spate of rate hikes they had to put up with last year.

President Gloria Macapagal-Arroyo, campaigning for election from February to May last year, promised she would make Philippine power rates the lowest in Asia. But power consumers had to kiss that promise goodbye as they had to bear rates increases starting July.

And now they have to brace for more.

Napocor petition

For one, the petition of the National Power Corporation (Napocor) for a P1.87 ($0.0333 based on a $1:P56 exchange rate)/kilowatt hour (kwh) increase in its generation charge seems on its way to approval.

Engr. Ramon Ramirez, convenor of the broad-based People Opposed to Warrantless Rates Increases (POWER) told Bulatlat in an interview Jan. 7 that the Energy Regulatory Commission (ERC) will approve Napocor’s request when it convenes Jan. 10.

Earlier in mid-2004, Napocor filed a petition for a P1.87/kwh in mid-2004. The ERC approved a P0.98/kwh increase in the generation charge last September.

The other half of the petition is still being deliberated on at the ERC, but as early as last December there were already telling signs.

Early that month Scholastica Cororaton, head of the policy and planning division of the National Economic and Development Authority (NEDA), told reporters that consumers should patiently bear with an additional power rate increase in early 2005.

“The impact of high inflation is only short-term,” she had said. “But looking at the long term, we have to solve the fiscal problem because it is through it that we can attract investments and help the economy grow.”

In a recent e-mail to Bulatlat, Ramirez interpreted this as meaning that “ERC got its marching orders to approve the other half of (the Napocor) petition.”

Ramirez also noted that when the ERC approved the provisional increase last September, Macapagal-Arroyo said it was only a step to reflect the true cost of power. But, he continued, “it is now all about solving the fiscal crisis and attracting investments.”

Power consumers may then expect an increase of P0.87/kwh in their power rates come February. This means a power consumer who uses an average of 279 kwh and paid P2,182 for Dec. 3, 2004-Jan. 4, 2005 will be paying an additional P244.96 in February.

As it is power consumers are also mostly battling with the high cost of living unmatched by low wages.

Based on data from the National Wages and Productivity Commission (NWPC), the daily cost of living for a family of six – the average Filipino family – is no less than P560. In the National Capital Region (NCR), the daily cost of living is already P594 for a family of six, while the minimum wage is pegged at P300.

TRAM, etc.

As if these were not enough, power consumers have to prepare for the eventual imposition of the Transition Rate Adjustment Mechanism (TRAM). It is not yet known how much the TRAM will bloat power bills, as the ERC is still preparing guidelines.

Ramirez describes the TRAM as “another device to let consumers pay for additional transmission costs.”

“The essence,” Ramirez added, “is that all changes in expenses are passed on to consumers. In other words, all business risks are borne by the consumers.”

Ramirez said that with this the people might as well take over the utilities.

An out-of-school youth queried by Bulatlat on this expressed a similar view. “If the power consumers are to be made to shoulder the business risks,” he said, “they might as well be made to operate the power firms.”

“In the first place (the utilities) should be publicly owned,” Ramirez further said.

Also, by October, the inter-class cross-subsidy will be removed, which will effectively increase power rates by P0.4278/kwh. So by October, a power consumer who uses an average of 279 kwh will be paying P119.36 more.

Meanwhile, new items have started to appear on the electric bill: the Napocor stranded debts, the Napocor stranded contract costs, the distribution utilities stranded contract costs, and the equalization taxes and royalties. As of now they each amount to P0.00 in the electric bills, but they will likely increase power rates in the next few months.

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