House leaders hail subsidized electricity rate

posted June 02, 2021 at 12:45 am
by  Maricel Cruz and Othel V. Campos
House Majority Leader Martin Romualdez on Tuesday lauded President Rodrigo Duterte's signing into a law extending the electricity lifeline rates for the benefit of 5.5 million low-income consumers in the next 30 years.

“We really need this law to ensure a subsidized rate in electricity bills for poor households, especially now that our kababayans are still reeling from the economic devastation caused by the pandemic,” Romualdez, representative of Leyte's first district, said.

“Allowing poor households access to the lifeline rate is Congress’ malasakit under the leadership of Speaker Lord Allan Velasco and continued commitment of President Duterte to provide assistance to low-income families,” Romualdez said.

Velasco also hailed the enactment of the measure extending the subsidized electricity rate for low-income households by 30 years.

“We thank PRRD for ensuring that poor families will continue to enjoy the much-needed power subsidy for the next three decades,” said Velasco, who pushed the measure in the House of Representatives when he was chair of the Committee on Energy.

Meanwhile, consumer advocacy group Laban Konsyumer, Inc. (LKI), on Tuesday, tagged the Public Service Act as anti-consumer, especially the water and electricity utility sectors.

LKI president Victorio Dimagiba said section 16 of Senate Bill 2094, amending the PSA, allows companies to recover their corporate income taxes (CIT) by increasing the rates and the regulatory agency, in its discretion may raise rates provisionally, with or without public hearing.  

“The bill will allow public utilities to recover them (CIT) backdoor through the rate increases. This is double whammy and anti-consumers,” he said.

Velasco said Republic Act 11552, signed by the President on May 27, “is a shoo-in to make the Duterte administration’s best legislative legacy list.”

“This important legislation would assure Filipinos access to continuous and affordable electricity, especially during the COVID-19 pandemic where many people are struggling to make ends meet,” the

House chief added. Velasco said around 5.5 million lifeline rate consumers, representing about 31 percent of the entire connections in the country, would benefit from RA 11552.

The new law amends RA 10150 or the Electric Power Industry Reform Act (EPIRA) of 2011, under which the lifeline rate provision would expire on June 26 this year.

It extends for the second time the socialized pricing system for marginalized households under Section 73 of the original EPIRA law or RA 9136.

The lifeline subsidy, given to households consuming not more than 100 kilowatt-hours or less per month, was first approved for 10 years under RA 9136 in 2001. It was extended for another 10 years under RA 10150 in 2011.

LKI submitted a letter to the Senate expressing concern on the provision that “income tax shall be allowed as a cash expenditure or outflow for rate –determination purpose”.

“We are opposed to the provision. Our understanding is this provision will allow regulated entities to incorporate income tax in rates. At the moment, distribution utilities are not allowed to add corporate income tax,” Dimagiba said in the letter.

He noted that water concessionaires should honor signed contracts which do not allow recovery of income tax.

Income tax is a direct tax and as such paid by the taxpayer and such direct taxes are not allowed to be passed on to the costs of services or goods, Dimagiba stressed.

“The issuance of the provisional authority on rate should be subject to prior public hearing with due notice, and should not be post facto.

The amendment is most welcome in rate making for water tariff petitions,” he added.

The country’s leading business groups have expressed reservations on the reciprocity clause which requires a similar treatment by the home country of the foreign investor before it can be allowed to own more than 40 percent of the capital of public services engaged in critical infrastructure.

Another provision that the groups found disturbing is the governing investments by foreign-state owned enterprises, which can be interpreted as prohibiting sovereign wealth funds from investing in public service classified as critical infrastructure.

“We strongly urge that these provisions be revisited and/or refined as they pose obstacles to the achievement of the bill’s avowed objective to attract more foreign investments,” the groups said.

Despite this, all 13 groups led by the Makati Business Club and the Management Association of the Philippines support the passage of the bill, which is estimated to attract foreign investments.

Business groups believed the bill would put in place a legal framework that will foster strong competition that will benefit the consumers, boost job creation, and expand the economy while at the same safeguarding national interests against foreign domination of critical infrastructure.

“It has adversely impacted on our country’s ability to attract foreign investments to our economy. As a result, the Philippines has paled in comparison with our neighboring countries in attracting foreign investments to the detriment of our economic development and our people,” the groups said.

Topics: Martin Romualdez , Rodrigo Duterte , Lord Allan Velasco , Electricity Rate ,
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