2016 Power Rate Scenario Sought

MANILA, Philippines - The Department of Energy is being urged to give the Senate a preview of what power rates would look like in 2016 to give business leaders, particularly in the manufacturing sector, a heads up in charting their expansion plans.

Sen. Ralph Recto, who chairs the Senate ways and means committee, said that if rates will remain stable until 2016, the power rate situation would "signal predictability in the pricing" and help investors "plan their expansion around the price scenario."

Recto said he is concerned that the Power Sector Assets and Liabilities Management (PSALM) Corp. and the debt-saddled National Power Corp. (Napocor) would again pass on their debts and losses to hapless consumers.

During last year's budget hearing, Recto said the Senate has asked the DoE to submit a "power rate scenario" but the request until now remains unheeded.

"I'm quite concerned that PSALM and Napocor would again pass on their debt and losses to the hapless consumers," Recto said.

"Do they realize how much are they taking from the people's pockets? That's billions," said Recto citing that consumers -mostly households, workers and companies-would have to cope with increases in PhilHealth contributions, new taxes for "sin" products and the soaring prices of commodities brought about by unstable oil prices.

The senator added that a "power price scenario" would significantly provide consumers time to brace for a new wave of increase in power rates starting this month.

Senators have earlier said higher power rates in the Philippines remain the single biggest stumbling block to the local manufacturing sector which has remained stunted over the years.

"We have the most expensive power rates in the region. Are we still going to be the most expensive in 2016? I guess it's harmless to wish that even though power rates have no chance of coming down, it would at least not increase in the years leading to 2016," he said.

This month, power consumers are expected to pay higher electricity after the Energy Regulatory Commission (ERC) granted the Napocor's proposal to jack up their generation charges. Napocor will increase its power charge in Luzon by 69.04 centavos per kilowatt-hour (kwh); Visayas by 60.60 centavos per kwh; and, Mindanao, by 4.42 centavos per kWh.

Currently, Recto said, Napocor's effective rate for Luzon stands at P5.0160 per kwh; P4.0740 per kwh in Visayas; and, only P2.9321 per kwh in Mindanao.

He noted that the government is actually imposing a new tax by passing on to consumers the burden of paying down the debts of Napocor through the new wave of power rate increases.

"The simultaneous power rate hikes in Luzon, Visayas and Mindanao are practically new taxes to be shouldered by consumers since the proceeds will be used to pay down the multi-billion debts incurred by Napocor," he said.

Recto said the power rate hikes by Napocor would make it more difficult for the Philippine government to attract investors particularly in the field of manufacturing.

He hoped that the National Economic and Development Authority (NEDA) had scrutinized Napocor's rate increase and studied its impact on investments.

"NEDA should have taken a look at this to check if this was congruent to good policy," Recto said.

But Recto said he would rather keep the current electricity prices, increase ten-fold the investment portfolio and ultimately secure an investment grade status from multinational credit rating agencies.

This is because increased investment due to stable supply and steady power prices would translate to more workers being hired and other economic opportunities being created and expanded.

"Why not keep the prices at current levels, which should get a more economic rate of return rather than raise power prices and stymie investment. Instead of looking forward to the traditional Flores de Mayo, each consumer would be rudely treated to a spectacle called 'Increases de Mayo'," Recto said.

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