Small electricity consumers seen losing subsidized rates

MANILA, Philippines—Consumers with monthly electricity consumption of 100 kilowatt-hours or less may soon have to pay for the true cost of electricity, unless the government decides to extend the socialized pricing mechanism that provides subsidized rates to small power users.
Energy Secretary Jose Rene D. Almendras said his department had been working on extending the scheme, which was due to expire in June.

“We already met with the House energy committee and we’ve agreed that we will submit a proposal to amend Section 73 of the Electric Power Industry Reform Act and it will be prioritized because of the deadline,” Almendras said.

Under Section 73 of the Epira, a socialized pricing mechanism providing for a lifeline rate for the marginalized end-users was set by the Energy Regulatory Commission. It was exempted from the cross-subsidy phaseout, which was provided in the Epira law for a period of 10 years, unless extended by law.

The level of consumption and the rate covered by the socialized pricing mechanism were determined by the ERC.

The Epira was passed in June 2001, which means that the 10-year period provided for lifeline rates will expire in June.

According to Almendras, an amendment to the law will be needed to effect the extension of the lifeline rates, not just a resolution from the Joint Congressional Power Commission (JCPC).

There are three pending House bills seeking the extension of the lifeline rates. These are House Bill Nos. 4169, 4529 and 4629, whose principal authors are Representatives Henedina Abad, Rufus Rodriguez and Ben Evardone, respectively. Rodriguez sought to extend the implementation of the subsidies by another 10 years.

Lifeline rates refer to the subsidized rates given to customers with a 0-to-100 kWh consumption every month. The discounts given to these consumers are shouldered by those with higher electricity consumption.

Under the lifeline structure of Manila Electric Co. (Meralco), the country’s biggest power distributor, customers using 0-20 kWh a month are free of charge. Those using 21-50 kWh are enjoying a 50-percent discount in rates; 51-70 kWh users are getting a discount of 35 percent; and 20 percent for 71-100 kWh consumers.

There is, however, a fixed monthly metering charge of P5, in accordance with a 2008 decision of the Energy Regulatory Commission.