THE government is helpless in the face of rising power and fuel prices because of laws that prevent it from intervening in “market-driven” industries, Presidential Communications Secretary Herminio Coloma Jr. said on Wednesday.
Coloma said the looming electricity rate increase and the recent rise on liquefied petroleum gas (LPG) prices are dictated by the law of supply and demand, which prevails under a deregulated environment.
“Let’s understand that since the passage of the Electric Power Industry Reform Act [Epira], the policy framework for rate setting in the power sector changed. This has become market-driven. This is no different from the changes in fuel pricing,” the Coloma said.
Power distribution firm Manila Electric Co. (Meralco) has advised its consumers of a rate increase of P2.50 or as high as P3 per kilowatt-hour (kwh) in its December billing.
It attributed the huge rate hike to the shutdown of the Malampaya plant, which has been undergoing maintenance repair since November.
“The higher fuel prices and the tightness in the supply caused by the outage of the power plants contributed to the expectation that the generation charge for December will be higher,” said Larry Fernandez, head of Meralco’s utility economics.
Coloma assured power users the rate hikes will be “temporary.”
Meralco “automatically adjusts generation charge depending on the prices of the supply it obtains from the market. The impending rate hike is caused mainly by the maintenance shutdown of the Malampaya natural gas plant . . . According to Meralco, the increase is temporary. Once the pipeline and maintenance is finished, electricity prices are expected to go down,” he said.
The power firm will announce the final rate of increase on December 9. If rates rise by P3.50 per kwh, a household that consumes an average of 200kwh will pay an additional P700.
Coloma said the rate adjustments were “not arbitrary” and “not unreasonable.”
“We should not be bothered . . . There are enough safeguards mandated by law to protect the rights of consumers if it would be proved that the hikes were unjust and not based on the movements of market forces,” he told reporters.
“The President is putting upfront in all of his decision making the general welfare of the Filipino people,” he added.
On Monday, LPG prices shot up by more than P100 per canister because of “market movements.”
“I have endeavored to explain that we operate under a system of laws, and there are certain laws that are in motion . . . The determination according to market forces of rate adjustments that had to be made. There is a mechanism in the law that allows the distributor to change the rates in the same way that oil companies are able to adjust the price, the retail, or pump prices according to market price fluctuations,” Coloma said.
Turning to fuel prices, he said the Energy Regulatory Commission has the power to review the process used by the oil firms.
Coloma said proposals amending the deregulation laws are welcome.
“We will work with the legislature in prioritizing the needed legislative measures,” he said.