Govt can’t stop oil, power rate surge

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Meralco linemen install electric meters along Batasan Road in Quezon City. The power distributor announced a huge rate increase this month.  Photo By Miguel De Guzman

Meralco linemen install electric meters along Batasan Road in Quezon City. The power distributor announced a huge rate increase this month.
Photo By Miguel De Guzman

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.

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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.

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7 Comments

  1. geoffrey bayeng on

    our government under the administration of pinoy who is abnormal,and good as mentally retarded is doing nothing to stop the increase prices if fuel and lpg.it is again an added burden to us filipino people especially now that CHRISTMAS is fast approaching.what is really happening to pinoy?see even the senate,it became a war zone for enrile and miriam,the whole world is watching them,and the only root of this all is about MONEY.WHAT A SHAME……..SHAME ON YOU ALL WHO IS IN THE SENATE FOR BEING SO UNPROFESSIONAL,YOU ARE SETTING A VERY BAD EXAMPLE.

  2. Para kay Mr. Coloma at sa iba pang mga taong bayan ng bansa…
    NAPAKAGANDA AT MALIWANG ANG MGA BINGGIT NA DAHILAN NG PAGTAAS NG KURYENTE AT FUEL, ETC. Ang tanong lang naman ay ito…
    1) kailan nangyayari ang mga bagay na binggit mo Mr.Coloma?
    2) Ngayon lang ba sa panahon ninyo ni BS3 o ito ay mula pa sa panahon ni Cory Aquino?
    3) Ibig sabihin sadyang hindi pwede kailanman iba-iba ang presyo ng electricity power at fuel o crudo na binabayaran ng mga consumers at hindi rin pwedeng kontrolin o pigilan ng sinuman Pangulo ng bansa?
    4) Kung ganoon, bakit nang panahon ni GMA, sa kanya binubuhos ang sisi ng mga dilawan at mga kalyado ninyo tulad ng Black and White Movement, Militant Groups, etc.?
    >>> So therefore, in year 2014 Election campaign, once na mayroon kandidato na sasabihin “kaliangan ibaba o kaniyang ibaba ang presyo ng gasolina, crudo, koryente at bilihin”…NANGANGAHULUGAN LAMANG NA SIYA O SILA AY PAWANG MGA MANLOLOKO, SIRA ULO AT TUNAY NA SINUNGALING !!!!. yun nga lang sa bandang huli iboboto pa rin ng mga BOBOTANTE lalo na ung tinatawag nilang nasa level C at D sa lipunan. KAYA PAGNATAPOS ANG ELEKSYON LAHAT NAKA-TUNGANGA AT NGANGAAAAAAAAAAAA !!!!!

  3. Why not cushion the oil price increases with the Malampaya Funds para matikman din naman ng mga ordinaryong mamamayan at di puro politiko na lang ang nakikinabang!

  4. MERALCO HIKE IS REASONABLE… Ha, ha, ha,!
    Malacang is helpless in the face of rising power and fuel prices… ha, ha, ha! People are not ignorant to be denied of this syndication agreement between two entities to act together in acquiring excessive profit. Meralco subscribers are practically lost in thought already on how to cope up with the exorbitant cost of electricity and yet Malacanang Palace has the nerve to say that MERALCO increase is still reasonable?

    Maybe Malacanang people need an in-depth studies how to differentiate what is exorbitant and reasonable? Preventive maintenance, repair, shutdown are common practices in industrial operation like the Malampaya natural gas plant, but it does not gave the authority to pass on the Millions of Maintenance Cost to their consumers.

    Now it high time to use the depleted Malampaya Fund to address the energy crisis to fund the reconstruction and restoration of downed high-voltage towers, electric poles, and power lines wrought by recent typhoon. But, please don’t pass it on to the poor people.

  5. Federico Santos on

    The Present Administration never run out of excuses. Good that they did not blame anyone about the price increases. Precisely, P’noy is the present President. What measures he did to curve or initiated to prevent the price increases, nothing. P’noy just watches what’s going on whatever issues raised. he’s like an ordinary citizen and looking someone to blame on or find an excuses. P’noy must exercise his power as a President of the Philippines. Pres. P’noy don’t just believe what your adviser feeds you. These adviser has always their own built personal interest to gain from your administration. P’noy help your bosses. Mabuti pa nga si Boosing Vic Sotto thru EAt Bulaga nakakatulong. Otherwise, You, Pres. P’noy is an ineffective, incompetent and inutile president that the Philippines ever had. Pres. P’noy should resigned ASAP.

  6. the govt. may not stopped the oil companies from raising prices BUT it can lessen the impact by cutting into half or lower the 12% VAT which is attached to any price increase.

  7. santiago caisido on

    The government can lower the cost of energy (LPG, Electricity, and water) by putting a cup on the application of VAT on these products. Calling our useless lawmakers to amend the internal revenue code.