Power Rates Up by Almost 30% Since Unbundling

Published on January 23, 2005

For most consumers, power rates have increased by an average of almost 30 percent from December 2003 to December 2004. In July 2003, the country had seen the unbundling of power rates.

BY ALEXANDER MARTIN REMOLLINO
Bulatlat.com

For most consumers, power rates have increased by an average of almost 30 percent from December 2003 to December 2004. In July 2003, the country had seen the unbundling of power rates.

Based on data from the Manila Electric Company (Meralco), power rates in its franchise areas have increased by the following amounts:

For consumers using 50 kilowatt hours (kwh) a month, an increase from P125.76 ($2.27 based on a $1:P55.44 exchange rate as of December 2003) to P170.70 ($3.04 based on a $1:P56.18 exchange rate as of December 2004) – amounting to P44.94 or 36 percent;

For consumers using 70 kwh a month, an increase from P241.53 in December 2003 to P296.36 in December 2004 (P54.83 or 23 percent);

For consumers using 100 kwh a month, an increase from P438.36 in December 2003 to P534.34 in December 2004 (P95.98 or 22 percent);

And for consumers using 202 kwh, an increase from P1,207.12 in December 2003 to P1,506.38 in December 2004 (P299.26 or 25 percent).

Rates differ according to consumption because of a “socialized” subsidy scheme. However, those consuming 50 kwh a month, or those belonging to the lowest income rungs, bore the heaviest increase compared to other power consumers.

Wages and power

In a recent email to Bulatlat, Dr. Giovanni Tapang, a physics professor at the University of the Philippines and a convenor of the broad-based People Opposed to Warrantless Rates Increases (POWER), power rates increased by almost 30 percent since December 2003 but wages had no significant corresponding increase.

The latest study by the socio-economic think tank IBON Foundation showed that the average daily cost of living for a family of six – the average Filipino family – has increased from P455.94 in December 2003 to P492.19 in December 2004. IBON used data from the government’s National Statistics Office (NSO) in its study.

Meanwhile, the minimum wage has long been way below the daily cost of living, and did not increase much during the period. In the National Capital Region (NCR), which has the highest minimum wage rates nominally, the daily minimum wage increased from P250 plus P30 cost-of-living allowance (COLA) in December 2003 to only P250 plus P50 COLA in December 2004.

More increases

The approval of the National Power Corporation (NPC)’s petition for a rate hike earlier this month is expected to bring power rates some P0.80/kwh higher. For those using 202 kwh a month, this would mean an increase of P161.60 in their monthly bills – easily amounting to 53.87 percent of the minimum wage for those in the NCR.

Meanwhile, power consumers will have to brace for the payment of additional items in the electricity bill: the NPC stranded debt, NPC stranded contract cost, distribution utilities stranded contract cost, and equalization taxes and royalties.

As of the December 2004-January 2005 bill, each of these has no corresponding charges yet reflected in the bill. But Engr. Ramon Ramirez, also a POWER convenor, said the new charges are already reflected in the bill – “to condition us that we will be paying more.”

In particular, the NPC stranded debt item in the electricity bill corresponds to the burden that power consumers will have to share in paying the NPC debts, amounting to P570 billion in all. Under the Electric Power Industry Reform Act (EPIRA) of 2001, the government would shoulder P200 billion of the NPC debt, while power consumers would share among themselves the brunt of the remaining P370 billion.

“As if power consumers were responsible for the debt problem,” Ramirez commented.

Later in the year, power consumers will be facing still more rates increases with the removal of the inter-class cross subsidy and the imposition of the transmission rate adjustment mechanism (TRAM). The latter is a device that would enable power companies to pass on to consumers additional transmission costs.

As of last December, the Philippines has been listed as having the sixth highest industrial power rates in the world and seventh highest residential rates, based on data compiled by the Department of Energy (DoE). Bulatlat.com