Coal prices, gov't subsidy adjustments cause hike in Sept-Oct electricity rates

·2 min read

Visayan Electric residential customers will experience an additional 13-centavo increase for the billing month of September-October.

The average rate for residential customers is now at P15.37/kWh from an average rate of P15.24/kWh for the August-September billing period. The new rate translated to a P26 increase for customers with an average monthly electricity consumption of 200kWh.

The high prices of coal in the world market continue to be the major cause of high prices of electricity. This is aggravated by an adjustment in the government subsidy for missionary electrification and the taxes for power purchases after the expiration of the contract with the Power Sector Assets and Liabilities Management Corporation (PSALM).

The Energy Regulatory Commission, in a resolution approved last August 4, 2022, approved the request of the National Power Corporation to recover the shortfall from the Universal Charge – Missionary Electrification (UC-ME) subsidy for 2012 in the amount of P2,606,208,364.83), with an equivalent rate of P0.0239/kWh.

The ERC resolution directed all distribution utilities and the National Grid Corporation of the Philippines (NGCP) to collect from the consumers the UC-ME true-up rate of P0.0239/kWh, on top of the existing UC-ME basic rate of P0.1561/kWh, for a period of 12 months starting September 2022.

In addition to the UC-ME additional charges, the increase in electricity rates is also driven by the taxes incurred for the purchase of power from the Wholesale Electricity Spot Market (WESM) and other contracted suppliers after Visayan Electric's contract with PSALM ended last July.

PSALM, a government-owned and controlled corporation established through the Electric Power Industry Reform Act (EPIRA), has the principal mandate of managing the orderly sale, disposition, and privatization of the NPC generation assets, real estate and other disposable assets, and Independent Power Producer (IPP) contracts to optimally liquidate all NPC financial obligations.

Last July, PSALM ended power contracts with distribution utilities, including Visayan Electric, due to the ongoing privatization. This led the power distribution firm to purchase additional power from WESM and other contracted suppliers to augment the power needs previously supplied by PSALM.

Power purchases from WESM that are sourced from non-renewable sources are subject to Value Added Tax, compared to power purchased from PSALM which is tax-free since its power assets are renewable sources.

To help its customers cope with the high prices, Visayan Electric is offering payment arrangements for customers in good standing who cannot pay their bills in full. Customers who are interested in applying for payment arrangements may do so at any of Visayan Electric’s service centers. (PR)