Senator Risa Hontiveros on Tuesday considered as “minimal and temporary” the power rate reduction by the distribution company Manila Electric Company (Meralco).
She believes that if the government were to seriously implement vital policy changes in the energy sector, power costs could potentially be reduced further.
The cost of electricity will really go down due to the reduction of the price of imported coal in the world market.
“The question is when will the consumers experience a low cost of electricity,” she asked.
“This is not permanent, “ added the opposition senator.
This is the senator’s response to the P0.72/kWh decrease in rates announced by Meralco for the month of July, purportedly as a result of the lower generation rate it receives from the Wholesale Electricity Spot Market (WESM) and its contracts with coal plants.
She emphasized the government should proactively implement policy changes that would permanently and sustainably reduce our consumers’ electricity bills.
“Apart from the generation charge, there are separate items in the electricity bill that can be further reduced and have a long-term effect, such as the distribution charge of Meralco and the transmission charge of the National Grid Corporation of the Philippines (NGCP),” she said,
According to Homtiveros, she has been insisting to the Energy Regulatory Commission (ERC) to lower the high 15% weighted average cost of capital (WACC).
Since 2015, she said Meralco and NGCP have been benefitting from this.
If this will be corrected, she guaranteed that the distribution and transmission charges will be reduced and the burden of consumers will be eased, “ he further stated.
Meralco’s distribution charge last June was around 18% of the total bill, the transmission charge was 4%, while government taxes were 10%. More than half of the bill (59%) is therefore payable to generation.
Hontiveros added that the ERC and the Department of Energy (DoE) should also correct and monitor power supply agreements (PSAs) between generation companies and distribution utilities, as well as optimize and adjust system operations because fraudulent contracts, power shortages, and delayed transmission projects directly affect consumers.
In addition, the discussion about the imposition of Value Added Tax on already expensive power rates could further strain the finances of Filipino families.
Hontiveros then urged the Marcos Administration to prioritize resetting the ‘improper’ practices in the power sector and said that she expects to hear his commitment during the second State of the Nation Address (SONA) on July 24.