Energy starts review of higher subsidy enjoyed in off-grid areas

The Department of Energy is seeking ways to cushion the impact of higher subsidy in the off-grid areas, which are expected to soar to P28.373 billion in the next two years from P7.784 billion in 2011.

Energy Undersecretary Felix William Fuentebella said in a memorandum to stakeholders in off-grid areas the department would study and formulate new policies and programs to rationalize existing tariffs in off-grid areas. He noted that the subsidy under the annual universal charge for missionary electrification was expected to continue to grow.

“This can only be cushioned by a formulation of new well-targeted and efficient subsidy policy for off-grid areas,” said Fuentebella said in a memorandum seeking comments on the guidelines for the rationalization of tariffs in off-grid areas.

“Notwithstanding any policy changes, the DoE will ensure that there will be no abrupt removal of UC-ME subsidy without appropriate safety nets to mitigate the effect of the rationalization to the household consumers in off-grid areas. The DOE therefore, urges the concerned stakeholders to join and participate in these public consultations,” he said.

Fuentebella said the subsidy rationalization policy aims to address social inequity because the UC-ME is being collected from all electricity consumers, including the average households and poor household consumers in the main grids of Luzon, Visayas and Mindanao and in off-grid areas. 

“However, the existing subsidy policy involves uniform pricing, such that the same level of subsidy per kilowatt-hour is being provided to residential, commercial and other electricity consumers in off-grid areas. In effect, poor electricity consumers in the main grids are also paying for the UC-ME to subsidize the electricity consumption of large commercial and even industrial consumers in off-grid areas. This inequity must be immediately addressed,” he said.

Topics: Department of Energy , off-grid areas
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